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AFP: Nigeria orders Shell to stop restructuring amid job loss fears

12 February 2008

LAGOS (AFP) — The Nigerian state-run oil company NNPC has ordered the Anglo-Dutch oil group Shell to suspend its restructuring amid fears it could lead to job losses, officials said Tuesday.

Senior Nigerian industry officials quoted Nigerian National Petroleum Corporation boss Abubakar Yar’Adua as telling a parliamentary hearing on Monday that the NNPC, with which Shell had a joint venture partnership, was not consulted before Shell went ahead with the exercise.

“There are issues involved and must be resolved before anything,” Yar’Adua said, but added that the NNPC appreciated the challenges facing Shell with production cut because of unrest in the Niger Delta.

Shell director Mutiu Sunmonu told the hearing the restructuring would have saved the company some 200 million dollars if allowed to go through, according to the NNPC officials.

He said Shell took the decision to ensure “the future and survival of its business operations” in the oil-rich west African country.

He said a combination of factors, including the unrest in the Niger Delta, had led to a cut in Shell’s daily production in recent months.

Shell is Nigeria’s largest operator, accounting for around half of the country’s daily output of 2.6 million barrels at peak production, but the unrest in the restive Niger Delta has reduced the firm’s production by some 500,000 bpd.

The company had said in a statement last November it was restructuring its Nigerian operation to promote efficiency, productivity and cut costs.

It said subsidiaries like Shell Production and Development Company, Shell exploration and Production Africa and Shell Nigeria Exploration and Production Company had been merged into one.

“The One Shell project seeks to eliminate duplication of the activities of its subsidiaries,” Shell said.

Managing director Basil Omiyi said apart from the support services that would be shared among the three subsidiaries, there would be one umbrella organisation for production, development and projects.

“We are operating in an extremely difficult environment where levels of production have been severely curtailed by the security situation for some time,” he said.

“Under these circumstances, we must take action in order to reduce costs, increase efficiencies and maintain a robust upstream business in the interests of both Shell, our partners and Nigeria in general,” he added.

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