They pumped an unprecedented £17.5bn into funds in an attempt to ensure that they can finance payouts to employees after they retire.

The drive by companies to shore up their final salary schemes – combined with last year’s strong rise in share prices – meant that by the end of 2009, the total deficits of FTSE-100 companies’ pension funds had almost halved to £51bn, according to a study by actuaries LCP. A year earlier, the gap was £96bn.

The figures are based on pension fund liabilities given in balance sheets; the gap measured by pension trustees may be far higher.

Oil giant Royal Dutch Shell was the biggest individual contributor to its schemes, almost quadrupling payments to £3.3bn.

Lloyds Banking group, Royal Bank of Scotland and Unilever also paid more than £1bn each into their final salary or ‘defined benefit’ pension schemes.

Several high-profile companies are using assets other than cash to bolster their pension funds. Diageo has put whisky stocks into its schemes. Tesco, Sainsbury and Whitbread have all used property.

And there were eight companies which paid more into their pension schemes than they handed out to shareholders in dividends: BAE Systems, British Airways, Invensys, Lloyds, Morrisons, Rolls-Royce, Serco and Wolseley.

Many companies have changed the terms of their pension schemes in order to try to cut the amount they have to contribute. In 2009 alone, nearly a quarter of FTSE-100 firms announced changes to their final salary pension schemes.

The Government has recently announced that increases in pensions after retirement should rise in line with the consumer prices index (CPI) rather than retail prices index (RPI).

In most years, CPI rises more slowly than RPI, so annual increases in pensions will be lower than they would have been.

The shift will hit pensioners. But companies will gain, as their funds’ liabilities for future payouts will be smaller. LCP estimates that changing the index for pension increases could have reduced the total funding gap for all FTSE 100 companies by as much as £30bn if the new method had been adopted this year.

• Illegal refineries distill diesel from crude oil by heating over naked flames
• Worker: “I cannot count the number of people who have died in explosions”
• Nigeria is major oil exporter, but most in Niger Delta live on less than $2 a day
• Shell managing director estimates around 100,000 barrels stolen a day

Niger Delta, Nigeria (CNN) — The young man, his body glistening with black oil and sweat, poured more oil onto the fire. The flames roared, heating two barrels of oil to explosive temperatures. He escaped to a safer distance, a slight smile breaking his grim face ­– he had survived.

“This job is very dangerous,” he explains, asking to remain anonymous. “The smoke, the heat ­– I cannot count the number of people who have died in explosions because they cannot escape the flames.”

He is risking his life trying to refine diesel from oil in the swamps of Nigeria’s oil-rich Niger Delta.

The contraption looks like a crude school science project. The aim is to boil two barrels of oil to evaporate the diesel which then passes down a rusted pipe, cooled by water, and drips slowly out into a container at the other end.

Heating oil to such temperatures with such basic equipment is dangerous. Having the distilled diesel only a few meters from a naked flame can be lethal. The surrounding trees and earth are blackened from the flames and explosions.

The four young men working the illegal refineries stand a respectable distance from the flames until it is their turn to pour more oil on the fire.

Nigeria is the fifth-largest oil exporter to the U.S. but little money from the country’s oil industry has been invested in its main oil-producing region — the Niger Delta.

Taken out over the region in a Shell helicopter, the illegal oil-refining sites look like small pockets of hell -­ scorched earth with great flames leaping up from small dark craters.

From the air, Shell facilities that have been attacked and the subsequent oil spills can be seen.

The oil companies, the government and the communities below are locked in a battle of blame over who is responsible for the cycle of violence.

Meanwhile, the region is being plundered. There is little development and the majority of people live on less that $2 a day, despite the region’s vast oil wealth.

And at the heart of the problem is corruption –­ billions of dollars worth of oil are being stolen in a massive illegal business known as “oil bunkering.”

“I would put the figure at about 100,000 barrels a day,” explains Mutiu Sunmonu, the Managing Director of Shell. “Some of it is stolen in tankers.”

Sold abroad for a price of $60 a barrel, 100,000 barrels would be worth more than $2 billion a year. On Monday, the crude oil futures market surged past $80 a barrel to its highest levels in three months.

No-one has been prosecuted but reports accuse local politicians and the military of heavy involvement.

