Daily Telegraph: Shell advised to retreat from Nigeria

By Christopher Hope, Business Correspondent (Filed: 11/06/2004)

Shell was in full damage limitation mode again yesterday after commissioning a report that recommended it pull out of Nigeria - its fourth-largest oil producing region - in five years. 

The oil and gas giant, already in crisis over "losing" more than 20pc of its proven reserves, also admitted that "we sometimes feed conflict by the way we award contracts" in the African country.

Shell commissioned a report last year from a Lagos-based conflict resolution organisation into the problems faced by Shell in Niger River delta.

The 93-page report, parts of which were published yesterday, recommended Shell might have to leave the area by 2009 because of rising ethnic tension.

A Shell spokesman said: "That date is in there. It is the view of the report's authors, but it is not a view with which we would agree."

He continued: "There is serious conflict in the delta and that has the potential to get worse if action is not taken."

Shell yesterday published its annual report on sustainable development, which included parts of the leaked report into the problems in Nigeria.

In the report, Emmanuel Etomi, sustainable community development manager for Shell Petroleum Development Company of Nigeria, accepted that the oil industry was "inadvertently contributing" to the conflict in the country.

He wrote: "In 2003 we enlisted three internationally known conflict experts to better understand how our activities are affected by and contribute to the conflict."

The experts highlighted "how we sometimes feed conflict by the way we award contracts, gain access to land and deal with community representatives; how ill-equipped our security team is to reduce conflict; and how drastically conflict reduces the effect of our community development programme," he said.

Ethnic violence has spiralled over the past four years in Nigeria, home to about 130m Christians and Muslims.

Amnesty International claims that clashes between the two groups have claimed at least 5,000 lives since 2000. More than 1,000 people died in an outbreak of clashes in 2001.

Half of Shell's reclassified reserves are in Nigeria.

Analysts dismissed the suggestion that Shell would pull out of Nigeria. Bruce Evers, analyst at Investec Securities, said: "It seems like a PR own goal."

Shell Transport's shares closed up 5 at 400p.

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