Shell 'planning 1,500 job cuts in Nigerian oil shake-up'

Oil giant Royal Dutch/Shell today said it planned to streamline its operations in Nigeria, cutting jobs in a bid to boost oil production by half a million barrels a day.

Shell will close some of its Nigerian offices and create ”a single corporate centre,” running a leaner and more efficient organisation in the country, the company said in a statement.

Shell Nigeria’s managing director, Chris Finlayson, said the reorganisation’s aim was to raise Shell’s oil production from about one million barrels daily at present to 1.5 million barrels daily by 2006.

Shell expects the move will help lower the cost of producing crude oil to $1.50 (€1,20) a barrel from about $2 (€1.60) a barrel, the statement said.

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

Finlayson said it was “premature to speculate on details” of the reorganisation, but a senior company official said that about 30%, or 1,500 of 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 south-eastern oil industry capital of Port Harcourt, the official said.

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 as rival ethnic militias fought over benefits from oil operations in the area.

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

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, said. “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 favour 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.