The Financial Times: Shell plans to squeeze more from Nigerian operations
By Astrid Wendlandt and Rebecca Bream in London
Published: March 22 2004 4:00 | Last Updated: March 22 2004 4:00
Royal Dutch/Shell yesterday said it would streamline its operations in Nigeria, cutting jobs and boosting production from about 1m barrels a day to 1.5m barrels by 2006.
When Shell made the first of its controversial cuts in declared oil reserves - in January, by 3.9bn barrels - it said a delay in investment in Nigeria was responsible for 1.3bn barrels of that total.
The company said the move would help lower the cost of producing crude oil to $1.50 a barrel from about $2 a barrel.
It also plans to scale back its activities in the troubled oil-port city of Warri, where more than 200 people have been killed in the past year as rival ethnic militias fought over benefits from oil operations in the area.
Today one of Britain's most powerful shareholder groups will grill Royal Dutch/Shell's directors about the true level of the oil company's reserves.
The Association of British Insurers, which represents some of the country's largest investment companies, is expected to meet several non-executive directors from Shell's UK arm, including Lord Oxburgh, its newly appointed chairman.
The group cut its reserves last week for the second time in three months, fuelling fears that more could follow, and has been forced to delay publication of its annual report and accounts by two months pending a full audit of its reserves by Ryder Scott, the consultancy.
The oil group is not ruling out more downgrades.
Earlier this month, the board asked Sir Philip Watts, chairman, and Walter van de Vijver, head of exploration and production, to resign after it was no longer able to say the erroneous bookings had been made "in good faith".
The ABI, along with other shareholders, is concerned about corporate governance at Shell. It said yesterday: "We are in a dialogue with Shell."
Shell is under investigation by the US Securities and Exchange Commission, the US Justice Department and regulators in the UK and the Netherlands.
Several current and former directors could be facing a series of class-action suits from the US.
Shell yesterday denied reports that auditor KPMG had refused to sign off its accounts, which were due to be published last Friday, because of concerns over inaccurate information.