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Mlive:com: Nigerian labor groups say Shell faces showdown over restructuring plans



The Associated Press

3/23/04 1:12 PM


LAGOS, Nigeria (AP) -- Labor unions warned Tuesday that oil giant Royal Dutch/Shell faces a "showdown" in Nigeria over plans to cut jobs and trim production costs while boosting production by half a million barrels a day.


In a joint statement, the West African nation's two major oil unions warned Shell to brace "for the effects of the inevitable showdown which will be unleashed on the country" if any of Shell's Nigerian staff lose their jobs as planned.


The groups accused Shell Nigeria's managing director, Chris Finlayson, of planning to fire Nigerian staff and replace them with expatriates.


"Much as we have nothing against the expatriates securing their future, we as Nigerians will also take steps to secure our future," said the statement from the blue-collar National Union of Petroleum and the white-collar Natural Gas Workers and the Natural Gas Senior Staff Association of Nigeria.


Shell spokesmen in London and Lagos declined to respond to the labor statement.


Shell pumps about half of all oil produced in Nigeria, which is the source of one-fifth of U.S. oil imports.


A Shell official in Nigeria, speaking on condition of anonymity, said Tuesday the company was conducting an "internal review" to finalize the number of layoffs. Officials earlier said about 1,500 would lose their jobs, or about 30 percent of its 5,000-strong work force in Nigeria.


A spokesman for Nigeria's Department of Petroleum Resources, also speaking on condition of anonymity, said Shell had not officially informed the government of its plans. Once it does, officials will conduct a review to decide whether the layoffs are legal, the official said.


Although the groups did not elaborate on what actions they will take, Shell's restructuring propositions have already resulted in strife.


Last September when the plans first surfaced, police fired tear gas to disperse disgruntled union employees picketing Shell's Lagos headquarters during a 10-day strike to demand job security.


The reorganization is part of an effort to raise Shell's oil production from about 1 million barrels to 1.5 million barrels daily by 2006.


The company also aims to reduce oil production costs from $2 a barrel -- already among the cheapest in the world -- to $1.50, according to the company's Monday statement.


Under the reorganization plans, Shell will relocate its Nigerian headquarters from the commercial hub of Lagos to the southeastern oil industry capital of Port Harcourt.


The disclosure of streamlining plans in Nigeria come as Shell tries to contain the fallout from recent reductions in its estimates of proved global reserves of oil and natural gas.


Shell reduced its estimate of reserves in Nigeria by 1.3 billion barrels in January, as part of a larger reclassification of 3.9 billion barrels in worldwide reserves. The company announced an additional cut to its global reserves on Thursday.


The January reductions caused a shareholder uproar that led to the resignations of chairman Sir Philip Watts and its head of exploration and production.


Shell also faces a U.S. Securities and Exchange Commission investigation into its accounting for its reserves. The company has postponed its annual report to give independent auditors time to review the reserves.


Reserves constitute an energy company's most valuable asset, and any reclassification of reserves into less certain categories is a major concern for investors.

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