shellnigeriaShell is facing the humiliation of having to reduce its workforce by 5000 as part of a radical cost-cutting drive due to the falling oil price.

As the oil giant’s profits had plummeted an amazing 73 per cent, Peter Voser, the chief executive, said “the outlook remains very uncertain, and we are not expecting a quick recovery.”

One place where Shell still faces an uncertain future is Nigeria, where the Abuja government is considering offering Shell’s current concessions up for sale. But rather than cut and run, Shell insists the company will fight the Chinese head-on.

Simon Henry, the chief financial officer told analysts yesterday that “One thing you probably will have seen, and can be sure of, is that both ourselves and the industry will defend our interests. ”

The Chinese had identified a number of blocks in which they would be interested, including licences operated by Shell, Chevron and ExxonMobil which originally expired in November and December 2008.

Chevron and Exxon have won a year’s extension, whilst Shell has successfully sought a court injunction allowing it to continue to operate while it challenged the expiry.

Henry noted the speculation came against a background of Nigeria proposing an oil reform bill.

The proposed Petroleum Industry Bill (PIB) “could allow the government to renegotiate old contracts, impose higher costs on oil companies and retake acreage that firms have yet to explore,” he said.

But Shell’s Nigerian operations are not for sale.Maybe the company still believes they remain one of the jewels in its crown .

And as the violence recedes so oil production increases. Shell’s Bayelsa state production has increased from a paltry 12,000 barrels per day at the height of militancy in the region to 100,000 barrels per day in the last few weeks.

But as production increases so will the gas flaring inflicting further misery on the local communities.