NIGERIA - Shell - Ron van den Berg.
Ron van den Berg is the current chairman/CEO of SPDC and is most influential among the foreign executives in Nigeria. He was appointed to this position in late May 1997 to succeed Brian Anderson, who became chairman of Shell operations in Greater China. Until then, Van den Berg used to be the CEO of Shell's operations in Brunei. A Dutchman having joined Shell in the 1960s, Van den Berg is a man of many capabilities and has been assigned to exceptionally difficult Shell missions.
Like his predecessor Anderson, Van den Berg acts as a "spokesman" for the CEOs of the other foreign oil companies operating in Nigeria during crises with the government. Often the crisis is caused by NNPC's failure to pay its share of capital obligations towards their capacity expansions and new exploration work.
Van den Berg has reduced SPDC's permanent staff in Nigeria from 5,100 in mid-1997 to a little over 4,400, because of a decline in operations caused by NNPC's payment failures and reduced budgets. But the company also has about 9,000 contract workers, reduced from over 10,000 in early 1999 because of violence in its areas of operations. SPDC's corporate HQ has been moved from Lagos to Abuja, the federal capital, where Van den Berg is in constant contact with President Obasanjo's aides like Lukman (see OMT). To protect his staff - some of the fields are located in areas long neglected by the government, so the communities are often hostile - Shell employs about 2,500 security men at the cost of $18m/year.
One constant challenge for Van den Berg is to lower operating costs. The same goes for his British colleague Andrew Jamieson who has succeeded Steven Ollereanshaw as the CEO of Nigeria LNG. Ollereanshaw retired in late 1999. Although hydrocarbon production costs up to loading at terminals in Nigeria are generally low by non-OPEC standards, though high by Persian Gulf standards, costs for oil produced in SPDC's large onshore fields are now below $3.00/b, compared to about $3.50/b in mid-1995. The average oil production cost in Nigeria is about $4/b (up to the loading terminals). Costs for offshore oil exceed $4/b, while the costs in ExxonMobil's offshore operations are less than $3.50/b. In some fields in Nigeria the cost is over $5/b, as in the case of a major part of Chevron's offshore production. But for companies to maintain oil production levels, they have to keep exploring as the size of most fields is small.
SPDC is committed, on behalf of the group, to raise its oil production capacity by 600,000 b/d to 1.6m b/d by 2010, compared with targets first set in late 1991 of 1.3m b/d for 1996 and over 1.8m b/d for 2008. The current target was announced in February 1999 by Van den Berg who then unveiled an $8.5 bn ten-year plan for Nigeria. The money will be invested in 12 projects, onshore and offshore, including an expansion of the LNG venture which began exports in October 1999 (see Gas Market Trends No. 7). This plan will depend on NNPC funding 25% of the investment - with Shell, TotalFinaElf and Agip sharing the rest. SPDC is committed to develop large non-associated gas fields, as well as cut the rate of flaring of its associated gas, again on condition that NNPC pays its share of the funding on time. (NNPC funding has been a major problem for Van den Berg and the other foreign CEOs). The plan was coupled with a proposal to shed about 25% of SPDC's staff, with most redundancies to affect contract workers.
Because NNPC failed to pay its share of funding for a $6.5 bn investment plan launched in 1992 by the group, based on a July 1991 MoU with the state, SPDC and other foreign operators stopped exploring for oil and delayed most development projects. As a result, SPDC's capacity was reduced from nearly 1m b/d in 1991 to about 900,000 b/d in 1995. At the time, Van den Berg's predecessor Anderson had to resort to a carrot diplomacy as well as be firm with the then military regime. Now, the JV's oil production capacity is 800,000 b/d, compared to more than 1m b/d in the 1990s.
Van den Berg has been pursuing a proposal, made in 1996 by then finance minister Anthony Ani (one of the key aides to then military dictator Abacha), that the oil producing JVs be converted into production sharing agreements (PSAs). In a PSA NNPC is relieved of a heavy funding burden and the foreign operator covers all the exploration and development costs. But NNPC's top management is still resisting such a change.
Like his predecessor, Van den Berg has spearheaded a multi-faceted drive to resolve numerous communal problems in the oil-rich areas, and SPDC has a programme to improve the environment in the Niger Delta which could become a model for the other JVs to follow. Some of the JV's fields have been attacked since the 1960s by the local communities.
These communities get little or no economic benefit from the oil produced in their territory but are affected by pollution which they claim to be caused by the oil companies. An example is the case of the Delta's Ogonis, one of 250 ethnic groups in Nigeria, whose oil-rich Ogoniland has been affected. The Ogonis accused Shell of collusion with Gen. Abacha's junta in the execution in November 1995 of Ken Saro-Wiwa, a leader of the 550,000-strong community who campaigned against Shell's operations. SPDC then said 60% of the oil spills in Ogoniland had been the direct result of sabotage made to claim compensation.
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|Comment:||NIGERIA - Shell - Ron van den Berg.|
|Publication:||APS Review Gas Market Trends|
|Date:||Aug 20, 2001|
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