Monthly Archives: April 2018

OPL 245: an Affair to Remember and Sanction

Nigeria has long ignited interest from oil firms, but it can be a dangerously combustible environment when it comes to the risk of corruption. Two firms caught up in scandals are Royal Dutch Shell and Eni, Italy’s state-backed energy group.

The case centres on the purchase of a big offshore oil field known as OPL 245, and touches the top ranks of both firms. In the dock will be, among others, Eni’s current CEO, Claudio Descalzi, and Shell’s former exploration chief, Malcolm Brinded. Also on trial are the firms themselves, charged with failing to prevent bribery. The individuals face jail if convicted; the companies face fines. All deny wrongdoing.

In 2011 Shell and Eni jointly paid the Nigerian government $1.3bn for OPL 245. Prosecutors allege they knew the government would pass $1.1bn of the funds to a shell company called Malabu, controlled by Dan Etete, a former oil minister. They claim the companies had reason to believe Mr Etete would use much of what he received to pay off officials, including Nigeria’s president at the time, Goodluck Jonathan. They also suspect that more than $50m may have gone to Shell and Eni executives as kickbacks. Mr Jonathan has denied involvement. Mr Etete faces charges in Nigeria; his whereabouts are unknown…

International investors are particularly vexed about the alleged involvement of Shell, a blue-chip oil major. In 2017, after e-mails were leaked, it admitted that executives had known that much of the purchase price would go to Mr Etete, a convicted money-launderer. In the e-mails, they speculated that funds might flow on to Mr Etete’s political friends. One investor says that Shell, by emphasising for so long who the contract was with, not where the money was going, honoured the letter but not the spirit of good governance—“and that’s not good enough anymore”.

Excerpts from The OPL 245 Affair: Drillers in the Dock, Economist, Mar. 3, 2018

Certainly Not a Bed: the seabed

Walking across the seabed (US Navy). image wikipedia

Patania One became in May 217the first robot in 40 years to be lowered to the sea floor in the Clarion Clipperton Zone (CCZ), about 5,000 metres beneath the Pacific ocean…There it gathered data about the seabed and how larger robots might move carefully across it, sucking up valuable minerals en route.

The CCZ is a 6m square-kilometre (2.3m square-mile) tract between two of the long, straight “fracture zones” which the stresses of plate tectonics have created in the crust beneath the Pacific. Scattered across it are trillions of fist-sized mineral nodules, each the result of tens of millions of years of slow agglomeration around a core of bone, shell or rock. Such nodules are quite common in the Pacific, but the CCZ is the only part of the basin where the International Seabed Authority (ISA), which regulates such matters beyond the Exclusive Economic Zones (EEZs) of individual countries, currently permits exploration. Companies from Japan, Russia, China and a couple of dozen other countries have been granted concessions to explore for minerals in the CCZ. The ISA is expected to approve the first actual mining in 2019 or 2020.

This could be big business. James Hein of the United States Geological Survey and colleagues estimated in a paper in 2012 that the CCZ holds more nickel, cobalt and manganese than all known terrestrial deposits of those metals put together. The World Bank expects the battery industry’s demand for these, and other, minerals to increase if the transition to clean energy speeds up enough to keep global temperatures below the limits set in the Paris agreement on climate.

One of the firms attracted by this vast potential market is DEME, a Belgian dredging company ….Korea, Japan and China all have state-run research projects looking to dredge nodules from the deep sea with robots: “It really is a race,” says Kris Van Nijen, who runs DEME’s deep-sea mining efforts…

[It was expected]that deep-sea mining would develop rapidly by the 1980s. A lack of demand (and thus investment), technological capacity and appropriate regulation kept that from happening. The UN Convention on the Law of the Sea (UNCLOS), which set up the ISA, was not signed until 1982. (America has still not ratified it, and thus cannot apply to the ISA for sea-floor-mining permits.)

Mr Van Nijen and his competitors think that now, at last, the time is right. DEME is currently building Patania Two, or P2… In order to satisfy the ISA, this new machine does not just have to show it can harvest nodules; it also has to show that it can do so in an environmentally sensitive way. Its harvesting will throw up plumes of silt which, in settling, could swamp the sea floor’s delicate ecosystem. A survey of CCZ life in 2016 found a surprising diversity of life. Of the 12 animal species collected, seven were new to science…

The CCZ is not the only sea floor that has found itself in miners’ sights. Nautilus, a Canadian firm, says it will soon start mining the seabed in Papua New Guinea’s EEZ for gold and copper, though at the time of writing the ship it had commissioned for the purpose sits unfinished in a Chinese yard. A Saudi Arabian firm called Manafai wants to mine the bed of the Red Sea, which is rich in metals from zinc to gold. There are projects to mine iron sands off the coast of New Zealand and manganese crusts off the coast of Japan. De Beers already mines a significant proportion of its diamonds from the sea floor off the coast of Namibia, although in just 150 metres of water this is far less of a technical challenge.

