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allAfrica.com: Nigeria: NNPC, Shell Disagree Over Downsizing

This Day (Lagos)
9 February 2008
Stanley Nkwazema
Abuja

The management of the Nigeria National Petroleum Corporation (NNPC) is not comfortable with the ongoing restructuring at the Shell Petroleum Development Company of Nigeria (SPDC).

An NNPC official said yesterday that the corporation, as the principal partner with a 51 per cent stake in the NNPC/Shell/Agip/Elf joint venture arrangement, should be properly briefed before an action of such a magnitude is taken by the Anglo-Dutch firm.
 
It also feels that Shell, which was yet to communicate the restructuring plan to the NNPC, cannot justify the plan.

The NNPC source said the restructuring would eat deeply into its coffers since it is expected that the bulk of the huge amount of money to be paid out to staff that will be affected by the exercise would come from funds meant for the JV programme.

The Petroleum and Natural Gas Workers Union (PENGASSAN) has also recently expressed doubts over the authenticity of the exercise and officials of the union were said to have contacted the House of Representatives Committee on Petroleum over the issue.

PENGASSAN officials are expected in the House on Monday to interface with Shell, NNPC, the Department of Petroleum Resources (DPR) and the Federal Ministry of Labour over the issue.

Also yesterday, the committee confirmed that it had invited the Managing Director of SPDC, Mr Basil Omiyi, over its planned restructuring.

The House is worried that the plan could have a ripple effect on the oil industry as other companies may be tempted to follow suit as soon as the oil giant implements its plan.

Chairman of the committee, Honourable Tamarautare Brisibe who also confirmed the summon said all the parties would be given enough time to explain the critical issues involved since the exercise, if carried out,will certainly affect the oil industry in Nigeria.

He said: “Yes we have invited all of them including NNPC, Shell, DPR, PENGASSAN and the Ministry of Labour. They are expected to interface with us on Monday, February 11. We are concerned and should be provided with enough reasons why they must go ahead. All the parties involved would be given enough time to present their cases.”

A top official of Shell yesterday confirmed receiving the summons by the lawmakers and said his management would honour the invitation to clear several doubts lingering over the plan to bring all its operations in Nigeria under one single unit.

He told THISDAY that Shell wants to join other players in the oil industry to streamline its operations by bringing together all its subsidiaries under one unit.

The restructuring he confirmed would be completed before the end of the year.

The Shell official said: “We want to bring all the operations under one unit. It is a global thing and it is unfortunate some jobs may have to go in the process. What we are doing presently is to look at the various positions to determine were cuts can be made.

“However, the exercise would be carried out in such a way that not more than the estimated 1,000 personnel planned for release may have to voluntarily retire from their positions as the incentives being offered would be too tempting to resist.”

Omiyi and his directors are expected to appear before the House Committee on Petroleum on Monday to explain the planned downsizing.

It would be recalled that President Umaru Yar’Adua had, during his recent visit to Switzerland to attend the World Economic Forum, met with the Group CEO of Shell, Jeroen van der Veer and the Dutch Prime Minister Jan Peter Balkenende to discuss its operations in Nigeria, the planned restructuring inclusive.

During the meeting, it emerged that the Anglo Dutch oil giant might have secured ‘critical’ concessions from the president over key federal government policies, which the firm considers to be unfavourable to its operations in Nigeria.
 
The major points of discussion during the meeting bordered on the controversial gas flare deadline, restiveness in the Niger Delta, the rising cost of production and the new investment policy of the government which may bring to an end the era of cash calls in joint venture operations.

Shell stated that it would consider divesting its operations with job cuts in the country.

But the Nigeria government is reported to have increased pressure on the oil firm by stating that it would press Shell to invest more in the country’s downstream sector. The issue was presented as a request but is seen industry observers as an ultimatum.

http://allafrica.com/stories/200802090018.html

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