Shell to cut Nigerian jobs in bid to boost profits, oil production

Monday, March 22nd 2004, 12:00 am

By: News On 6

LAGOS, Nigeria (AP) _ Oil giant Royal Dutch/Shell said Monday it plans to streamline its operations in this West African nation, cutting jobs even as its tries to boost oil production by half a million barrels a day.

Rival ethnic groups in the oil rich Niger Delta _ where the bulk of Shell's oil is drilled _ responded by threatening to force Shell to close oil production facilities if any of their people lose jobs.

Since last year, the militants have captured dozens of multinational oil facilities, forcing the closure of sites producing hundreds of thousands of barrels of crude oil daily.

Shell said it will close some of its Nigerian offices and create ``a single corporate center,'' running a leaner and more efficient organization in the country, the company said in a statement.

Shell Nigeria's managing director, Chris Finlayson, said the reorganization's aim was to raise Shell's oil production from about 1 million barrels to 1.5 million barrels daily by 2006.

Shell expects the move will help lower the cost of producing crude oil to $1.50 a barrel from about $2 a barrel, the statement said.

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

Crude oil sells for over $30 a barrel on the world market. Under joint venture agreements between multinationals and Nigeria's government, the state receives more than 50 percent of profits.

Finlayson said it was ``premature to speculate on details'' of the reorganization, but a senior company official told The Associated Press that about 1,500 people, or about 30 percentof its work force of about 5,000, will be laid off.

Shell will relocate its Nigerian headquarters from the commercial hub of Lagos to the southeastern oil industry capital of Port Harcourt, the official said, speaking on condition of anonymity.

The company 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 last year in clashes between rival Ijaw, Itsekiri and Urhobo ethnic militias fighting over benefits from oil operations in the area.

In Warri, locals expressed apprehension about the impact of Shell's reorganization plan. Ethnic Ijaw militant leader Dan Ekpebide warned his followers would force Shell to shut down oil facilities if Ijaws lost jobs or other community benefits.

``If Shell thinks Warri is not good enough for their offices, it should not be good for their oil installations,'' Ekpebide said.

The Ijaws' traditional Itsekiri rivals issued similar threats.

``If Shell tampers with any of the few Itsekiris in their employment, we shall speak to them in the language that they understand,'' Itsekiri leader Matthew Tsekure said without elaborating.

Shell will also have to overcome the hostility of powerful unions for a successful reorganization.

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

``I don't think they (Shell) can embark on anything not agreeable,'' Brown Ogbeifun, president of the white-collar Petroleum and Natural Gas Senior Staff Association of Nigeria, told The Associated Press. ``It will be resisted.''

Shell's restructuring plans in Nigeria are consistent with moves by oil multinationals in Nigeria to cut back on onshore operations in the oil-rich Niger Delta _ troubled by disruptive violence _ in favor of offshore operations where large oil discoveries have made in recent years, said industry analyst Mike Okomiko.

``The offshore wells are far away from restive communities and are high-tech affairs that don't need too many staff numbers,'' he said.