Shell has started to "streamline" its operations in the delta region of Nigeria as it appears to have accepted that it is fighting a losing battle against armed militants - and the government.The company announced yesterday that it had taken a £359m charge in its fourth-quarter accounts to pay for the cost of restructuring the business in the light of a deteriorating security situation and a problem getting its state partners to properly fund projects.
Nigeria has always been controversial for Shell, with criticism from campaigners worried about human rights and environmental problems. Despite militant attacks on its installations in the delta, Shell has previously played down the scale of the difficulties although a third of its production is shut.
But at the annual results conference, Jeroen van der Veer, chief executive, accepted the company was facing "very serious difficulties" and was reducing its financial exposure to Nigeria.
"We have taken measures to streamline our operations taking into account the difficult circumstances we had to face," he explained. "The Nigerian government is slow funding their share of the costs of new developments." Van der Veer said he had held face-to-face talks with the Nigerian president last week to discuss funding and security issues. He declined to comment on speculation that the authorities are putting pressure on Shell to hand over a bigger equity stake in the business.
The oil group has already been forced to hand over a larger stake in its Sakhalin scheme in Russia and Kashagan project in Kazakhstan to local state-owned entities as part of a rising trend towards "resource nationalism".
Van der Veer said Shell remained committed to Nigeria, where it has had a presence for 50 years, and was unwilling to say how many jobs or offices were being cut. He stressed that the offshore and liquefied natural gas sides of the business were progressing well.
Nigeria has made money for Shell but it has also brought it a lot of criticism since the company was embroiled in the controversy surrounding the hanging of the poet and oil company critic Ken Saro-Wiwa. Shell has also been attacked by green groups over the use of "flaring" in Nigeria where gas is burned off, causing carbon emissions. Several deadlines for halting the practice have passed with Shell complaining that the work has been delayed because of violence and a lack of government funding.
Nigeria has made money for Shell but it has also brought it a lot of criticism since the company was embroiled in the controversy surrounding the hanging of the poet and oil company critic Ken Saro-Wiwa. Shell has also been attacked by green groups over the use of "flaring" in Nigeria where gas is burned off, causing carbon emissions. Several deadlines for halting the practice have passed with Shell complaining that the work has been delayed because of violence and a lack of government funding.
Source: The Guardian
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