The young men at the illegal refineries however collect their oil in dugout canoes, not tankers. They are not the major players. And they say they are tired of receiving all the blame and none of the money from Nigeria’s oil industry.

But when I asked if he saw a way out he simply shook his head. Then he turned and ran to put more oil on the fire before it died out.

SOURCE CNN ARTICLE WITH VIDEO PRESENTATION & PHOTO GALLERY

* Biggest shareholders approached on possible takeover -report

* Nexus said no takeover approach received

* Shares trim gains after jumping 30 pct to 9-mth high

* Stock’s volume on Tuesday exceeds 90-day avg by 12 times

By Fayen Wong

PERTH, Aug 3 (Reuters) – Shares of Australian oil and gas company Nexus Energy (NXS.AX: Quote) surged as much as 30 percent on Tuesday on speculation Royal Dutch Shell (RDSa.L: Quote) was lining up an A$480 million ($438 million) takeover offer to secure gas supplies for its flagship floating LNG project.

Nexus shares later cut their gains after the firm denied that it had received any approaches. Shell declined to comment on market speculation, but said gas from the Crux field owned by Nexus was an “integral part” of its Prelude floating Liquefied Natual Gas (LNG) project in western Australia.

The Australian newspaper reported that some of Nexus’ top shareholders had been sounded out about a possible 50 cents per share bid, stoking speculation that Shell may be interested in making an offer for Nexus.

The largest shareholder of Nexus is Viking Shipping Ltd which owns 7.2 percent of the stock. U.K. fund manager M&G Investment Management holds 6.25 percent of Nexus, while Nexus’ non-executive director Symon Drake-Brockman owns 4.9 percent.

“Nexus advises that it has not been approached by any party, nor is in discussions with any parties in respect of a takeover of the company,” it said in a statement to the stock exchange.

Shares of Nexus, led by former Queensland Gas Co. boss Richard Cottee, jumped to a nine-month high of A$0.395 before falling back to close up 23 percent at A$0.375. The broader market ended up 0.7 percent.

Nexus’s traded volume on Tuesday was 78.6 millon shares, more than 12 times the 90-day average. Nexus shares have surged 43 percent in July, with most of the gains chalked up over the past two weeks.

NATURAL SUITOR

Analysts said Shell was a natural suitor for Nexus, since a full ownership of the Crux field would add strategic value and synergies to its own Prelude project, which Shell is eager to develop as the world’s first floating LNG processing facility.

“It is certainly a possibility. Shell may decide it’s better to takeover Nexus and own all of Crux resources than risk Nexus bringing on another party to the project which could complicate matters,” said John Young, an energy analyst at Wilson HTM.

Nexus owns an 85 percent stake in the Crux field off Western Australia which contains 75.2 million barrels of condensate and 2 trillion cubic feet (tcf) of gas — a mid-sized gas resource that is considered uneconomical to support a stand alone LNG project.

It plans to extract only the condensate for sale and inked a $40 million deal with Shell in 2007 which allows the energy major to take over ownership of the permit from 2021 and extract the gas and any remaining condensate from the field.

“At the moment, Nexus is also one of the cheapest companies in the mid-cap space in Australia’s oil and gas sector. So Shell could potentially gain access to high-value resources at a very reasonable price,” Wilson HTM’s Young said.

Nexus also owns the Eucucha Shoals gas field in western Australia that contains between 2-4 tcf of gas and is located in close proximity to Shell’s planned Prelude project.

The firm has been trying to sell up to 30 percent of Crux for the past year, after Japanese group Mitsui Corp (8031.T: Quote) walked away from a planned purchase of a 25 percent stake in Crux for $255 million in Oct. 2009 — raising doubts on Nexus’ ability to fund the estimated A$1 billion project, in which Japan’s Osaka Gas (9532.T: Quote) holds a 15 percent stake.

Nexus, once a rising star among the juniors in Australian oil and gas sector, has seen its share price languish because of its mounting debt, production trouble at its Longtom gas project and the failure to find a partner for Crux despite a sale process headed by Deutsche Bank. ($1=1.096 Australian Dollar) (Additional reporting by Sonali Paul in MELBOURNE; Editing by Ed Davies and Muralikumar Anantharaman)