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Nigeria

Aiteo struggles with output and pollution in the Delta

The latest oil spill devastation comes as political tensions rise in a region that has seen little benefit from its production of the country's main export

Since local producer Aiteo first reported a spill in the Niger Delta on 5 November, thousands of barrels of crude oil have flowed into the network of creeks polluting the environment with toxic fumes and threatening the local farm and fisheries-based local economy. Aiteo says that it has recovered 3,000 barrels of crude from the river.

The leak, which has already caused massive environmental damage, would be 'speedily addressed,' President Muhammadu Buhari said last week. But the accident raises yet more concerns about the viability of oil production in the Delta and who would be liable for remediation after such accidents.

Despite promises of rapid action from Aiteo Eastern E&P, which owns the well in the Nembe area of Bayelsa state and the authorities in Abuja, local people report the leak is continuing and little progress has been made on what will require a massive clean-up.

The United States oil services giant Halliburton, best known in Nigeria for its involvement in a bribe scheme in the building of the gas export plan on Bonny Island, has secured a contract for its Boots & Coots unit to clean up the spill.

This is the latest in a series of setbacks for Aiteo, which paid Shell $2.7bn for the Oil Mining Licence 29 block, substantially above its market value, in a deal that was pushed through just before the 2015 elections, and made Aiteo the largest indigenous oil production firm in Nigeria. It operates the licence in a joint venture with the state-owned Nigerian National Petroleum Corp (AC Vol 58 No 16, Trading places and faces & Vol 58 No 8, Ambition and ethics).

Wrangling between the two sides has continued, related to provisions which saw Shell lend Aiteo $500m to finance the deal and retain exclusive marketing rights to the oil produced.

The area around OML 29 is one of the most polluted places on earth after decades of spills that have destroyed much of its farming and fishing grounds.

Aiteo's field produced about 27,000 barrels per day in 2020, according to information published by Nigerian National Petroleum Corporation (NNPC), but output had dropped to about 9,500 barrels a day by July this year.



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