Thursday January 31 2008
Shell has started to “streamline” its operations in the Delta region of Nigeria in what appears to be a final realisation that it is fighting a losing battle against militants in the region.
The company announced today it had taken a $716m (£359m) 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 Delta, Shell has previously played down the scale of the difficulties it was having there.
But today, 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 had to face,” he explained adding: “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 both funding and security issues. He declined to comment on speculation that the authorities there 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.