Friday, June 11, 2004

Violence 'May Force Shell to Quit Nigeria'

I'm not sure what to make of this FT report; on the one hand, nothing would please me more than to see the Nigerian oil wind down, as it's brought the "country" nothing but strife, and the opportunity to loot the proceeds from it is really all that is keeping Nigeria's peoples yoked uncomfortably together. On the other hand, the prospect of widespread violence in the Delta region fills me with trepidation.

Royal Dutch/Shell, the oil multinational, 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.

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 of some of the company's most promising future fields.


Shell did not agree with the authors' conclusions that it would have to withdraw in five years, but admitted conflict in the Delta had "the potential to get worse" if no action were taken. "Government and local communities must take the lead in ending conflict. But we are also determined to help."

Shell operates and has a 30 per cent shareholding in a government-controlled joint venture that accounted last year for just under half Nigeria's official production of about 2m barrels a day. The venture, which also includes France's Total and Eni of Italy, invested $2.3bn last year. Nigeria accounted for about a third of the 3.9bn barrel 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 Africa region is 2.37bn barrels, compared with a worldwide total of 14.35bn barrels. The bulk of its African reserves are in Nigeria.