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Cables Paint Shell as Dismissive of Nigeria

By JAMES HERRON in London and WILL CONNORS in Lagos, Nigeria

Royal Dutch Shell PLC feared it could lose the bulk of its oil-license acreage in Nigeria after the country’s new Petroleum Industry Bill is passed, according to one in a series of diplomatic cables that offer glimpses into the intersection between business and politics in Africa’s biggest oil producer.

“The PIB will redefine how a company can hold on to its exploration and production blocks, limiting what can be kept to two kilometers around each well,” said the cable from the U.S. Embassy in Nigeria to government officials in Washington. The message followed an Oct. 13, 2009, meeting between Dundas McCullough, the U.S. deputy chief of mission in Abuja, Nigeria, and Ann Pickard (right), who then was Shell’s vice president for sub-Saharan Africa. “We could lose 80% of our acreage” under rules that would redistribute undrilled areas, she was quoted as saying.

The cables, secret U.S.-government correspondence published by WikiLeaks, paint Shell officials as dismissive of Nigerian officials and nervous about pending changes in the nation’s oil industry. Nigeria has been a cornerstone of Shell’s operations for decades. The nation accounted for around a fifth of the company’s oil production last year. Output has increased this year as militant attacks on oil facilities have decreased.

To keep tabs on a Nigerian government that Shell considered inept and increasingly more willing to deal with China and Russia, the company placed persons in “all relevant [Nigerian] ministries,” according to an Oct. 20, 2009, cable.

In that message, Ms. Pickard told former U.S. Ambassador to Nigeria Robin Renee Sanders that data belonging to Shell had been sent by Nigerian government officials to China and Russia. But, she added, the Nigerian government “had forgotten that Shell had seconded people to all the relevant ministries and that Shell consequently had access to everything that was being done in those ministries.”

Ms. Pickard said a conversation between herself and a Nigerian official had been secretly recorded by the Russians, and she asked Embassy officials to share intelligence on Russia’s plans for Nigeria, according to the cable.

“We cannot comment on the alleged contents of the cable, including the correctness or incorrectness of any statements it allegedly contains,” a company spokesman said. The company said, however, that it is “absolutely untrue” that Shell infiltrated every Nigerian ministry affecting the company’s operations in the country. Ms. Pickard, who in March became Shell’s executive vice president for exploration-and-production operations in Australia, didn’t respond to a request for comment.

A Nigerian government spokesman didn’t respond to requests for comment.

A U.S. Embassy official in Nigeria declined to comment.

The Petroleum Industry Bill has become a hot-button topic because multinational corporations fear it will reshape the industry by raising their royalty and tax payments on existing deals and possibly repossess long-dormant oil fields.

At a meeting in Lagos this February with U.S. Assistant Secretary of State for African Affairs Johnnie Carson, several oil-company executives criticized the PIB, according to another cable published by Wikileaks.

Peter Robinson, a Shell vice president for Africa, told Mr. Carson that the Nigerian authorities don’t understand the oil industry. “Amateur technocrats run the oil and gas sector,” the cable quotes Mr. Robinson. “They believe that they can control the industry via spreadsheets and pushing through the PIB.”

Several drafts of the PIB exist. An aide to Nigeria’s president has said he hoped the law would pass by year-end.

Write to James Herron at [email protected]

Ann Pickard photograph: Bloomberg News

WSJ ARTICLE DECEMBER 9, 2010 and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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