Shell Won't Re-Enter Nigeria's Western Delta This Year

ISTANBUL Jun 26, 2007 (Dow Jones Newswires)

Royal Dutch Shell PLC (RDSB.LN) is unlikely to go back into Nigeria's troubled Western Delta this year despite the area contributing around 500,000 barrels a day to the company's crude oil production, a Shell executive said Tuesday.

Speaking on the sidelines of an energy security conference hosted by Cambridge Energy Resources Associates here, Ann Pickard, Shell's Africa Regional Executive Vice President for Exploration and Production, told Dow Jones Newswires that escalating violence in the Delta has shut in production for 1.5 years so far, and production is unlikely to begin in 2007.

"We won't be back in this year," Pickard said on the sidelines of an energy conference in Istanbul. "We're still working with the government to re-enter the Western Delta," she said.

Ongoing kidnappings and attacks on oil workers in the Delta have forced Shell to cut spending there by $100 million over three years, Pickard said.

"We've been without production in the western part of the Delta for a year and a half now, so we're looking at ways to consolidate jobs," she said.

Last year 339,000 barrels a day of Shell's oil came from its operations in West Africa, most of which comes from Nigeria, Pickard said.

"That was pretty low for Nigeria," she said. "The official number of shut-in production is 477,000 barrels a day, plus additional shut-ins from periodic attacks on pipelines."

Shell's total oil output was 1.9 million barrels a day in 2006. But the country continues to be "very, very important" for Shell, Pickard added.

"We spent $1.8 billion in the region last year, so our $100 million cuts are not significant."

Shell is planning a new liquefied natural gas plant, OK LNG, expanding trains 7 and 8 of Nigeria LNG, and planning to increase production onshore and offshore, Pickard said.

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