The Guardian: Shell plans 20% job cuts in Nigeria
Wednesday March 17, 2004
Shell is threatening to cut 1,000 jobs in Nigeria, one of the countries at the centre of the company's "lost" reserves scandal.
The planned 20% cut in the Nigerian workforce was revealed as the oil major struggles to reach a peace formula with the government there over allegations it has unfairly exploited tax loopholes.
Sir Philip Watts, who was sacked as chairman of Shell two weeks ago, headed the group's Nigerian operation between 1991 and 1994 before moving to become chief of global exploration.
The restructuring move leaked out in Lagos where local officials from Shell Petroleum Development Company have been working on a staff audit aimed at cutting costs.
Shell head office in London insisted no final decisions had been taken on the scale of reductions and argued it was all part of normal business practices. "SPDC is undertaking studies to look at the most cost-effective way of operating. These studies are yet to be completed so it is premature to speculate on details," said a spokeswoman.
"However, it is likely that they will lead to some relocation and reduction in numbers of staff. Staff and unions are being consulted as the studies progress."
The AFX newswire quoted a spokesman for Shell's Nigerian operation in Lagos saying, in response to local media reports that the group would shed 30% of its workforce: "I think around 20% is more like it; 30% is pretty much on the high side."
Shell and other foreign operators are facing demands for hundreds of millions of dollars to be repaid to the Nigerian government over the way it used a reserves addition bonus scheme.
This was a fiscal arrangement that ran from 1991 to 2000 and offered generous incentives for companies to invest in oil and gas.
Yesterday Shell said discussions continued on a delicate issue which could cost it and other oil firms up to $600m (£330m), according to local estimates.
"Shell and other companies operating in the Niger Delta have been in discussion with the Nigerian government about reserves addition bonuses," it said. "These discussions concern the operation of the memorandum of understanding, which applied at the time. They are in no way related to the recategorisation of some proved reserves by the group, either as a cause or an effect."
As for the cuts in reserve estimates, Shell said it had provided the Nigerian authorities with an explanation of the group's recategorisation and assured them it would not affect the national figures.
"The Nigerian authorities presently appear to be satisfied with Shell's explanations," added the spokeswoman, who denied there was any link between this and the reserves downgrade.
Job cuts in Nigeria could be an explosive issue because the unions are well organised and highly politicised.