Royal Dutch Shell - Nigeria Joint Venture at Risk

A recently leaked internal memo from Royal Dutch Shell’s chairman of Nigerian operations, Basil Omiyi, and comments from Shell’s CEO, Jeroen van der Veer, raise serious concerns regarding the future of the Shell-Nigeria joint venture. The memo lambasts the Nigerian government for its failure to adequately finance and support the Shell Petroleum Development Company (SPDC), the Shell-Nigeria oil and gas exploration and production joint venture. The memo, circulated on November 14, 2007, was reported by the Financial Times on January 30, 2008. According to Financial Times, the memo accuses the Nigerian government of failing to finance its 55 percent majority share in the Shell Petroleum Development Company (SPDC) . On January 31, Reuters reported that Shell was taking a write-down of $716 million related to its Nigerian assets. In a statement covered by Reuters, Shell said the write-down largely related to onshore assets, including impairments and provisions arising from funding and the security situation in Nigeria.

Nigeria Anti-Corruption Campaign Suffers Major Setback

Nigeria’s law enforcement agency recently announced that it was reassigning Nuhu Ribadu, the current Chairman of the Economic and Financial Crimes Commission, to a remotely located training institute for at least a year. According to the New York Times, Ribadu “has risen to become one of the most powerful and feared figures in Nigeria.” His aggressiveness in combating government corruption have been lauded at home and by the West. Not surprisingly, his willingness to take on powerful Nigerian politicians has put him in a precarious position. The move to sideline Ribadu was quickly condemned by activists, including Nigerian Nobel Prize laureate Wole Soyinka, as a step backward in the effort to clean up Nigeria’s government. According to Soyinka, “it is the ruling party itself, the PDP, that continues to suffocate the nation in its folds of corruption, negating every attempt to rid her of this incubus, since that party has exhibited itself, again and again, as the very quagmire of corruption, nurtured on corruption, sustained by corruption and dependent on corruption for its very survival.”