Nigeria Orders Shell Unit to Suspend Reorganization

The Nigerian government has directed Shell Petroleum Development Co. of Nigeria, or SPDC, to suspend its restructuring, a local newspaper reported Monday.

The Guardian reported on its Web site that the order to halt the restructuring came after a three-way meeting between the presidency, the Nigerian National Petroleum Corp. and Shell in Abuja.

The Guardian reported that the government took the action because of its desire to conclude the ongoing reforms in the oil and gas sector, which it announced last August.

"Government has made it clear to Shell to suspend action on the exercise until the reform process in the oil and gas industry is concluded," an unnamed source told The Guardian.

The Guardian reported that the government didn't accept Shell's explanation for the reorganization - which it demanded last month - that it aimed to merge its SPDC operations with other companies in its group.

SPDC is part of Royal Dutch Shell PLC (RDSA).

Shell is the largest crude oil producer in Nigeria. It is able to produce about 1 million barrels a day, but it is reported to be producing half of that now due to attacks on its facilities by armed militants in the Niger Delta.

Militants in the Niger Delta have since January 2006 kidnapped more than 250 local and foreign oil workers and damaged several oil and gas pipelines and other facilities. Shell said it has closed virtually all its wells in the Niger Delta and now focuses on its offshore blocks to sustain operations.

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