Nigerian State Oil Company to Take Shell License (Update1) 

By Julie Ziegler

June 12 (Bloomberg) — Nigerian National Petroleum Corp., the state oil company, will take over operations in the Ogoni district of southern Nigeria from a Royal Dutch Shell Plc joint venture in an effort to revive oil production, the country’s president said.

The removal of Shell will “calm down” unrest by local residents of Ogoniland, Nigeria President Umaru Yar’Adua said in a statement today following his talks with French President Nicolas Sarkozy in Paris. Yar’Adua had said June 4 that it would appoint another operator for Ogoni oil operations, without specifying.

Militant violence has shut about 20 percent of Nigeria’s oil production since early 2006, and recent attacks on pipelines have allowed Angola to surpass the country as Africa’s biggest oil producer. Nigeria is also renegotiating decades-old production agreements with foreign companies to garner a larger share of the wealth created by record oil prices.

The move would also help boost Nigeria’s domestic output. NNPC’s production unit has only managed to pump about 70,000 barrels a day in its 30 years of existence, compared with a company such as Addax Petroleum Corp., which is now producing more than 100,000 barrels a day in Nigeria after operating there less than a decade.

Avoid Politics

Antony Goldman, a UK-based independent analyst specializing in Nigeria, said giving the license to NNPC might be the most expedient strategy, because it would avoid politics in the Niger Delta over who deserves to be awarded the oil block.

“It would be the quickest way of getting the fields back in production,” Goldman said in an interview. “It’s simpler than farming it out.” Still, he questioned NNPC’s ability to act as an operator.

Shell spokesman Tony Okonedo declined to comment. The company has shipped oil from Nigeria for more than 50 years.

Shell hasn’t produced oil in Ogoniland since 1993 following protests by local people demanding a greater share of oil wealth and company action to clean up oil pollution. Movement for the Survival of the Ogoni People leader Ken Saro-Wiwa, who led the protests, was hanged in 1995 as part of a response by then- military government of General Sani Abacha.

Shell was forced to shut Bomu and other oilfields pumping about 28,000 barrels a day. Access to repair pipelines and installations there has frequently been denied by locals still angry over Saro-Wiwa’s death. The company denied any role.

To contact the reporter on this story: Julie Ziegler in Lagos at[email protected]

Last Updated: June 12, 2008 14:33 EDT

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