Prepared for Free Article on 03/10/2022 at 08:47. Authorized users may download, save, and print articles for their own use, but may not further disseminate these articles in their electronic form without express written permission from Africa Confidential / Asempa Limited. Contact email@example.com.
A plan to restart oil production in Ogoniland amid a failing environmental clean-up risks repeating all the mistakes of 25 years ago
This week lawyers for the 40,000 people in the Ogale and Bille communities in the Niger Delta have been pressing their case in London's Supreme Court to hold Royal Dutch Shell liable in Britain for environmental despoliation in the Niger Delta. For now, it's just a matter of where the case will heard.
At the centre is the question of whether Royal Dutch Shell can be held liable for the actions of the Shell Petroleum Development Company JV (a joint venture with the government) in Nigeria: the foreign oil companies held 45% of the equity while the government had 55%. But the foreign oil companies were the operators of the licence, and were allowed to repatriate their costs, dividends and profits. That raises the question of their responsibility for operations on the ground in Ogoniland.
Should the Supreme Court rule in favour of the applicants in Bille and Ogale, there is likely to be a flood of similar cases from other petitioners in the Niger Delta seeking damages in the British courts for environmental despoliation.
Many of these would be historic claims. Shell was operating in Ogoniland from 1958 to 1993 and could be held responsible for all the accumulated environmental damage there in that period. And in the 12 onshore licences that Shell has sold to local companies such as Aiteo and Seplat, it might be held liable for the environmental damage wrought by oil production up until the date of sale, depending on the interpretation of the contract.
Mitigation of environmental damage was seen as a major cost at the time of the sale negotiations and most of the Nigerian buyers paid prices that, at least in retrospect, look ruinously high. Other more political factors might have been involved at the time.
A ruling on the Ogoni case is expected before the end of the month. London firm Leigh Day, representing the applicants, argues an important precedent was set with a ruling by the Supreme Court in London in April 2019 to allow a case against Vedanta mining company, accused of environmental damage in Zambia, to be heard in Britain (AC Vol 60 No 18, The China price).
Deltan activists calculate that a court in Britain, insulated from the commercial and political pressures in Nigeria, will order far higher damages than a judge back home. A London hearing would also earn their cause a far higher profile.
These legal arguments in London are playing out against a backdrop of a plan to restart oil production in Ogoniland. After it stopped production there in 1993, Shell has sought to restructure its operations in Nigeria. It had tried to sell its Ogoniland licences to Tony Elumelu, the flamboyant local magnate and advocate of 'Afri-Capitalism', who was aggressively trying to secure the Ogoniland blocks, understood to hold substantial reserves.
In the end, the state-owned Nigerian National Petroleum Corporation (NNPC) stepped in and plans to restart production there. But it will mean some critical negotiations with local groups in the meantime.
It will be 25 years in November since Ogoni activist Ken Saro-Wiwa and eight others were hanged by General Sani Abacha's military regime and for a few weeks the Niger Delta region was in the international headlines.
Nelson Mandela weighed in support of the activists. Abacha's regime was sanctioned and expelled from the Commonwealth (AC Vol 37 No 14, Commonwealth collapse).
Shell, which faces similar cases in the Netherlands over jurisdiction, wants the hearing in Nigeria. So does President Muhammadu Buhari's government which insists it's cracking down on judicial bias and corruption.
Billions of dollars could be at stake. Ogoniland is one of the most contaminated stretches of water and marshland in the world and the pollution across the wider Niger Delta is said by activists to be of a similar scale. The UN Environmental Programme called for a US$1 billion fund to clean-up the 600 square kilometre area with its shut-off oil wells and labyrinths of ageing pipelines.
UN experts estimated the damage in Ogoniland is far worse than the BP Deepwater Horizon spill of 4.9 million barrels in the Gulf of Mexico in 2010. Then BP paid $18.7bn in fines to the US government and spent $65bn on the clean-up.
There is mounting evidence that the $1bn clean-up in Ogoniland, financed jointly by Shell and Nigeria's government, has achieved little and failed to meet basic standards of accountability. To that has been added the deployment of around 5,000 troops to the area since last December.
