Shell says end to Nigerian rift is near
Royal Dutch Shell has said it is close to resolving a dispute over funding the group’s Nigerian joint venture, Shell Petroleum Development Company (SPDC). Nigeria has already reached agreement with two of its five other joint venture partners in the Niger Delta – Total of France and ExxonMobil of the US – to try to end a cash crisis that has cut production from the world’s eighth-biggest oil exporter.
Separately, the oil giant said yesterday that it has managed to restore some production from the Delta after repairs to parts of its Bonny light crude facility after rebel attacks.
The news, which came as oil prices touched a record $132.07 a barrel yesterday, helped to lift Shell’s share price by more than 4 per cent to £22.12, just 6p shy of its high set in 2001.
SPDC is 55 per cent-owned by the state oil producer, Nigerian National Petroleum Corporation (NNPC), and 30 per cent by Shell, with the remainder owned by Agip and a subsidiary of Total. Under terms of the deals struck so far, Total and Exxon have agreed to provide loans to NNPC to help to fund the joint ventures.
A similar deal to restore adequate funding of SPDC would help to boost production. SPDC employs 4,500 people operating 90 oilfields and 1,000 producing wells. It is capable of producing a million barrels per day, but in 2007 produced on average 700,000.
President Umaru Yar’Adua has been keen to plug the funding shortfall in Nigeria’s oil sector. Nevertheless, a deal is likely to represent only a short-term solution to the problems faced by Shell in Nigeria.
On Tuesday, the Government said it is seeking $850million (£431million) from Shell, which it claims is owed under the terms of a production- sharing contract for the Bonga offshore field, which opened in 2005.
NNPC and the Government are also seeking $414.6million they claim is owed from revenues related to the field. A Shell spokesman said this was a separate issue and that further talks were under way to resolve the dispute.
http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article3981242.ece
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