Shell set to miss environmental targets in Nigeria

Shell put its environmental record under fresh scrutiny today after conceding it would miss targets to end the controversial practice of burning unwanted gas in Nigeria.

The oil giant blamed a lack of funding from the country’s government and project delays for pushing back the elimination of “flaring” at its drilling wells in Nigeria by a year to 2009.

The news is likely to be seized upon by environmentalists as further evidence of damage being caused by Shell’s activities in Africa as flaring is a key contributor to greenhouse gases, which are linked to global warming.

Unveiling its environmental report for 2004, Shell conceded that its record in Africa fell short of its expectations.

Basil Omiyi, managing director of The Shell Petroleum Development Company of Nigeria, said: “We must improve our environmental performance and make up for past mistakes, including cleaning up oil spills, preventing new ones and ending continuous flaring of gas.”

Flaring has been adopted by Shell because of the high gas content in Nigerian oil, but the practice is considered wasteful as the gas could be piped into local power plants or to create liquefied natural gas (LNG).

A total of $2bn (£1.1bn/€1.6bn) has been spent so far on gathering a third of the gas and Shell expects to spend a further $1.8bn (£988m/€1.4bn) on capturing the remainder.

Shell added that more oil spills had occurred over the past year than at any time since the turn of the millennium, although the majority of the 236 incidents were caused by sabotage as local people sought access payments or clean-up work.

Nigeria produces 3% of the world’s oil but the country is still in the throes of corruption, crime and tribal conflicts.

The release of Shell’s eighth environmental report coincides with the publication of company’s annual report for 2004, which confirms that bonus payments have resumed to its executive team following its reserves crisis.

The annual awards for 2004 come a year after Shell scrapped bonuses to its directors in the wake of repeated downgrades to its oil and gas reserves.

Shell said its directors qualified for bonuses representing 90% of their base salaries after the company measured up favourably against its rivals in areas such as financial and operational performance.

Chief executive Jeroen van der Veer will pick up a bonus of €1.35m (£928,000) for 2004 on top of his annual salary of €1.28m (£880.000), while exploration and production boss Malcolm Brinded will receive an annual bonus of £634,500 (€924,000).

Details of the pay awards have already been indicated to authorities in the US through a filing with the Securities and Exchange Commission.

Shell set a new record for a UK company in February after annual profits totalled £9.3bn (€13.5bn) – equivalent to more than £1m (€1.4m) an hour.