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Violence could force Shell out of Nigeria'

Consultants tell oil group its policies have fed mounting strife in Nigeria, which is home to 10% of its output

ROYAL Dutch-Shell, the oil multinational, could be forced to pull out of Nigeria by 2008 because of violence in the oil-producing Niger Delta region, says a confidential report commissioned by the company.

The report, written by outside consultants, said Shell had contributed to conflict through its policies on community relations, access to land and contract awards.

Nigeria is one of Shell's most important countries of operation, accounting for about 10% of worldwide production as well of some of the group's most promising future fields.

The report, which Shell has declined to publish in full, was commissioned as part of a bid to develop a peace and security strategy with other interest groups in the Delta.

Shell did not agree with the authors' conclusion that it would have to withdraw in five years, but admitted conflict in the Delta had "the potential to get worse" if no action were taken.

"Government and ... communities must take the lead in ending conflict. But we are also determined to help."

Shell operates and has a 30% shareholding in a government-controlled joint venture that accounted last year for just under half Nigeria's official output of about 2-million barrels a day. About $2,3bn was invested in the venture last year, which also includes France's Elf and Eni of Italy.

Nigeria accounted for about a third of Shell's 3,9-billion barrel cut in global proved reserves this year.

Shell does not separate out the figure for its proved reserves in Nigeria but the total amount for the Africa region is 2,37-billion barrels, compared with a worldwide total of 14,35billion barrels.

Oil companies' operations in the Delta are frequently disrupted by theft, militias and local protests at the failure of multinationals and the government to deliver development after more than 40 years of production.

In its annual People and the Environment report released yesterday, Shell said it lost 9-million barrels of oil to theft last year and had forgone 43million barrels after violence in the western Delta forced it to shut its swamp facilities.

Shell has a target to increase jointventure production to 1,5-million barrels a day by 2006. Shell is increasingly looking to develop economically attractive deep offshore fields, away from the Delta's problems.

The deep offshore projects are expected to bring production increases of 200000 barrels a day by 2006.

Shell was heavily criticised after the 1995 executions of the writer Ken Saro-Wiwa and eight other activists by the then military government.

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