N’Delta Crisis: Shell to Lay off More Workers

By Ejiofor Alike, 03.09.2009

Anglo-Dutch oil major Shell Petroleum Development Company Nigeria (SPDC) may have rescinded its decision to put on hold the re-organisation of its Nigerian operations which last year claimed the jobs of over 1,000 workers and resulted in a drastic reduction in its operations in the Niger Delta. 

Shell was believed to have soft-pedalled after President Umaru Musa Yar’Adua reportedly met with the company’s out-going Chief Executive Officer, Jeroen van der Veer, and the Dutch Prime Minister, Jan Peter Balkenende, in Davos, Switzerland, during the World Economic Forum last year. 

Before the suspension, Shell had concluded plans to reduce its 3,500 work force in the country by 1,500 in order to reduce cost of operations. 

But THISDAY gathered at the weekend that the oil major has resumed the restructuring exercise, which it called “downsizing” to reduce its staff strength as part of its cost-cutting efforts in response to the collapse of oil prices and the increasing wave of kidnappings in the Niger Delta, which had shut in a large chunk of its operations in the region. 

Competent company sources told THISDAY that the “sack fever” last week hit Shell’s Eastern Operations, claiming the Head of Marine (East), and many workers, mostly in Logistics and Marine Sections. 

Shell said in the sack letters post-dated to take effect from March 31st 2009 that it was “downsizing” to reduce cost of operations. 

Investigations showed that unlike last year’s exercise, which was not based on any clearly defined criteria, the present exercise was hinged on staff’s annual performance as contained in their Individual Performance Factor (IPF) for 2008. 

IPF is a measurement of the annual performance of each staff of the company and it is released in March of every year. 
But the workers alleged that the assessment for 2008 was arbitrarily done without any form of fairness. 

It was alleged that in order to accord this new exercise credibility and justify the sack, staff were deliberately scored low in their IPF for 2008, to pave the way for their exit from the company. 

“IPF ranges between 0.5 and 1.5. The lowest score is 0.5 and the highest score is 1.5. But many people were given 0.00 in their IPF. Does it mean that throughout last year, they did not perform a single task for the company and they were receiving salaries? The truth is that some managers and supervisors were used to do the hatchet job. The supervisor will do the appraisal and submit the report, while the manager will issue the IPF. You cannot question your manager if he gives you low IPF,” said a senior manager. 

THISDAY gathered that under the present restructuring, highly-remunerated skilled workers are also being replaced with low cadre manpower as part of the efforts to reduce cost. 

A manager, who was privy to the planning of the exercise, told THISDAY that the exercise had swept off all the professional Master Mariners in the Marine Section. 

“How can you run Marine without a Master Mariner? Who will inspect the vessels? It is worrisome that we (Shell) are setting aside our own standards in order to cut cost of operations,” he said. 

Branch Chairman of the Petro-leum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Mr. Olley Victor, and the Branch Secretary, Mr. Okoloka-Ideh Tony, as well as the Port Harcourt Branch Chairman  of PENGASSAN, Mr. Shedrack Ejinwa, could not be reached through their official mobile phones at the weekend.

When contacted over the matter, National President of PENGASSAN, Mr. Babatunde Ogun, told THISDAY that the union had asked the workers to stop collecting sack letters from Shell management. 

“We have also directed the branch not to discuss anything with management. We reject what they are doing. Shell management mentioned it but the union rejected it. Now, they are doing it unilaterally. They retrenched 1,200 last year, and within this quarter, they are sending more people away. It is unacceptable. What they are doing is an affront on management-labour relations and we are going to resist it,” he said. 

Officials of Shell, who were contacted by THISDAY, refused to comment on the issue. 

But Shell’s Head of Exploration and Production Malcolm Brinded was quoted by Reuters report earlier this year as calling for a drastic reduction in costs in a confidential email he sent to some employees.

