AllAfrica.com:  LC Will Make Upstream Operating Cost Cheaper, Effective -- Shell

Hector Igbikiowubo

Vanguard (Lagos)

Posted 5 August 04

NIGERIAN subsidiary of the Anglo/Dutch oil giant, Shell Petroleum Development Company (SPDC) has disclosed that increased local content development will reduce its cost of operations, make its services even more effective and meet government aspirations.

The company's managing director designate, Mr. Basil Omiyi, made the disclosure while speaking with Vanguard in Port Harcourt recently.

"If we can seek local services and materials from the immediate environment, it will make our cost cheaper and make us more effective and meet government aspirations. That is a win win situation. And local content is part of that.

We share government aspirations of the petroleum industry in Nigeria being a catalyst for other ancillary industry around the industry, we share those views and to be frank with you if that happened, our business will be better," he disclosed.

Mr. Omiyi said properly structured local content will take up his attention within the shortest possible time on assuming office by September 1st, adding that efforts to improve local content is part of the issues the company's management is currently working on. "We need an environment where people are ready to make long term investment and quite a few people like to make investment that will yield investment tomorrow. Our business takes a bit longer time. People who are going to be our partners in local content also have to be ready to make that investment over a long time to get full returns."

He called for the development of more facilities like Niger Dock, adding that the country also requires more engineering and technical services capability, as well as more partnering.

"Quite a few of our businessmen like to go it alone. Each person forms his own company, and you have twenty companies trying to deliver services and not all of them can really raise their game. One would be looking to encourage them to pull together, they pull their capability, they pull their capital," he said.

Regarding the company's plans for sustaining and increasing its one million barrels per day production target, he said he could not give a figure but pointed out that Shell's aim has always been to deliver the bulk of Nigerian oil production capacity.

"I don't want to give you a number that is not funded. You remember no matter what my aspiration is, it is what is funded that is delivered. Nigeria has enough reserves, and I think we did about 2.67million barrels a few days ago.

But in my view I think Nigeria can actually produce much more than that, but we need the OPEC quota and we need the investment," he disclosed.

On the company's transformation plans, he said the whole intention is to have SPDC operated from Port Harcourt to save the cost of traveling and the cost of paying for property in Lagos, pointing out that some of the group's subsidiaries rent buildings in Lagos. "So when we move out of Freeman house, they can then move in. It will still be a Shell building, but it is going to be other Shell companies like SNEPCO, Shell Gas Nigeria, Shell Oil Products, more companies that people don't even know about and our African region Headquarters country head is coming to Nigeria," he said.

On his expectations from the Niger Delta, Mr. Omiyi disclosed that in the next few months the company will begin engaging the Niger Delta people on its sustainable community development programme, adding that the company wants to emphasise development of human capital.

"We want to move funding from just putting infrastructure on the ground, to actually the development of human capital. Here you support business enterprises, you support building human capacity in training education, you support best of training in health and local health management issues and you stay away from infrastructure which really should be taken up by government.

That is you try and contribute to raise the ability of the people to do a lot of things for themselves. That is what SPDC is trying to do and it requires that communities themselves sit down and articulate their vision for themselves and their long term," he said.

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