Royal Dutch Shell plc (ADR) (RDS.A) Looks to Change Its Strategy in Nigeria

The four joint-venture partners plan to spend some $1.5 billion to combat crude oil theft and vandalism on the Trans Niger Pipeline, as well as an additional $2.4 billion to fund five more gas pipeline projects. The oil theft and vandalism problem is so acute in the region that some companies have either scaled back or retreated entirely from their operations in the country.

For instance, in November, French oil major TOTAL S.A. (ADR) (NYSE:TOT) agreed to sell a 20% stake in an offshore Nigerian oil field to Chinese oil giant Sinopec Shanghai Petrochemical Co. (ADR) (NYSE:SHI), while ConocoPhillips (NYSE:COP) sold its Nigeria unit to Toronto-listed Oando Energy Resources for about $1.79 billion in cash a month later. The Nigerian Petroleum and Natural Gas Senior Staff Association estimates that the country loses roughly $6 billion annually to crude oil theft.

The bottom line
It appears that Royal Dutch Shell plc (ADR) (NYSE:RDS.A) is finally taking aggressive action to combat the oil spills, theft, and sabotage that have characterized its operations in Nigeria for decades. Though Shell has hinted that further asset sales in Nigeria may be forthcoming, its announcement suggests that it hasn’t given up on the region’s potential and may decide to invest further in deepwater licenses and onshore gas projects in the near future.

The article Shell Looks to Change Its Strategy in Nigeria originally appeared on Fool.com and is written by Arjun Sreekumar.

Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Chevron Corporation (NYSE:CVX) and Total SA. (ADR).

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