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Reuters: Shell Nigeria suspends restructuring for government talks

Wed 13 Feb 2008, 13:21 GMT
ABUJA (Reuters) – The Nigerian arm of Royal Dutch Shell has suspended a cost-cutting reorganisation to hold more talks with the Nigerian government which is worried about job losses, a spokeswoman said on Wednesday.

Shell, which operates three different businesses in Africa’s top oil producing country, had announced on November 13 its “One Shell” plan to combine previously separate functions including production, development and projects.

“The new leadership positions under One Shell have been announced but we have suspended further appointments until we conclude discussions with the government,” said spokeswoman Caroline Wittgen.

Shell employs roughly 6,000 people in Nigeria and a further 6,000 contractors. It has given no figure for expected job cuts but industry sources say the original restructuring plan foresaw between 1,000 and 2,000 job losses out of the total 12,000.

Shell wants to restructure and cut costs because its onshore oil production facilities in the Niger Delta have been repeatedly attacked by militants since February 2006 and it is producing significantly less oil than it used to.

After decades as the biggest producer in Nigeria, it has now been overtaken by ExxonMobil which has a higher proportion of its facilities offshore where they are less vulnerable to attack.

Shell does not confirm daily production figures, but industry sources estimate it is currently pumping between 600,000 and 700,000 barrels per day (bpd) from a peak production of about 1 million bpd in the past.

The lost production is onshore, where Shell operates a joint venture called SPDC with state-owned Nigerian National Petroleum Corporation (NNPC) and fellow majors Total and Agip.

SPDC accounts for the bulk of Shell’s staff in Nigeria. The company says 95 percent of SPDC staff are Nigerians.

Wittgen declined to comment on how many jobs would be cut but she said Shell remained committed to the policy of employing as many local staff as possible.

NNPC management have been widely quoted in Nigerian media as saying they were not properly consulted about the One Shell plan and as Shell’s partners in SPDC they wanted to have their say.

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