Shell reduces operation in N/Delta

01.02.2008

Shell Petroleum Development Company (SPDC) has started to ‘streamline’ its operations in the Niger Delta region.

The company announced on Thursday that it had taken a $716 million charge in its fourth quarter accounts to pay for the cost of restructuring the business in the light of security and funding problems there.

Nigeria has always been a controversial part of Shell’s business with much criticism from campaigners worried about both human rights and environmental problems in the area.

Despite mounting attacks on its installations by militants in the Niger Delta, Shell had previously played down the scale of the difficulties it was having there.

But on Thursday, at a financial results conference, Jeroen van der Veer, the Shell chief executive, made clear he was facing twin threats to the business and was reducing the scale of the operation.

“We have taken measures to streamline our operations taking into account the difficult circumstances we face,” he explained, adding: “the Nigerian government is slow in funding its share of the costs (of new developments).”

Van der Veer said he held talks with President Umaru Yar’Adua last week to discuss both funding and security issues. He declined to comment on speculation that the authorities are pressurising Shell to hand over a bigger equity stake in the business.

The Dutch oil group has already been forced to hand over a large stake in its Sakhalin scheme in Russia and Kashagan scheme in Kazakhstan.