Integrated energy firm,
Royal Dutch Shell plc's
) Nigerian joint venture - SPDC JV - has decided to invest a
total of $3.9 billion to develop two projects - the Trans Niger
Pipeline loop-line (TNPL) and the Gbaran-Ubie Phase Two, both
based in the eastern Niger Delta of Nigeria.
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Nigerian National Petroleum Corporation (NNPC) holds a 55% stake
in SPDC JV. Shell Petroleum Development Company of Nigeria Ltd
(SPDC), which is a wholly owned affiliate of Royal Dutch Shell,
owns 30% of the joint venture. The rest 10% and 5% stakes are
), an integrated oil and gas company, and Nigerian AGIP Oil
Company Limited, respectively. The operator of the joint venture
The venture of Royal Dutch Shell is planning to spend roughly
$1.5 billion for the development of the TNPL project. The
pipeline transports roughly 180,000 barrels of oil per day to the
Bonny crude oil Export Terminal. Precautionary measures should
also be taken to improve the protection of the pipeline system,
as the part of the pipeline was impacted from theft of crude oil
Moreover, $2.4 billion will be invested for five gas supply and
infrastructure projects of the Gbaran-Ubie development. It is
estimated that the peak production from the projects will be
215,000 barrels of oil equivalent per day.
In terms of assets, Royal Dutch Shell owns a strong and
diversified portfolio of global energy businesses that offer
attractive long-term growth opportunities. The company currently
has approximately 30 projects under construction that should
guarantee upstream growth for years to come.
However, Royal Dutch Shell's relatively heavy downstream exposure
leaves it less diversified than its integrated peers. Moreover,
the company's downstream operations have been affected by the
weak demand for fuel, leading to lower returns in this segment.
Royal Dutch Shell currently retains a Zacks Rank #3 (Hold),
implying that it is expected to perform in line with the broader
U.S. equity market over the next 1 to 3 months.
Meanwhile, one can consider
Ferrellgas Partners LP
EQT Midstream Partners LP
) as good buying options. The energy stocks - sporting a
Zacks Rank #1 (Strong Buy) - have solid secular growth stories
with the potential to rise significantly from the current