Thursday, June 17, 2010

Shell: $40B in Nigerian investments in jeopardy


LAGOS, Nigeria — Royal Dutch Shell PLC warned Nigeria on Thursday that $40 billion of planned investments in the oil-rich nation could be in jeopardy if lawmakers pass a proposed bill to overhaul the petroleum industry.

The threat by Shell, which first discovered oil in the West African nation 50 years ago, is the latest in the oil major's vocal campaign against the proposed Petroleum Industry Bill. It also comes as Shell's chief executive officer has hinted that the company can no longer depend on Nigeria as a profit-maker, despite being the dominant firm in the country.

Shell spokesman Tony Okonedo told The Associated Press that the $40 billion in investments dealt with offshore oil sites the company has plans to explore in the coming years. Okonedo said Shell put the projects on hold as the petroleum bill remains before Nigeria's National Assembly.

Analysts say the petroleum bill would sharply reduce the profits of foreign oil companies like Chevron Corp., ExxonMobil Corp., Shell and Total, all of whom have subsidiaries operating oil fields in Nigeria. Government officials say the bill would allow more oil money to return to Nigeria's people. The bill also would require the government-run Nigerian National Petroleum Corp., which partners with all foreign oil firms, to seek profits like a private business and not rely on government subsidies.

Oil money provides about 80 percent of Nigeria's government funding, which trickles down to states that have budgets greater than those of surrounding nations. But the corruption that pervades the nation often sees that money go into political leaders' pockets rather than toward government services.

Still, the outcry against the culture of graft often remains a second to concerns over production, as Nigeria's oil market can cause global prices to spike. Nigeria one of the top oil exporters to the U.S.

Shell long has been demonized both by environmentalists and community activists who want more of Nigeria's oil wealth to flow back into the poverty-stricken and oil-rich Niger Delta. However, Shell and its former regional executive vice president Ann Pickard have constantly said the overhaul bill will "make the present bad situation worse."

"If passed in the form currently proposed its mistakes will take years to correct," Pickard said in a farewell speech in February. "Nigerians will have to wait longer for the electricity they need to light their homes at night. They will have to wait longer for the jobs they need to put food on the family table."

The future of the oil bill remains in question after the long illness and death of elected President Umaru Yar'Adua. Though new President Goodluck Jonathan has said he remains committed to the overhaul bill, his new cabinet and oil minister have yet to make a push to see the law enacted before next year's presidential election.

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