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MarketWatch: Shell CEO says it’ll take time to ramp up Nigeria oil output

Sept 12, 2006

LONDON (MarketWatch) — Royal Dutch Shell PLC (RDSB.LN) will take time to ramp up its Nigerian oil production following militant attacks in the Niger Delta, Chief Executive Jeroen van der Veer said Tuesday.

Van der Veer said the Anglo-Dutch oil major’s priority “is to create a situation that is safe for our staff to return” to work “in cooperation with local communities, local governments, (and) the Abuja government.”

About 872,000 barrels a day of Nigerian oil production has been shut in as a result of militant attacks and damaged pipelines. Slightly more than half of that output comes from Shell’s E.A. platform and Forcados oil terminal, which together produce 477,000 b/d.

Nigerian Oil Minister Edmond Daukoru said Monday that the violence would be resolved within a couple of months and that it would take Shell three to six months to resume operations at the two facilities.

Van de Veer, however, was more cautious, saying safety is a priority and production will take a long time to reach normal levels.

“You can’t suddenly produce at your old levels,” the CEO said, responding to Daukoru’s comments on the sidelines of an oil seminar sponsored by the Organization for Petroleum Export Countries in Vienna.

Van de Veer reiterated the company’s stance that “we hope that we can be back by the end of the year.”

Shell’s operations in Nigeria are run through Shell Petroleum Development Co., a joint venture operated by Shell and with the Nigerian National Petroleum Co. and others.

Van de Veer also said Shell remains interested in investing in violence-prone Iraq, although he said any company would need at least two green lights in order to consider investing in the country: a clear judiciary system and safety.

He said that two years ago the company was more optimistic about Iraq than now, but “we are ready to go” into Iraq.

When asked whether the current spat between Iran and the international community over nuclear issues would threaten investment in Iran, van de Veer said in the short-term, “if there are U.N. sanctions, we will obey that.”

The U.S. and other European countries are pressing the U.N. to impose sanctions on Iran but both China and Russia are against the idea.

Van de Veer added that it is logical for companies like Shell to take a long-term view of Iran, with its huge oil and gas reserves, despite current political problems.

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