Tag Archives: Nigeria Shell

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

Cash or CleanUp? life in the oil polluted swampland

Image from http://cas2.umkc.edu/Geosciences/LCAM/NIGER_DELTA/PAGES/N_Sat_vali_Warri.htm

Nearly a decade after two catastrophic oil spills in the Niger Delta, a comprehensive clean-up has been launched in 2017 in the southern Nigerian region.

Earlier this month, crews of young men equipped with high pressure hoses began to attack the crude oil blighting the creeks and mangrove swamps where they live.  Workers from Bodo in Rivers State are beginning a three-year project that claims to mark a new approach to cleaning up the delta, the vast polluted swampland pumping the oil vital to Africa’s largest economy.

Four hundred workers will clear dead foliage and spilled oil before planting new mangroves. Where they are working is small but organisers hope the anti-pollution drive can be repeated elsewhere in the delta.

Unlike clean-up operations run routinely by oil giant Royal Dutch Shell, this one is backed by local communities and teams of scientists who will take samples of water, mud and soil in each area to measure progress and determine the best cleaning method.  Funded by Shell and its joint venture partners, the clean-up is the culmination of years of legal wrangling and international pressure to overcome animosity and mutual suspicion that have divided locals, government and oil companies.

Shell declined to say how much it was spending, while leaders see it as a glimmer of hope in a benighted land where many wells are not safe to drink from and fishing and farming are devastated.

“The Niger Delta is at a crossroads,” said Inemo Samiama, chairman of the Bodo Mediation Initiative (BMI), managing the clean-up. “We have a lot of polluted sites. We need something we can refer to, some shining example.”

The work of BMI covers 10 sq km, a fraction of the 70,000 sq km Delta.  As workers walk through gnarled, dead mangrove roots in protective gear and masks, oil seeps into their footprints – remnants of spills for which Royal Dutch Shell admitted responsibility. Despite the optimism, environmentalists point out at BMI’s work rate, it will take 21,000 years to clean the entire delta and that’s not including the 10 years of legal battles it took to make it happen.  Communities in eight other Delta states are unhappy they have no clean-up plan, fuelling the resentment underpinning militant movements that hit production last year and helped tip Nigeria into its first recession in 25 years.  One group, the Niger Delta Avengers, has threatened a return to violence. They say government is not keeping its promises to clean up the delta and provide more jobs, money and infrastructure.

Bodo received support from British law firm Leigh Day, which negotiated a 55 million pound pollution settlement with Shell in 2015. Leigh Day said it agreed to freeze a separate case to force a clean-up via British courts in order to give the BMI a chance.  Ogoni, the wider area in which Bodo sits, was the subject of a 2011 UN Environment Programme report warning of catastrophic pollution in the soil and water.

King Emere Godwin Bebe Okpabi of the Ogale community is on the board of a wider Ogoni clean-up effort and is optimistic its own clean-up, due to start next year, will work. But he fears it will not be replicated elsewhere without another marathon battle in the London courts.“The only place you get legal success is the international courts,” he said.

Under Nigerian law, oil companies must begin cleaning up any spill within 24 hours. But the remoteness of spills and lax enforcement mean this rarely happens.  Ferdinand Giadom, a lecturer at the University of Port Harcourt and technical advisor to the Bodo cleanup, said communities often block clean-ups in the hopes of cash settlements. Even in Bodo, works were delayed by two years due to local infighting.

Shell said most oil spilled last year was due to sabotage or theft for illegal refining. It also said communities block access to sites, making cleaning more difficult.

Excerpts from Anger on the margins of historic clean-up in Nigeria’s Delta, Reuters, Nov. 9,  2017

The Niger Deltans 1992-2016

Niger Delta states of Nigeria. image from wikipedia

They call themselves the Niger Delta Avengers. Little is known about the new radical group that has claimed a series of pipeline bombings in Nigeria’s oil-producing region this year and evaded gunboats and soldiers trawling swamps and villages.  Their attacks have driven Nigerian oil output to near a 22-year low and, if the violence escalates into another insurgency in the restive area, it could cripple production in a country facing a growing economic crisis.

