Shell’s future in Nigeria in doubt

Royal Dutch Shell is facing pressure from the Nigerian government and increasingly violent opposition in the Niger Delta oil-producing region, raising questions over its long-term future in the country.

Sources in the Delta say the Nigerian government has withheld up to $1bn as part of a production-sharing agreement while the two sides are locked in talks over how to pay for new investments in the oil industry. The decision to withhold funds is preventing contractors from getting paid, say sources.


The government of President Umaru Yar’Adua, who last year won an election fraught with intimidation, is taking a harder line on historic oil contracts, many of which are being renegotiated. Pressure on Shell comes as a steel firm controlled by the Mittal family attacked the Nigerian government last week, after its concessions were confiscated.

The difficulties for Shell and other western oil producers, including Chevron and Agip, could push oil prices to new heights. Last week, US light crude reached an all-time record of $112.21.

Observer