Oil companies to hold firm despite Niger Delta unrest

PARIS (AFP) - Multinational oil companies being targeted by militants in Nigeria will weather attacks on their infrastructure and personnel given the huge potential for profit there, analysts and the oil groups say.

British oil major Shell is the biggest operator in the West African country and remains committed to developing reserves in the Niger Delta, the main oil-producing region hit by a recent upswing in kidnappings and sabotage.

"We will stay there, of course. Nigeria is one of our core countries. We will also do further investments," said a London-based spokesman for the group, Rainer Winzenried.

Shell currently produces about 650,000 barrels per day in Nigeria, but is pumping at 477,000 bpd below capacity because of the unrest.

All foreign oil companies active in Nigeria Shell, US groups Chevron and ExxonMobil, France's Total and Italy's Agip have been targeted by armed gangs from the Niger Delta claiming a fairer share of oil profits for their region.

Others have simply been attacked by violent racketeers who kidnap employees for ransoms.

Nearly 200 expatriates, mainly oil workers and their families, have been snatched in the last 18 months, over which time Nigerian oil production has fallen by a quarter to the current rate of 2.44 million bpd.

In one of the most shocking attacks of recent times, gunmen seized a three-year-old British girl last week after her father, who works in the oil sector, dropped her off at school.

Since then, another five foreigners have been kidnapped.

"Security is a major issue for oil companies in Nigeria because production has dropped a lot," said Leo Drollas, the chief economist of the Centre for Global Energy Studies, an influential energy consultancy based in London.

"Attacks used to happen to onshore installations. But offshore platforms have been attacked recently. It is new and worrying."

Shell says it has taken measures to protect its staff, such as moving expatriates to the capital Lagos from trouble hotspots Warri or Port Harcourt.

"Port Harcourt at the moment is perhaps the most dangerous place, but there are areas where security has improved," said company spokesman Winzenried.

Of 5,000 direct employees, the group says it now employs 4,800 Nigerians, a strategy of favourising locals over expatriates also adopted by the French group Total.

"It's easier to gain acceptance from the local population," said a spokeswoman for Total, which counts 900 Nigerians among its 1,200-strong workforce in the country.

Defending oil companies against charges they exploit Nigeria's oil reserves at the expense of the country, Winzenried underscores that the state takes 95 percent of oil profits.

"Ninety-five percent of the profit goes to the governement. We share the remaining five percent with (partners) Total and Agip," he said.

The issues of security and wealth distribution are up to the Nigerian government to resolve, according to Winzenried.

"It is not up to us to sort the problem," he said. "The core issue is that people feel they don't get the right piece of the cake.

"The people of the Delta think they should get more and we cannot sort this."

Neither Total nor Agip plans to reduce their presence in Nigeria, but the Italian group reduced its personnel to a minimum in November.

For analysts, the oil companies will stand firm against the attacks because of the huge profits they make from existing projects.

"In Nigeria, profits are still very high for oil companies," said Drollas from the CGES.

An analyst at brokerage Oppenheimer, Fadel Gheit, said: "All oil-producing operations in the world, whatever their cost, are extremely profitable because these operations were launched when oil was worth only 25 dollars."

Oil prices are currently nearing all-time highs, trading above 70 dollars per barrel on Tuesday.