President Muhammadu Buhari has said he will crush the militants, but a wide-scale conflict could stretch security forces already battling a northern rebellion by hardline Sunni Muslim group Boko Haram.  Militancy has been rife over the past decade in the Delta, a southern region which is one of the country’s poorest areas despite generating 70 percent of state income.

Violence has increased sharply this year – most of it claimed by the “Avengers” – after Buhari scaled back an amnesty deal with rebel groups, which had ended a 2004-2009 insurgency.Under the deal, more state cash was channelled to the region for job training and militant groups were handed contracts to protect the pipelines they once bombed. But Buhari cut the budget allocated to the plan by about 70 percent and cancelled the contracts, citing corruption and mismanagement of funds.

The “Avengers” have carried out a string of attacks since February 2016… The group has emailed journalists a statement saying they were fighting for an independent Delta and would step up their attacks unless oil firms left the region within two weeks.”If at the end of the ultimatum you are still operating, we will blow up all the locations,” it said. “It will be bloody. So just shut down your operations and leave.””To international oil companies, this is just the beginning and you have not seen anything yet. We will make you suffer,” it said.

Authorities have no hard facts about the group – such as its size, bases or leadership…Diplomats and security experts say it has shown a level of sophistication not seen since the peak of the 2004-2009 insurgency, which halved Nigeria’s oil output. They say it must be getting help from sympathetic oil workers in identifying the pipelines to cause maximum damage….

In February 2016 the group claimed an attack on an undersea pipeline, forcing Shell to shut a 250,000 barrels a day Forcados terminal. In May 2016, it took credit for blasting a Chevron platform, shutting the Warri and Kaduna refineries…

Reuters, like other media, has been unable to reach the group, which mainly communicates via Twitter, with the location tracker switched off, and on its website.Its members describe themselves there as “young, well travelled” and mostly educated in eastern Europe.

Given the lack of intelligence about the militants, the army launched a wide-ranging hunt across the Delta this week, sending gunboats into mosquito-infested creeks and searching villages in the middle of the night. But some residents say such a heavy-handed military approach stokes dissent in the Delta where many complain of poverty despite sitting on much of Nigeria’s energy wealth. They say some villagers help militants to hide in the hard-to-access swamps….

Executives [oil firms in Nigeria] met Vice President Yemi Osinbajo in May 2016 and one of them warned the government was being “too direct and blunt” and needed to find some balance, according to a source familiar with the discussions….Many locals in the Christian south see Buhari, a Muslim northerner, as an oppressor.

Excerpts ‘Avengers’ threaten new insurgency in Nigeria’s oil-producing Delta, Reuters, May 16, 2016

According to their website: The Nigerian State is like the biblical Egypt, the Government of the Federation is like the Biblical Pharaohs, President Buhari is like the Egyptian Pharaoh Ramesses, the Niger Delta People are like the Jews while the Niger Delta Avengers is Moses. So all we are asking is let our people go (NIGER DELTANS).

See also UN on Ogoniland oil damage

Shell Nigeria and the Ogoni People

Nigeria

Fishermen + Farmers Against Shell

shell gas station. Image from wikipedia

Tens of thousands of Nigerian fishermen and farmers are suing multinational oil giant Shell in two new lawsuits filed on March 2, 2016 in a British High Court, alleging that decades of uncleaned oil spills have destroyed their lives.  London law firm Leigh Day & Co. is representing them after winning an unprecedented $83.5 million in damages from Shell in a landmark ruling by the same court last year. Shell originally offered villagers $50,000.

In a statement on March 2, 2016 before the trial opened, Shell blamed sabotage and oil theft for the ongoing pollution and noted it had halted oil production in 1993 in Ogoniland, the area where the two communities are located in Nigeria’s oil-rich southern Niger Delta.  Shell said it will challenge the jurisdiction of the British court.

The Ogoni are among the most traumatized of millions of Nigerians suffering oil pollution since the late 1950s….

