Business Report: Shell unit pays $1.86bn taxes to Nigerian state: “Last year Shell reduced part of its production in western Niger Delta, following the escalation of ethnic conflict in the area”

July 6, 2004

Lagos - Shell Petroleum Development (SPD) paid $1.86 billion (R11.41 billion) in taxes to the Nigerian government last year through its Nigerian joint venture, according to media reports.

SPD, Shell's Nigerian subsidiary, operates a joint venture with state-run Nigerian National Petroleum (NNP), in which NNP holds 55 percent, SPD 30 percent, Total 10 percent and Agip (a unit of Italy's ENI), 5 percent.

Nigeria's Guardian newspaper quoted Precious Omuku, SPD's director of external relations, as saying the partners paid $1.26 billion as petroleum profit tax and $600 million as royalties. Omuku was speaking at the presentation of Shell's 2003 People and Environment Report in Lagos.

The joint venture is the biggest producer of crude oil in Nigeria, accounting for about 40 percent of the country's output.

Omuku said the SPD produced an average 910 000 barrels of oil a day last year It had the capacity for more than 1 million barrels a day.

Ethnic unrest in the Niger Delta, vandalism at oil installations, crude oil theft and agitations by host communities were some of the factors that prevented oil companies from operating at full capacity.

Last year Shell reduced part of its production in western Niger Delta, following the escalation of ethnic conflict in the area.

The SPD was operating to a tight budget in 2003, Omuku said. While the partners proposed a budget of $2.7 billion for the venture's operations, the government approved a budget of $2.3 billion.

Despite this its 2003 production rose 27 percent.

Its production reached a 20-year high last October, averaging about 1 million barrels a day, Omuku said.

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