Anglo/Dutch oil firm, Shell Petroleum Development Company, is set to lay off 3,500 workers as the crisis in the Niger Delta region further hampers its operations.
Sunday Punch learnt that the retrenchment exercise would be carried out before September.
A similar action was taken in 2004 when about 1,500 Shell workers were retrenched.
A reliable source in the management cadre of the company told our correspondent on Friday that the idea was conceived in order to reduce operational costs, in view of the worsening security situation in the Niger Delta region.
It was learnt that management of the SPDC opted for the measure in response to the cut in production, especially in the western operation in Bayelsa and Delta states since February, 2006.
A production shut-in of over 500,000 barrels of crude oil per day is being recorded in the western operation since fresh crisis erupted in the Niger Delta in February 2006.
Investigations revealed that employees at all levels would be affected in the downsizing of the company’s workforce.
It was further gathered that the imminent cost reduction measure was largely informed by the poor funding of the operations of the SPDC by its joint venture partners, particularly the Nigerian National Petroleum Corporation, Agip and Total Fina Elf.
The JVPs, our source said, significantly cut down funds allocation to SPDC since January, due to a shortfall in the crude allocation to them as a result of the stoppage of production in the Western division.
Consequently, a sack fever has gripped the members of staff of Shell as the management adduced reasons for the action in a recent memo.
The management informed the workers that the company continued to face difficult times that made stringent operational tactics inevitable.
It said, “A leaner and high performing organisation will be in a better position to manage the challenge we face going forward.
“We will, therefore, be looking at the use of our workforce, challenging the numbers as well as criticality of roles. We will also look at our processes for improved cost-effectiveness as well as general belt tightening all around.
“The situation has led to cuts in production and therefore significant income loss. Our HSE performance, especially fatalities, should be improved; we are still in an under-funded situation at a time costs of business are soaring.
“This requires us to put the company on an austerity programme to deal structurally with the cost challenge. While we may have the best growth opportunities in the country, unlocking this value is challenging, given the issues just mentioned.
“Some of the difficulties are external and are being worked by senior management full time. However, most of them require concrete action to be taken from within the company to position the SPDC to deliver on its promises and meet shareholders and JV partners’ expectations.
“We will be advising you on some of those actions shortly. They will involve a demand for significant step change in performance at personal and organisation levels, as well as focus on cost-out. This requires us to put the company on a three-year austerity programme to deal structurally without cost challenge.”
The management said the step was unavoidable, explaining, “If our business is to be in a position to take full advantage of the growth opportunity before us.”
SPDC’s spokesman, Mr. Precious Okolope, said the company’s management believed in cheaper and effective ways of delivering value to its stakeholders.
Okolope, in a telephone interview with our correspondent, said, “As a company, we are always exploring ways of doing our business cheaper and more efficiently, and at the same time delivering more values to our stakeholders.”
Okolope, however, said he was not ready to comment on the possibility of the measure leading to a downsizing of the bureau.
Jun102007