If the various precautions work out, the benefits of deep-sea mining might be felt above the water as well. Mining minerals on land can require clearing away forests and other ecosystems in order to gain access, and moving hundreds of millions of tonnes of rock to get down to the ores. Local and indigenous people have often come out poorly from the deals made between miners and governments. Deep-sea mining will probably produce lower grade ores, but it will do so without affecting human populations.

Undersea Mining: Race to the Bottom, Economist, Mar. 10, 2018

Forever Dead Products

Yangtze river

In a paper published in 2107 in Science Advances, Roland Geyer of the University of California, Santa Barbara, and his colleagues put the cumulative amount of solid plastic waste produced since the 1950s that has not been burned or recycled at 4.9bn tonnes. It could all have been dumped in a landfill 70 metres deep and 57 square kilometres in area—that is to say, the size of Manhattan

If only it had all remained on land, or even washed up on beaches, where it could be collected. A bigger environmental worry is that much plastic has ended up in the ocean, where, dispersed by currents, the stuff becomes virtually irretrievable, especially once it has fragmented into microplastics. Computer models suggest that seas hold as many as 51trn microplastic particles. Some are the product of larger pieces breaking apart; others, like microbeads added to toothpaste or face scrubs, were designed to be tiny….

Even if the flow of plastic into the sea, totalling perhaps 10m tonnes a year, was instantly stanched, huge quantities would remain. And the flow will not stop. Most of the plastic in the ocean comes not from tidy Europe and America, but from countries in fast-developing East Asia, where waste-collection systems are flawed or non-existent. In October 2017 scientists at the Helmholtz Centre for Environmental Research, in Germany, found that ten rivers—two in Africa and the rest in Asia—discharge 90% of all plastic marine debris. The Yangtze alone carries 1.5m tonnes a year

Trucost, a research arm of Standard & Poor’s, a financial-information provider, has estimated that marine litter costs $13bn a year, mainly through its adverse effect on fisheries, tourism and biodiversity. It puts the overall social and environmental cost of plastic pollution at $139bn a year. Of that half arises from the climate effects of greenhouse-gas emissions linked to producing and transporting plastic. Another third comes from the impact of associated air, water and land pollution on health, crops and the environment, plus the cost of waste disposal.

Exerpts from:  Plastic Pollution: Too Much of a Good Thing, Economist, Mar. 3, 2018, at 51

Production, use, and fate of all plastics ever made (R. Greyer et al., 2017)

Returning Stolen Money: the Nigerian Saga (2002-2018)

Nigeria and Switzerland signed a memorandum of understanding on March 26, 2018 to pave the way for the return of illegally acquired assets…Switzerland said in December 2017 that it would return to Nigeria around $321 million in assets seized from the family of former military ruler Sani Abacha via a deal signed with the World Bank…[T]he memorandum of understanding was ratified between Nigeria, Switzerland and the International Development Association, (IDA), the World Bank’s fund for the world’s poorest countries.

Excerpt from Nigeria and Switzerland sign agreement to return stolen assets, Reuters, Mar. 26, 2018

US in Africa: Ghana

Ghana’s parliament on March 23, 2018 ratified a deal granting “unimpeded” access to the United States to deploy troops and military equipment in the West African nation in a vote boycotted by the opposition, legislators said.The Ghana-U.S. Military Cooperation agreement requires Ghana to provide unimpeded access to agreed facilities and areas to U.S. forces, their contractors and other related services.

It said facilities provided by Ghana shall be designated as either for exclusive use by U.S. troops or to be jointly used with their Ghanaian counterparts. “Ghana shall also provide access to and use of a runway that meets the requirements of United States forces,” it said. The Americans will use

But critics, including some civil society groups, say this year’s agreement amounted to mortgaging the country’s sovereignty.

Ghana votes to host U.S. military; opposition boycotts vote, Reuters, Mar. 23, 2018