Nigeria beats Shell while its down...
Shell's Nigerian oil operations are threatened by a cash squeeze caused by government budget cuts and continuing arrears in state investment in joint venture oil projects.
The Anglo-Dutch group had launched a big cost-cutting initiative aimed at increasing the profitability of one of its largest oil provinces.
But Shell's efforts to raise its game in Nigeria -- the oil company wants to increase output from 1 million to 1.5 million barrels per day -- are being stymied by a shortage of investment funds from its state investment partner, the Nigerian National Petroleum Corporation.
NNPC owns just over half of the Shell Petroleum Development Company, Shell's local operating company, and must contribute US55c out of every US dollar that Shell invests in the Niger Delta.
Pleas from foreign oil companies to invest over $US4 billion in the oil sector this year have been ignored.
Olusegun Obasanjo, Nigeria's President, cut the joint venture cash call from $US3.5 billion in last year's budget to $US3.2 billion for 2004. Sources close to SPDC suggest that NNPC cash call arrears are still a drag on investment plans.