Excerpts from  MICHELLE FAUL, Nigerians sue Shell in UK court for oil spills contamination, Associated Press, Mar. 2, 2016

6,000 km Pipelines, How Many Lawsuits against Shell, Nigeria

shell company logo--always a Shell, image from wikipedia

A Dutch appeals court ruled on December 18, 2015 that Royal Dutch Shell can be held liable for oil spills at its subsidiary in Nigeria, potentially opening the way for other compensation claims against the multinational. Judges in The Hague ordered Shell to make available to the court documents that might shed light on the cause of the oil spills and whether leading managers were aware of them.  This ruling overturned a 2013 finding by a lower Dutch court that Shell’s Dutch-based parent company could not be held liable for spills at its Nigerian subsidiary.

The legal dispute dates back to 2008, when four Nigerian farmers and the campaign group Friends of the Earth filed a suit against the oil company in the Netherlands, where its global headquarters is based.  “Shell can be taken to court in the Netherlands for the effects of the oil spills,” the court ruling stated on Friday. “Shell is also ordered to provide access to documents that could shed more light on the cause of the leaks.”  The case will continue to be heard in March 2016.  Judge Hans van der Klooster said the court had found that it “has jurisdiction in the case against Shell and its subsidiary in Nigeria”….

“There are 6,000km of Shell pipelines and thousands of people living along them in the Niger Delta,” he said. “Other people in Nigeria can bring cases and that could be tens of billions of euros in damages.”  In a separate case, Shell agreed in January to pay out £55m ($82 million) in out-of-court compensation for two oil spills in Nigeria in 2008, after agreeing a settlement with the affected community in the Delta.

Excerpt from Dutch appeals court says Shell may be held liable for oil spills in Nigeria, Guardian, Dec. 18, 2015.

Shell in Nigeria: the Attitude

Shell and the Nigerian Government

How to Squander a Country: Nigeria

Gates of Oil reifnery in Port Harcourt, Nigeria. Image from wikipedia

Dead fish wash up on the once-fertile shores of creeks around Bodo, a town in the Niger delta, that are covered with crude oil more than six years after two massive spills. Locals have only now received compensation from Shell, the oil firm responsible for the leaks. For the first time in half a decade, fishermen have cash to start businesses, repair their houses and send children to school… “Look,” says the chief of a tiny town called B-Dere, just a few miles from Bodo. He gestures to the deathly-black banks still bearing the marks of the slicks. “There is nothing to drink, nowhere to fish. What good has come from it?”

The cash that the oil industry provides has greased Nigerian politics for decades. Gross mismanagement and corruption in the industry are the causes of much of the inequality and discontent with the ruling party in an economy that is not just Africa’s largest but that ought to also be one of its wealthiest…

Nigeria pumps something like 2m barrels of oil a day. These account for most of its exports and about 70% of government revenues. But official figures are as murky as its polluted creeks. Volumes are recorded only at export terminals rather than at the wellhead, says Celestine AkpoBari of the Port Harcourt-based advocacy group, Social Action. Were a proper tally kept, he says, corruption would be exposed on a scale that would shock even the most cynical Nigerian.

It seems likely that more than 100,000 barrels of crude are stolen (or “bunkered” in the local parlance) every day, at a cost to the state and investors of billions of dollars a year. Politicians, oil workers and security forces are said to be behind the complex cartels that steal, illegally refine and sell crude oil. They have amassed almost unimaginable wealth in a country where poverty is still rife.

Oil’s taint has seeped into almost all levels of government and business. Yet the central problem is found in the petroleum ministry, which wields vast unaccountable power. The Nigerian National Petroleum Corporation (NNPC), a state-owned behemoth, is responsible for all aspects of the industry, from exploration to production and regulation. It is among the most secretive oil groups in the world, and is “accountable to no one”, says Inemo Samiama, country head of the Stakeholder Democracy Network, a non-profit group.

In 2013 the former governor of the central bank, Lamido Sanusi, alleged that $20 billion in oil revenues was missing from state coffers. He was fired for his troubles soon after. …

Even where cash has not been nicked, it has often been squandered. Take the Excess Crude Account (ECA), a sovereign-wealth fund intended to cushion Nigeria’s budget against falling oil prices. Most of it was spent over the past two years, despite oil prices being relatively high for most of that period.

