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Shell starts new work in Nigeria's Niger Delta

Operations target natural gas, but mark an important development given regional security concerns.

By Daniel J. Graeber
Shell starts new work in Nigeria's Niger Delta
Shell's subsidiary in Nigeria says production has started at a gas prospect in the Niger Delta, the site of recent militant activity. File photo by Mohammad Kheirkhah/UPI | License Photo

Aug. 23 (UPI) -- The Nigerian subsidiary of Royal Dutch Shell said Wednesday that hundreds of thousands of new barrels of product are expected from a project in the Niger Delta.

Shell said it started production from the second phase of its Gbaran-Ubie project in Nigeria's Niger Delta region. The company said 18 wells have been drilled at the site already and a new pipeline connects it to a nearby plant.

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Peak production is forecast at 175,000 barrels of oil equivalent per day by 2019, though most of that would be in the form of natural gas.

"Today's announcement is a positive step for Shell's global gas portfolio," Andy Brown, Shell's director of exploration and production, said in a statement. "It is also good news for Nigeria as gas from Gbaran-Ubie Phase 2 will strengthen supply to the domestic market and maintain supply to the export market."

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While noted for its natural gas prospects, the development is important for Nigeria because of security-related issues in the Niger Delta. Militants in July targeted the Trans-Niger crude oil pipeline, sidelining about 150,000 barrels of oil per day.

Nigeria is a member of the Organization of Petroleum Exporting Countries, but exempt from its multilateral effort to draw down a global glut of oil through managed production declines because it needs the revenue from oil to address national security issues.

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The collective effort has come under pressure from supply gains from Nigeria and Libya, also exempt, but committee members monitoring the deal at a recent conference in St. Petersburg said Nigeria considered a cap to production as soon as it was able to sustain a level of 1.8 million barrels per day.

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Secondary sources reporting to OPEC said Nigeria produced about 1.75 million barrels of oil per day in July.

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