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Shell delays target to end gas flaring in Nigeria by a year

THE TIMES (UK): Shell delays target to end gas flaring in Nigeria by a year

28 May 2005

By Carl Mortished, International Business Editor

SHELL has risked the ire of the environmental lobby by delaying its target date for the end of gas flaring in Nigeria by a year to 2009.

The oil company blames a failure to invest by its state partner, Nigerian National Petroleum Corporation, for the delay in cutting out the wasteful flaring of gas from more than 1,000 wells in the Niger Delta.

The practice has been a blot on Shell’s copybook in Nigeria and the conflagration, visible on satellite images, is a big source of greenhouse gases.

Shell’s annual social and environmental review, published yesterday, also showed that Shell dismissed 203 staff and contractors for bribery and corruption. A company survey last year indicated that 5 per cent of staff believe that their part of the organisation still tolerates bribery and facilitation payments, prohibited under the company’s business principles.

Shell undertook nine years ago to end the practice of burning gas produced from its oil wells by 2008. It invested billions of dollars to develop Nigeria Liquefied Natural Gas, a separate joint venture that exports deep-chilled gas by ship to Europe and the United States. Last year, SPDC, the company’s Nigerian joint venture was collecting a third of the available gas after an investment of $2 billion (£1.09 billion). A further $1.85 billion needs to be spent to complete the job.

Basil Omiyi, managing director of SPDC, said he now expects flaring to cease in 2009 and wells that cannot be hooked up to gas infrastructure will be shut. He said: “The effort is behind schedule because of past under-funding by our government partner and delays by SPDC in implementing projects.” Underfunding and cash investment shortfalls by the state partner has been a continuing problem for oil companies operating in Nigeria NNPC struggles every year for funds to reinvest in the business and meet its 55 per cent share of the SPDC budget. The budget is cut every year by the government, and since 1996, the state has sliced some $4 billion from SPDC’s budgets and this year it has cut spending by $400 million to $2.6 billion.

Shell uncovered 16 cases of bribery last year, up from 8 the previous year and 64 contracts were cancelled, up from 49.

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