Shell Suspends $12billion Nigeria Bonga Project over Lingering Oil Price Plunge

Royal Dutch Shell, says it has put on hold the Final Investment Decision (FID) on the $12 billion Bonga South West project in deep water Nigeria.

The company also announced that it reduced operating costs and capital investment in the year 2015 by a total of $12.5 billion as compared to 2014, saying further reductions would be effected in 2016.

In the company’s fourth quarter (Q4) and 2015 report results released yesterday on its official website, Royal Dutch Shell’s chief executive officer, Ben Van Beurden, also announced that the company would be laying off 10,000 workers globally, this year.

He said: “We are making substantial changes in the company, reorganising our upstream, and reducing costs and capital investment, as we refocus Shell, and respond to lower oil prices. As we have previously indicated, this will include a reduction of some 10,000 staff and direct contractor positions in 2015-16 across both companies.

“In 2015, we significantly curtailed spending by reducing the number of new investment decisions and designing lower-cost development solutions.

“For 2016, we have exited the Bab sour gas project in Abu Dhabi, and are postponing final investment decisions on LNG Canada and Bonga South West in deep water Nigeria. Operating costs and capital investment have been reduced by a total of $12.5 billion as compared to 2014, and we expect further reductions in 2016.”

The company explained it had to take such decisions regarding the Bonga Nigeria project among others, noting that only competitive projects will go forward.

“Only the most competitive projects are going ahead and many potential projects have been purposely delayed, re-phased, or cancelled. This is to manage affordability and get better value from the supply chain in the downturn,” Beurden said.