Netherlands-based oil giant Royal Dutch Shell (NYSE:RDS.A) told investors in the Hague on Tuesday that the company considers climate change in its decisions and that its efforts to reduce natural gas flaring in Nigeria, a main cause of pollution in West Africa, are being hindered by a lack of government funding.
Shell’s Nigerian joint-venture Shell Petroleum Development Co. (SPDC) said in 2012 it planned to invest $4 billion in oil and gas projects, including one to reduce flaring, the burning of natural gas released when oil is extracted. Since 2004, SPDC has reduced gas flaring by 80 percent and reduced the amount of flaring last year compared to 2012, but Shell’s CEO Ben van Beurden acknowledged this was due to reduced oil production in the area.
“The situation in Nigeria was challenging in 2013,” he said at the meeting.
SPDC’s partner in Nigeria, the Nigerian National Petroleum Corp., has been criticized by watchdog nonprofits like the New York-based Revenue Watch Institute for a lack of transparency and mismanagement. Shell has struggled to prevent oil thieves from vandalizing its pipelines, damaging its bottom line and the environment. Sixteen staff, dependents and contractors for Shell were kidnapped in Nigeria last year, and reduced production due to oil theft cost the company over $800 million last year, according to Shell.
“We’ve sold assets for $1.8 billion in the last few years, and we have further licenses for sale,” van Beurden said. “This is not an exit from Nigeria. We are still making selected growth investment onshore, and the pace of these projects will be largely determined by continued government funding.”
Shell’s Chairman Jorma Ollila outlined four areas where Shell is trying to manage carbon dioxide emissions, which trap heat in the atmosphere: producing more natural gas, more low-carbon biofuels, helping to develop carbon capture and storage, and improving efficiency in operations.
“We consider climate and price risk in our decision-making,” he said.
In a letter to investors last week, Shell dismissed the possibility that its proven oil and gas reserves would become unusable as a result of climate change regulation.
ExxonMobil said in March it had considered climate change risks to its business and concluded none of its reserves would become stranded if governments were to require a drastic reduction in emissions.