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Financial Times: “Royal Dutch/Shell faces a ‘high intensity conflict’ in Nigeria's Niger Delta as severe as those in Chechnya and Colombia”


Shell faces escalating violence in Nigeria


By Michael Peel in Lagos

Posted 14 June 04


Royal Dutch/Shell faces a "high intensity conflict" in Nigeria's Niger Delta as severe as those in Chechnya and Colombia, according to an internally-commissioned report.


The confidential document, which has been seen by the Financial Times, says organised large-scale oil theft from pipes and well-heads is "the most significant accelerator" of conflict.


It estimates the theft at between 100m and 250m barrels of crude a year, giving the thieves an income of between $1.5bn and $4bn. Official oil company and government estimates are generally lower.


The money has allowed community-based militias to buy thousands of weapons, including former Soviet-type small arms, rocket launchers and possibly short-range missiles.


Written by a group of external consultants, the report accuses Shell of a "quick-fix, reactive and divisive" approach to community relations and says Delta violence could force it to pull out of onshore production within five years.


The study is the latest evidence suggesting Shell's much-publicised attempts to improve its social performance and reduce conflict in Nigeria have largely failed, adding to the instability of one of the company's most important areas of operation.


The situation "not only threatens [the oil industry's] future ability to operate, but Nigerian national security".


WAC Global Services, a consultancy specialising in west African issues, was commissioned to produce the report as part of Shell's attempts to prepare a "peace and security strategy" in partnership with other interest groups in the Delta.


Nigeria accounts for about 10 per cent of Shell's annual oil output, and it plans to expand rapidly.


Staff loyalty to Shell is low, the document says. Some workers sympathise with the people of an impoverished region that has seen almost no development despite decades of oil production.


Shell refuses to publish the report. It says it disagrees with the conclusion that it could be forced to pull out of onshore production by 2008. Government and local communities must take the lead in ending the conflict, it has said, adding that it wanted to help. 

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