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The New York Times: Nigeria Threatens to Halt Shell Production




Published: March 26, 2004

Filed at 12:52 p.m. ET


WARRI, Nigeria (AP) -- Senior officials in Nigeria's oil-rich Delta state warned multinational Royal Dutch/Shell on Friday it would force the company to shut production there if the company goes ahead with plans to close offices and cut jobs in the state.


On Monday, Shell announced plans to reorganize its Nigeria operations in an effort to raise 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.


Under the reorganization plans, according to some company officials, Shell will relocate its Nigerian headquarters from the commercial hub of Lagos to the southeastern oil industry capital of Port Harcourt and scale down operations in the Delta state oil port of Warri.


``I can't see anybody in Delta who would like to see Shell close its offices here and continue exploiting our oil. They might as well say bye-bye to Delta state,'' said Abel Oshevire, spokesman for state Gov. James Ibori.


``We believe Shell and the other oil companies are part of the problem that we are facing here. They are dividing the community and continuing to exploit oil,'' Oshevire added.


He did not elaborate and Shell spokesmen in London and Lagos were not immediately available for comment.


Labor unions and ethnic militant groups earlier this week threatened to use force to shut down Shell's oil production if job cuts go ahead as planned.


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.


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 disclosure of streamlining plans in Nigeria come as Shell tries to contain the fallout from recent reductions in its estimates of proven 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, causing 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.


U.S.-traded shares of Royal Dutch Petroleum rose 23 cents to $46.36 in afternoon trading Friday on the New York Stock Exchange, where shares of Shell Transport & Trading Co. gained 24 cents to $39.74. 

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