The industry itself is in as sorry a state as the government’s finances. Although oil practically gushes from the ground in parts of the delta, oil output has been stagnant for years and billions of dollars of investment are stalled because of uncertainty over a new law for the industry.  This is holding back Nigeria’s economy almost across the board. Because the industry has failed to build the infrastructure to pipe gas to domestic consumers such as power plants, much of it is simply flared and burned: Britain reckons that some $800m worth of Nigeria’s gas a year goes up in smoke. The country is also chronically short of fuel even though it has four state-owned oil refineries. Because of poor maintenance and ageing equipment they operate at well below capacity, forcing Nigeria to import about 70% of the fuel it needs. There is little incentive for reform since the government pays hefty subsidies to NNPC to keep on importing…

But a starting point should be to halt subsidies for fuel imports. At a stroke that would undercut a major source of corruption and crime (both on land and at sea) that spills into neighbouring countries, the destination for smuggled consignments of cheap Nigerian fuel. It should also take a close look at NNPC, which should not be allowed both to participate in the market and regulate it. Some of its assets could be privatised. The ruling party and opposition are considering both….

For communities in Ogoniland, the most pressing problem is cleaning up. Shell has promised to mop up the mess around Bodo, though the process has yet to start. Compensation is one thing, Bodo residents say, but what they really want is their livelihood back.

Nigeria’s oil: Crude politics, Economist,  Mar. 28, 2015, at 54

Bonga Oil Spill: the Nigerian Perspective against Shell

The Director General, Nigerian Maritime Administration and Safety Agency (NIMASA) Mr. Patrick Akpobolokemi has slammed Anglo Dutch oil giant, Shell for the way and manner it handles oil spill in the country, especially in the oil and gas rich Niger Delta region.  He said the response of the foremost oil firm to oil spillages in the country fell short of international standards and practices.  The helmsman of Nigeria’s apex maritime regulatory authority spoke against the backdrop of the Bonga oil spill incident which wreaked havoc in many communities in the Niger Delta region in 2011.

The National Assembly had last week through the House of Representatives Committee on Environment, organised a public hearing over the incident.  Recounting NIMASA’s experience during the incident, Akpobolokemi said that the oil giant tried as much as possible to frustrate the agency’s attempts to move to the site of the spill.  As a stop gap measure, he explained that the agency provided some relief material to some of the communities affected by the spill.  Akpobolokemi flayed Shell for it poor response and nonchalant attitude towards spill incidents in the Niger Delta area and called for an immediate stop to this.

Said he: “The kind of impunity Shell and its allies have demonstrated so far in the Niger Delta area in the past must stop if the future of the people of Nigeria and the environment are to be protected,” adding that in other countries when spills like this occur, the first thing is remuneration, attention to the affected communities and finding ways of reducing the sufferings of the people and restoring the ecosystem, which Shell has failed to do. “Shell fell short of all these criteria and of course it is sad that it is only in Nigeria that we can witness this degree of impunity.

“We in NIMASA see this as a serious infraction to our laws, communities and the damage done to the communities and the ecosystem can be seen as genocide. When a similar spill occurred in the gulf of Mexico, Shell was alive to its responsibilities, they were made to pay compensation to the affected communities but today in Nigeria, any spill that occur, a claim of sabotage or third party claims are the order of the day.” He said NIMASA had made presentations before the House Committee on Environment, asking SNEPCO to pay compensation, not an administrative fee, to the communities totalling $6.5 billion.

“The response from Shell was evasive and do not suggest that it is a company that is alive to its responsibility. It believes that the culture of impunity can continue to go on, thereby playing with our legal system. May we use this opportunity to correct the wrong that has been done to the Nigerian environment because of the callousness of this company and we stand by our position that compensation must be paid to the communities.

“What we expect Shell to do is to come to the negotiating table and discuss with the affected communities on the means of payment so that the communities can get back their natural eco-system”.

John Iwori, Bonga Oil Spill: NIMASA Slams Shell, http://www.thisdaylive.com/,  Feb. 14, 2014

Shell Response