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 Daily
Independent Online.
* Monday,June 14, 2004.
Shell may quit Nigeria in 2008 over
violence
By Charles
Okonji
Snr Business Correspondent, Lagos
Royal Dutch/Shell, the oil multi-national, could be
forced to pull out of onshore production in Nigeria by 2008 because of
violence in the oil-producing Niger Delta region, according to a
confidential report commissioned by the company.
Shell operations in Nigeria comprise Shell
Petroleum Development Company of Nigeria Limited (SPDC), Shell Nigeria
Exploration and Production Company (SNEPCO), Shell Nigeria Gas (SNG) and
Shell Petroleum Products.
The company may, however, still maintain its deep
offshore bloc, the Bonga field, which is the largest deep offshore bloc
in the country capable of producing about 250,000 barrels per day.
The report, by a group of outside
consultants, said Shell had fuelled conflict through its policies on
community relations, access to land and contract awards.
Nigeria is one of Shell's most important
countries of operation, accounting for about 10 per cent of worldwide
production, as well as some of the company's most promising future fields.
The report, which Shell has declined to
publish in full, was commissioned as part of its work to help develop a
peace and security strategy with other interest groups in the Niger Delta.
Shell did not agree with the
authors' conclusions that it would have to withdraw in five years, but
admitted conflict in the region had "the potential to get
worse" if no actions were taken. "Government and local
communities must take the lead in ending conflict. But we are also
determined to help," it said.
Shell operates and has a 30 per cent
shareholding in a government-controlled joint venture that accounted last
year for just under half of Nigeria's official production of about two
million barrels a day. The venture, which also includes France's Total
and Eni of Italy, invested $2.3 billion last year. Nigeria accounted for
about a third of the 3.9 billion barrels cut in global proved reserves
made by Shell this year.
Shell does not split out the figure for
its proved reserves in Nigeria but the total for the African region is
2.37 billion barrels, compared with a worldwide total of 14.35 billion
barrels. The bulk of its African reserves is in Nigeria.
Oil companies' operations in the
Niger Delta are frequently
disrupted by theft, militias and local protests against the
multi-nationals and government’s failure to deliver infrastructural
facilities after over 40 years of production.
In its annual People and the
Environment report released at the weekend, Shell said it lost nine
million barrels of oil to theft last year and had forgone 43 million
barrels after violence in the western Delta forced it to shut swamp
facilities. A Nigerian rights activist and co-author of a highly critical
book about Shell, Where Vultures Feast, Mr. Oronto Douglas, said
it had been the "key architect" of the Niger Delta crisis over
the past two decades. "They will either change totally, or be
consumed”, he predicted.
Shell has a target to increase
joint-venture production to 1.5 million barrels a day by 2006. It is
increasingly looking to develop economically attractive deep offshore
fields, away from the Niger Delta's problems. The deep offshore projects
are expected to bring production increases of 200,000 barrels a day by
2006.
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