ANGLO-DUTCH oil major Shell, said yesterday, that the Niger Delta crisis in the South region of Nigeria has severely affected its onshore activities as it is currently operating at 120,000 barrels per day from 300,000 barrels per day before the crisis commenced.
This indicated that the crisis has prompted the company to shut-in more than half of its production output.
Stating this at the company’s corporate headquarters in Holland, the Chief Executive Officer, Peter Voser, said Nigeria’s onshore production has been heavily curtailed by the violence.
“We have a huge proportion of our onshore production shut in at this stage,” Voser said.
“I think we are now at 120,000 barrels per day and we used to be close to 300,000 bpd. These are Shell’s share (production).”
Violence in the Niger Delta, where Shell has long been a dominant player, has declined significantly since President Umaru Yar’Adua offered an unconditional pardon to militants in June.
Speaking on the just concluded amnesty programme, the CEO said that it was too early to say whether the improvement could be sustained.
“The overall security situation is still very fragile, the government had some success with their amnesty programme and we are looking now towards the next few weeks to see how this influences the whole security situation,” Voser said.
“But it would be by far too early to say that it has improved. We are still dealing with the same kind of issues,” he added.
Shell had announced recently a 62 per cent drop in first-quarter net profit as oil prices fell sharply amid a global economic downturn.
The net profit figure of $3.49 billion compares with $9.08 billion in the same period a year ago. Sales fell 49 per cent to $58.2 billion.
“Conditions deteriorated further in the first quarter of ’09 following a downturn across Q4,” Voser said adding that business has continued to be under pressure so far in the second quarter.
“This is a very difficult condition for the oil industry, and we need to be clear about it.”
The company’s production arm reported a 67 per cent fall in earnings to $1.7 billion. Both oil production and sales prices fell. Its refining arm saw earnings drop to $1.40 billion, down from $2.37 billion a year earlier, which analysts said was better than expected.