Military officers in Ogoni are in a position to broker when oil can be tapped from the network of pipes crisscrossing Ogoni land, by both legal and illegal refiners. It's called 'bunkering' in the argot of organised crime in the Delta but has nothing to do with maritime refueling. Fortunes have been made by officers and local business people in this way.
Papers by Transparency International and the Civil Society Advocacy Group last year claimed military officer had played a key role in oil theft amounting to billions of naira since 2016. The report accused the officers of turning 'a blind eye to illegal activity and protecting oil thieves' access to extraction points'.
Reliable figures on volumes of oil theft are hard to compute as reporting is politically driven. Government officials minimise it and reject most claims of collusion by security forces. International companies reckon oil theft takes at least 10% of production, blaming the tapping of pipelines for most environmental damage.
Activist groups, many hollowed out since Saro-Wiwa's effective international campaign, struggle to agree on a common stance on oil theft or much else. Some of their leaders are now fully embedded in the national political hierarchy.
In the Movement for the Survival of the Ogoni People (MOSOP) founded by Saro-Wiwa, three activists were vying to be its President. Legborsi Pyagbara sits on a governance board at the Hydrocarbon Pollution Remediation Project (HYPREP) which is meant to oversee the clean-up in Ogoniland. After opponents accused Pyagbara of being too close to the discredited HYPREP operation, he has been pushed out of contention for the MOSOP leadership. (AC Vol 60 No 7, Clean-up or cover-up?).
Critics are demanding that HYPREP explain what it's doing with the $360 million that it's claimed to have received. It says that it has spent $38.5m on local projects and created 750 jobs before the coronavirus pandemic lockdown (AC Vol 60 No 14, HYPREP's checkered rep).
This raises further problems for Shell which says it has paid $108m into HYPREP funds, of which about $10m have been subject to an audit. No Clean-Up, No Justice, the latest report on the project by Nigeria's Environmental Rights Agency, Amnesty International and Friends of the Earth, quotes the UN assessment that HYPREP wasn't capable of running such a complex project. The UN concluded that at the current rate of disbursement it would 'take HYPREP 100 years to utilise its five-year budget'.
For the most part the report targets Shell which might prove helpful to the Deltan communities' case in the Supreme Court. It also argues that the clean-up should be extended to other areas of the Delta, to be done mainly by Shell and the other big oil companies.
This will be music to the ears of activists and politicians elsewhere in the Delta. Former governor of Bayelsa State, Seriake Dickson, has been lobbying for this, having established the Bayelsa Commission and persuaded the Archbishop of York, John Sentamu (who has just retired), to chair it.
Given the volume of oil pumped out of Bayelsa, it was where production started in 1958, then proponents of the commission would be seeking at least another billion dollars.
Political organisations, however, are badly fractured in the Delta, whether in Ogoniland, or the rest of Rivers State, Bayelsa, Edo and Delta states. It's less to do with party labels and more with factions within the parties jockeying for position within the national organisations.
Local activist groups have also fractured, often over resources, sometimes over tactics. MOSOP's transition council is preparing to re-run internal elections for the group's presidency next year.
One of the most powerful Ogoni politicians, Senator Magnus Abe, has been elevated to the board of the NNPC by Deputy oil minister Timipre Sylva, a former Delta militant and governor of neighbouring Bayelsa State. Rather than boosting the Ogoni voice at national level, Abe's promotion plays into a widening schism within the governing All Progressives' Congress.
That is pitting a faction led by former governor of Rivers state Rotimi Amaechi and sitting governor of Kaduna, Nasir el Rufai, against the national leader of the APC, Bola Tinubu, a former governor of Lagos, and Adams Oshiomhole, a former governor of Edo whose abrasive style has led to his suspension as national chairman of the APC.
In the wake of Oshiomhole's reluctant acceptance of the confirmation of his suspension, there is now a battle between the two factions over who should become acting chairman, with the power to rule on disputes within the party. That's relevant to the oil-producing region because two of the contenders come from the Niger Delta.
