Shell has begun looking at a potential $4.0 billion in new projects in Nigeria to boost production and reduce the amount of gas burned off into the atmosphere, the company's chief executive has said.
"Shell is assessing new projects for onshore Nigeria, which will add new production and reduce flaring," Peter Voser, CEO of the Anglo-Dutch oil giant, said in a speech in London on Wednesday posted on its website.
"These projects could cost some $4.0 billion," Voser added.
Flaring refers to the environmentally damaging practice of burning off natural gas during oil production.
Nigeria's government has been pushing to use more of its natural gas for new gas-fired power plants as part of plans to improve electricity supply, with blackouts currently occurring daily across Africa's most populous nation.
The country, the continent's largest oil producer, also wants to boost its exports of liquefied natural gas.
Voser said that Shell, the biggest producer in Nigeria, hoped the projects could be completed in "the 2014 to 2015 timeframe ... subject to approval by partners and the security situation.
"These are the final two projects which will allow us to reduce the flaring intensity in Nigeria to below the current global average," Voser said.
The Shell Petroleum Development Company (SPDC), Shell's affiliate in Nigeria, flared some 20 percent less gas last year than 2010, he said.
SPDC's production increased to 800,000 barrels of oil equivalent per day in 2011 compared with 460,000 in 2009, when militant attacks in the Niger Delta region sharply reduced output.
A 2009 amnesty has led to a major decline in unrest there but sporadic incidents continue to occur.
Oil theft in the Niger Delta has however been a growing problem. Voser said there have been estimates that 150,000 barrels per day of oil and condensate is stolen in Nigeria.
"The oil theft and illegal refining is at large scale, with tank farms, barge building operations and barges shuttling crude to waiting tankers offshore," he said.
"In fact the oil theft was so prevalent, we could not ensure the safety of our operation and shut in 25,000 barrels a day of production during part of 2011."