Shell continues operations in Ogoniland

July 8, 2008
Shell Petroleum Development Co. has not been ordered to leave its operations in Ogoniland in Rivers State, although Nigerian President Yar'Adua said another operator would replace Shell by yearend.

Uchenna Izundu
International Editor

LONDON, July 8 -- Shell Petroleum Development Co. (SPDC) has not been ordered to leave its operations in Ogoniland in Rivers State, although Nigerian President Umaru Yar'Adua said another operator would replace Shell by yearend.

Yar'Adua said in June that trust between the Ogoni people and Shell has badly deteriorated and a new operator would be assigned. But Mutiu Sunmonu, managing director of the Shell subsidiary, told reporters in Port Harcourt the company still holds a 30% stake in its oil wells in the area.

Sumonu said company officials learned of the president's remarks via the media. "We are yet to get any letter or official directive on the matter as [of] today. The federal government has not formally notified us. There has not been a formal letter. We have heard and discussed it. What the president said is headline statement, [of] which details are not available," he said.

The government set December as the new deadline to end gas-flaring in the Niger Delta, and Sunmonu said the company would have to spend $5 billion to meet this target. SPDC missed previous gas flaring deadlines because its joint venture partner, Nigeria National Petroleum Corp., failed to contribute its share of funding to set up gas gathering infrastructure. So far SPDC has spent $3 billion in "commissioning facilities to gather and process gas."

Sunmonu said the security problem in the Delta would determine whether the firm could meet the government's new deadline.

SPDC agreed to loan the federal government $1.3 billion to advance its stalled projects in the Niger Delta. Both parties signed only a 'head agreement,' Sumonu said. The final agreement is still being negotiated. Total SA and ExxonMobil Corp. agreed to loan the government $6.1 billion to cover the funding gap.

Sumonu denied that SPDC laid off more than 2,000 employees due to soaring exploration and production costs and reduced output because of repeated attacks on its operations in the Niger Delta. He said a review of Shell operations is still under way.

Contact Uchenna Izundu at [email protected].