The Guardian: Shell to cut Nigerian jobs
Monday March 22, 2004
Shell, which is mired in controversy over "lost" barrels of oil, announced in the early hours of this morning a "strategic transformation" of its Nigerian unit involving job cuts and rapid growth in oil output.
The company has been in crisis mode since admitting in January that it did not have 4bn barrels of oil that had been previously stated in its reserves, in countries including Nigeria.
The announcement said that Shell would cut production costs in Nigeria to $1.50 a barrel by 2006 from their current level of about $2.40. It would also increase production to 1.5m barrels per day by 2006, an increase of 400,000 a day on current levels. A Shell spokesman would not confirm reports that 1,000 employees, or 20% of its Nigerian workforce, would lose their jobs as a result of the plan.
The news comes after another bad few days for Shell. Yesterday it denied that its auditors refused to sign off on its accounts.
Last week it was forced to delay the publication of its annual report and its annual meeting as it revealed more holes in its reserves.
But reports yesterday that KPMG and Pricewaterhouse- Coopers, the joint auditors for the firm, had refused to sign off on last year's accounts due to concerns over the quality of information, were denied by the firm. Instead Shell blamed the delay in publication of its audited accounts on the lateness of information about its oil reserves. "The accounts were not presented to the auditors because of the delay with respect to the reserves data," a spokesman said.
"The decision was made by the board not to publish the accounts pending much greater clarity on the reserves situation, with the completion of the reserves review."
In January the loss of the nearly 4bn barrels, which was about 20% of the group's total oil reserves, led to a fall in the share price and an investor backlash. Sir Philip Watts, the firm's former chairman, was ousted earlier this month. But his replacement, Jeroen van der Veer, is also under scrutiny for his role in the debacle.
There are likely to be more fireworks today when institutional investors meet senior executives at the Anglo-Dutch oil group. The Association of British Insurers are to demand far-reaching changes in Shell's corporate structure, including a new independent chairman.