The Nigerian National Petroleum Corporation (NNPC) has instructed Shell Petroleum Development Company (SPDC) to stop the present downsizing of its staff.
The NNPC said transparency would not be followed if SPDC was allowed to continue with the exercise.
Appearing before the House of Representatives Committee on Petroleum (Upstream) yesterday, the Acting Managing Director of SPDC, Mr. Mutiu Summonu, said the downsizing would save the company over $200 million annually.
The Acting Group Managing Director of NNPC, Alhaji Abubakar Yar�Adua, said: �We were taken aback, because we were not duly consulted. We are aware of the company�s difficulties and financial cost on the $1.2 billion over performance. It is a very strange financial position. We are aware of the Ogoniland issue and the vandalism, which not only Shell is facing. We hope to be able to overcome that soon.�
Yar�Adua said inasmuch as the Federal Government holds 51 per cent in the Joint Venture Operations, it would �do a lot to assist them pull through and we have almost concluded on several financial models. This week, we will sign on the financial model.�
According to him, �when I was alerted, I wrote to Shell on the 8th of January to suspend forthwith the exercise. It would have affected 3,000 Nigerians. It is a lot and they have heeded the call.
�Another letter of 28th January was for us to discuss with them. Our concern is not only on the downsizing, but the JV and the PSC. We believe that transparency must be limited.
�If the proposed synergy will be affected in the exercise, transparency would be lost. The Federal Government is interested. You can do it over time. So, it does not affect the physical issues of the organisation.�
He said following the intervention of NNPC and the House, the retrenchment would be put on hold.
Summonu while explaining the finer details of the downsizing said: �The issue we are facing is not retrenchment, but the survival of our business. Making sure we pull from the brink of collapse.
�In 2004, Shell produced 1million bpd, in 2006 because of the problems in the Niger Delta we produced far below that. In the last two years, we have been struggling to get access to our production. We shut down production till last year in some areas and kept on paying salaries, maintaining company community relations.�
Sunmonu said the company�s business plan from 2008 to 2012 �is now half what we used to do. Production is going high and unit cost is also high. We are taking action in the interest of the business and all the JV partners. It is in the interest of the Federal Government and business that we will continue to deliver value.�
The SPDC MD said both Nigerians and their foreign counterparts would be affected by the downsizing.
�We have expatriates of less than 300 in a population of more than 6,000. Nigerians abroad as expatriates are close to 270, which means Nigerians are working for different parts of Shell. It rose from 72 in 1993 to the present figure last year,� he said.
�Shell is under pressure to improve efficiency in the company. We did a benchmark study in our business and we observed that we are terribly over staffed when compared to neighbours like Gabon, Oman and others.
�The unit operating cost is about $6 a barrel when we should hover between $2 to $2.5. We believe that one area to improve efficiency is by making sure there is synergy,� Summonu said.
The Group Executive Director of NNPC, Mr. Chris Ogiemnwonyi, told the Committee that Shell was not in tune with reality.
�This is the first time I am hearing of him as the MD of Shell. We have raised issues over their structure, local content, personnel. We don�t have the structure and we need to see the structure in place. Nobody in the technical cadre on the high level is from Nigeria,� he said.
Feb122008