After Godwin Obaseki, governor of Edo, fell out with Oshiomhole, he defected to the opposition People's Democratic Party and is trying to win the party's nomination to run for a second term in state elections in August. Should he succeed and hold the state, that would strip the APC of any office in the Delta.
But plenty of other rivalries may come into play making Obaseki's position tenuous in either party. Historically, with oil, gas and massive infrastructure contracts in play, as well as the possibility of a revival of armed militancy, all encourage a determined ruthlessness among Delta politicians. Even his supporters ask whether Obaseki has the steel to outmanoeuvre Tinubu and Oshiomhole.
During the hiatus in work due to the pandemic, there have been calls to restructure HYPREP yet again. That puts at risk the position of HYPREP's public face Marvin Dekil. In any case, Shell will not be returning to produce in Ogoniland. Its exit from the area, on the demand of Saro-Wiwa's movement was one of the enduring results of those bitter confrontations in the 1990s.
How the delta shakes up Naija
Although there are new players in the Niger Delta, the region still has the capacity to shake up Nigeria's politics and economics. Dealt a heavy blow by the coronavirus pandemic, the treasury needs oil revenue urgently. Buhari's spending plan for 2020 was based on an oil price of $57 a barrel with production of 2.17 million barrels a day.
The latest budget plan has gone through the National Assembly; at 10.8 trillion naira it is slightly bigger than the previous version and includes stimulus spending to avert recession. Vice-President Yemi Osinbajo's Economic Sustainability Committee has launched an ambitious 'Bounce Back' post-pandemic recovery plan involving the cultivation of 20,000-100,000 hectares of farmland in each of the 36 states, the building of 300,000 houses a year and the installation of solar power in 5 million households.
Whether there is money to finance all this will depend more than ever on conditions in the Niger Delta. The current price of Brent crude is around $39 a barrel but OPEC has set a provisional quota for Nigeria of 1.42 million barrels a day. A resumption of militancy could undermine even that lower level of production.
International interest in the Delta has ebbed since the 1990s. Then, governments, activists and lobby groups announced boycotts and protests against General Sani Abacha's regime for what the then British Prime Minister John Major described as the 'judicial murder' of Ken Saro-Wiwa and eight others. Yet two weeks after Saro-Wiwa's execution, a senior British official assured all the major oil companies operating in Nigeria that there was no prospect of direct sanctions to block Nigeria's oil exports, the lifeblood of the Abacha regime (AC Vol 37 No 3, Who's killing who?).
But it took some arguing within the British and United States governments to give Abacha that vital leeway. According to leaked diplomatic cables there were discussions in 1995 between Major and US President Bill Clinton about the possibility of a naval blockade on Nigeria's oil exports at the UN Security Council. But commercial pressure scuppered that.
Yet, the Ogoni crisis did long-term damage to the standing of oil companies, particularly that of Royal Dutch Shell, the main target of the protests. It was the combination of the environmental damage to Ogoniland and the accusations that the company had colluded with the Abacha regime's military occupation of the area that forced it to rethink its strategy in Nigeria. Since 2000, it has been trying to sell most of its onshore blocks (see Feature, Back to the scene of the crime) and give local politics a wide berth.
Most other 'Big Oil' companies are following that lead. For Nigeria, that poses questions about its status among Africa's biggest oil producers.
Can it continue to lead the pack if most of its onshore fields are operated by smaller local companies? And what concessions will it have to make to international companies to persuade them to invest in offshore fields under the terms of the new Petroleum Industry Bill?
Both deputy oil minister Timipre Sylva and managing director of the state's Nigerian National Petroleum Corporation (NNPC) Mele Kyari say there will be another bidding round for major exploration licences next year when industry interest may have recovered (AC Vol 61 No 8, Oil behaving badly). Until then, there is unlikely to be strong interest in much buying and selling, including Sylva's much-criticised but ongoing marginal field bidding round, which has been rescheduled several times this year (AC Vol 61 No 10, Into the land of empty).
Copyright © Africa Confidential 2022