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NIERIA - Shell - Finlayson & Basil Omiyi.

Shell Nigeria (SPDC) in July 2004 became the first of the Western majors to appoint Nigerians to top executive posts for its operations in Nigeria, where the SPDC chief executive now is Basil Omiyi who in mid-2004 replaced Chris Finlayson, and at Shell HQ in London. Chima Ibenech, another Nigerian, now is the CEO of a Shell unit in charge of deep-water E&P.

Chris Finlayson was in mid-2004 made chief executive of Shell Exploration & Production in Africa and the country chairman for all the Shell units in Nigeria, i.e., the boss for Omiyi and the other Shell CEOs. As SPDC's CEO, Finlayson had succeeded Ron van der Berg in mid-2003. Being in charge of the whole of Shell's African E&P operations, Finlayson is responsible for Nigeria as well.

The Shell-led oil and gas producing group in Nigeria is by far the biggest among the JVAs in the country, accounting for almost half of the country's oil production capacity. It is the biggest gas supplier to industry and the power sector. The group consists of: Shell Petroleum Development Co. (SPDC), holding 30% and acting as operator; NNPC, holding 55% (reduced from 60% when the cash-starved state company was compelled to cede 5% as it could not pay its full share in funding the group's development plan); Total, holding 10% (raised from 5% out of NNPC's 60%); and Agip, holding 5%. Total and Agip are also among the main oil operators in Nigeria and are partners in the Shell-led LNG venture, the biggest project in this country (see Gas Market Trends No. 7). Shell D'Arcy was the first major to pioneer Nigeria from 1936 and to put it on the world's oil map in 1958.

It was in July 20, 2004, that Omiyi was appointed a CEO of Shell Nigeria. On the following day, Shell Nigeria's Deputy Managing Director Joshua Udofia was made senior adviser-Nigeria, with effect from Sept. 1. Udofia replaced Egbert Imomoh as senior advisor and has since been based in Shell's London HQ. A Shell spokesman on July 22, 2004, said the senior adviser's job included representing Shell's interests in Nigeria in partnership projects with international agencies, such as the World Bank.

There had been increasing pressure from Abuja on IOCs operating in Nigeria to appoint locals to responsible positions, particularly in the wake of restructuring by Shell and other foreign oil majors.

Omiyi, now 59 and from Delta State, took over on Sept. 1, 2004. Omiyi's previous position was Shell production director, before which he was director for external affairs. Omiyi is a graduate of chemistry from the University of Ibadan. He joined Shell in 1970. He has worked as a production engineer, divisional chief production engineer and operations manager. He has been on cross posting twice to Shell UK, EXPRO and SIPM in the Hague. As CEO of the main Shell unit in Nigeria, Omiyi has been able to shield the company from Abuja's constant pressures to end SPDC's gas flaring before its own schedule to 2009.

In the 2004 arrangement, Ademola Adeyemi-Bero became deputy managing director, taking over from Joshua Udofia who has been moved to the company's office in London. Before his appointment as the DMD, Udofia was the manager, Western Operations of SPDC after which he moved to the Eastern Operations as manager. He also held managerial positions in other subsidiaries of the Shell both in Nigeria and abroad. Adeyemi-Bero was the Southern Swamp manager in Nigeria until 2003 when he was sent on cross posting to Shell Netherlands as director in the E&P division, in the Hague.

As the news of the management changes broke on in mid-2004, Shell also announced that it planned to invest additional US$9 bn (N1.26 trillion) in the Nigerian petroleum sector over the next five years. Its Chairman and Group Managing Director Malcom Brinded disclosed this in Abuja when he had an audience with President Obasanjo. The amount will be used to expand the company's operations in the country "in view of high level co-operation it is receiving from the Nigerian Government", Brinded said. That came at a time when it was reported that Shell was going to pull out of its Nigerian onshore operations due to restiveness in the Niger Delta. It has since, however, pledged to intensify operations in the deep offshore, where its major discovery, the Bonga field, is reputed to be one of the most viable offshore fields on the African continent. Brinded did not specify where the money would be invested. But it was commonly known Bonga was the most likely place since this holds the greatest oil reserve for the firm.

An elated Obasanjo, assured by Brinded as well as Finlayson and Omiyi and Bonga would be on stream before end-2005, gave assurances that his administration would continue to ensure the security of lives and property within the company's Nigerian areas of operations, including those of SPDC oil installations in the Niger Delta. Obasanjo said concerted efforts were on to achieve this aim as governors of states in the region were also in the vanguard of fighting crimes associated with vandalisation of oil facilities. Obasanjo reiterated that his government would strengthen measures to curb crude oil theft. A statement by Presidential Senior Special Assistant on Media Remi Oyo said Obasanjo asked Brinded for a speedy execution of the Afam Power Project (an IPP) as energy is very critical to us".

Like his predecessors Finlayson acts as a spokesman for the CEOs of the other IOCs operating in Nigeria during crises with the government. Some of the crises have been caused by NNPC's failure to pay its share of capital obligations towards their capacity expansions and new exploration work (see background in Vol. 61, Gas Market Trends No. 8).

Chris Hayes, CEO of NLNG, took over at the beginning of 2005 fromAndrew Jamieson. Hayes is a capable Shell executive like his predecessors at the head of NLNG Jamieson, Ollereanshaw, Oerlemans, etc. He is one of Shell's heavyweights.

However, Train 4 of NLNG's $12 bn project last month missed its start-up deadline. Hayes was then quoted as saying the train would be on stream "shortly". But Petroleum Argue on Aug. 8 said there were fears that Train 5, scheduled for late 2005 and Train 6 scheduled for October 2007, "might also be delayed". Argus quoted a company source as saying the project was on course. Trains 4 and 5, jointly termed NLNG Plus, will together produce 8m t/y. With Train 6, total LNG output capacity will be 22m t/y, but the actual production level will be much higher. Shell is involved in another LNG venture in Nigeria (see Gas Market Trends No. 7).
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Publication:APS Review Gas Market Trends
Geographic Code:6NIGR
Date:Aug 22, 2005
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