“We simply need much higher sustainable savings this year and I ask for real actions from all of you… Shed contractor staff, challenge requirements, eliminate consultancy work, reduce travel massively, cut overheads everywhere,” he said. 

He also pleaded for fewer meetings and “75 per cent fewer slides”. 

“We are still too slow in maturing our hydrocarbon resources and advancing projects,” Brinded said. 

Brinded said Shell was not complacent about its 2008 performance, despite reporting a record profit for a European company of $31.4 billion. 

“Overall 2008 performance was good, with record earnings and strong operational results, but a disappointing Total Shareholder Return,” he said. 

Being the worst hit by the restiveness in the Niger Delta, where its crude oil output has been on steady decline since the crisis escalated, Shell is seen by oil industry analysts as paying for its “years of arrogance” in Nigeria. 

The company was alleged to have over the years enjoyed the support of the Federal Government forces to unleash unfriendly environmental practices on the largely impoverished inhabitants of the oil-rich region. 

Both criminal and genuine agitators in the region now see the troubled oil giant as the face of the “unwholesome policy of environmental degradation and resource exploitation”.

THISDAY had reported last month that the unabated crisis in the oil-rich Niger Delta had continued to take its toll on SPDC and Nigeria’s oil revenue, as the company had been forced to shut in production of 180,000 barrels per day of oil following renewed attacks on its facilities. 

Shell’s Chief Executive, van der Veer, confirmed at a London conference that the lost production was due to the heightened insecurity in the region. 

It was also reported that suspected loyalists of Kitikata, a militant leader linked with the recent killing of soldiers in the Niger Delta region, invaded the SPDC’s Nembe Creek flow station in Bayelsa State. 

THISDAY had also reported that oil-producing companies operating in the region had suspended further redeployment of expatriate staff in the area pending when normalcy would return. 

An official of Shell was last month quoted as affirming that the company had commenced preparations to evacuate its staff from the Niger Delta after a militant group issued a warning to quit the region or risk more attacks. 

The spokesman had, however, stated that the company had no plans to leave Nigeria but that at the same time was not prepared to gamble with the safety and well-being of its workers and contractors. 

A militant group led by Ateke Tom had accused Shell and other oil operators including Agip, the local subsidiary of Italian oil company Eni, and the Nigeria Liquefied National Gas Company of helping the Nigerian military to carry out attacks on the group’s camps in Rivers State. 

The invasion of the multi-billion dollar Nembe Creek flowstation was said to have been repelled by soldiers on guard duties aboard the facility. 

The militants, in the said letter, had accused Shell of “being insensitive to the plight of the people of the area by refusing to implement agreements reached with them in various Memorandum of Understanding signed with the people”. 

It was reported that part of their demands was that their militia group should be recognised by the SPDC management as a major interest group and must be placed on a stipend of N3 million monthly. 

Shell, which for many years bestrode the Nigerian oil and gas industry like a colossus, and dictated to a large extent the pace of developments in the economy has since lost its influential position as Nigeria’s number one oil producer to the U.S. oil major, Exxon-Mobil, the world’s largest publicly traded oil company. 

Statistics show that from a record level of about 999,000 barrels per day of crude oil, nearly half of Nigeria’s total daily average production in 2003, Shell now accounts for less than 500,000 barrels per day of the country’s total production of 1.9 million barrels per day. 

ExxonMobil, which currently produces about 800,000 barrels per day of Nigeria’s total crude production, accounted for only about 321,000 barrels per day of the country’s total output as at 2003. 

Former Chairman and Managing Director of Mobil Producing Nigeria (MPN), Mr John Chaplin, who was promoted to Vice-President of the ExxonMobil Corporation, had told THISDAY shortly before he left office that with the completion of the company’s East Area Projects at Bonny River Terminal in Rivers State, the company’s daily output was about 800,000 barrels per day. 

Chaplin further stated that the figure would have been higher if the Organisation of Petroleum Exporting Countries (OPEC) had not imposed production cuts.

SOURCE ARTICLE