Vanguard (Nigeria): Shell staff, contractors apprehensive over cost-cutting measures

By Hector Igbikiowubo
Tuesday, June 19, 2007

STAFF and contractors of Shell Companies in Nigeria are apprehensive over their fate as the company commences the implementation of cost cutting measures to its  operations, to combat rising cost and falling oil revenues caused by production shut-ins.

Some staff and contractors who spoke on the basis of anonymity hinted that their fate currently hangs in a balance, adding that they were not aware of the extent of  the planned cost cutting measures.

A spokesman of the Royal Dutch Shell in The Netherlands said last Sunday the company has started implementing a number of cost cuts to its operations in Nigeria,  which are likely to include job cuts, to combat rising costs and falling oil revenues.

He pointed out that the changes which were underway, follow an internal announcement May 30 in which the company told its roughly 4,500 Nigerian employees that  it would implement a “series of measures” to cut cost and boost productivity.

However, when contacted for further clarifications, Mrs. Diezani Allison-Madueke, Shell Petroleum Development Company (SPDC) External Relations Director said  she was not aware of any such measures.

“These are internal affairs and I am not in a position to start discussing such matters publicly,” she said.
One of the staff of the company however noted that considering the volume of shut in output Shell has been made to put up with, it was inevitable that measures had  to be put in place to mitigate the loss.

“Personally, I am surprised it took this long for the company to come up with these measures. I just hope that the staff affected by these measures would be given due  consideration when the situation in the delta returns to normal,” he said.

The contractors who spoke with the Vanguard appeared embittered by the development, noting that most of them have been forced to incur debilitating cost  considerations owing to the development in the delta.

“It is sad that it has come to this. Who knows how long the situation there would take to resolve. It is indeed a peculiar situation. One would have expected that such  a situation would only happen in a state of warfare.

However, here we are, there is no war. Yet! We are in a state of war. Nothing underscores the failure of the Olusegun Obasanjo administration like the situation in  the delta. I just hope it is resolved soon enough. Please I do not want my name in print,” the contractor pleaded.   
 
The cost cutting measures amount to “an austerity program for three years,” the company said in the announcement, which wasn’t made public but was made  available to Dow Jones Newswires.

“The measures will demand significant step change in performance at personal and organizational levels as well as focus on how to reduce costs,” the company said at  the time.

The announcement didn’t indicate what cost savings Shell hoped to strip out of its Nigerian operations.

Shell remains the biggest western oil company in Nigeria, Africa’s largest oil producer, through its 27 per cent stake in a joint venture under the auspices of the Shell  Petroleum Development Company.

The spokesman in The Netherland declined to comment on what exact measures the cost-cutting programme entailed, however, staff expect that several hundred job  cuts are in the offing. Efforts to get the external relations department of the company to elucidate on the proposed cost cutting measures has so far proved abortive.

In the last eighteen months, Shell has been worst hit by militant attacks on oil installations in Nigeria and this has cost it and the Nigerian government several billion  dollars in oil revenues. Meanwhile, about 745,000 barrels a day of oil remains shut in with the Shell operated joint venture accounting for over 500,000 per day since  February 2006.

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