“Shell is not leaving and has not abandoned the Niger Delta. The headquarters of The Shell Petroleum Development Company (SPDC) is and remains in Port Harcourt. Our strategy in Nigeria is to consolidate our onshore oil footprint while making investments in other growth areas, particularly deep water and the gas value chain. This strategy is intended to strengthen our position in the country for the long term.” – Bamidele Odugbesan, Media Relations Manager, Shell Nigeria.
*Shuts production in 25 fields *Moves key depts from Port Harcourt to Lagos *OMLs 11, 17 up for sale
OpeOluwani Akintayo & Mkpoikana Udoma
12 December 2018, Sweetcrude, Lagos/Port Court — After over 60 years of oil exploration and production in the Niger Delta, the Royal Dutch Shell is gradually abandoning the region, leaving the economy of the area in ruins.
Leaving the Niger Delta hollow
Information available to this newspaper showed that the international oil company which began oil exploration in the country in the 1900s and discovered oil in Oloibiri in the current Bayelsa State in 1956, has since 2017 shut production in 25 oil fields.
It has now put up two major assets, Oil Mining Leases, OMLs, 11 and 17, for sale.
Ordinarily, this move would not have elicited concern especially since any company is free to buy and resell its assets but stakeholders have expressed fear and anxiety in what appears to be the multinational oil company’s strategic plan to sell assets and move major operations out of the Niger Delta, thereby leaving the region hollow, with the resultant debilitating effect on the economy of the region.
OML 11 lies in the southeastern Niger Delta and contains 33 oil and gas fields of which eight are producing as of 2017. In terms of production, it is one of the most important blocks in Nigeria.
Although the OML 11 license is now smaller than what it used to be as the Federal Government had in April, last year split the block into three parts, giving Shell one portion after it sought renewal of the production license.
SweetcrudeReports learnt that OML 17 along with some infrastructure, including a natural gas-fired power plant, is also on Shell’s list of disposables, as talks are already in top gear to sell it for $2 billion.
OML 17 is a large onshore license within the NNPC/Shell joint venture. The block includes the northern half of Port Harcourt, extending from the low-lying swamp northwards into drier terrain where the operating conditions are easier. There are 15 oil and gas fields on OML 17, six of which are producing. Crude is exported through the Trans-Niger Pipeline to the Shell-operated Bonny Oil Terminal, according to Wood Mackenzie.
The two licenses would be sold to Heirs Holdings Limited, a company run by Nigerian billionaire, Tony Elumelu.
There is also the other issue of the Shell Nigeria Exploration and Production Company, SNEPCo, relocating its Logistics and Supply Base from the Oil and Gas Free Zone in Onne, near Port Harcourt.
SNEPCo’s relocation of its Logistics and Supply base from Onne to the Lagos Deep Offshore Logistics Base, LADOL’s yard seems to be a sharp pointer to totally crippling the region’s economy, which according to experts, thrives greatly on the activities of the Supply Base.
To compound matters, the Shell Petroleum Development Company, SPDC, has also moved its Procurement and Accounting Departments from its Port Harcourt headquarters to Lagos following a directive to that effect by the company’s top hierarchy.
Exiting the Niger Delta would, however, not be that easy for Shell, as this newspaper learnt that the issue has been a major cause of recent controversies.
Protests have erupted, the height of them is the one by a group of community women in Rivers State, who protested, vowing to storm the supply base of SNEPCO in the Oil and Gas Free Zone, Onne, naked to stall the relocation of the supply base to Lagos.
The women’s threat came three weeks after some youths under the aegis of the Onne Youths Council, OYC, staged a peaceful protest at the SNEPCO base, asking the company to rescind its decision to relocate the supply base from the free zone to Lagos.
The Rivers State government, civil society organisations as well as concerned individuals have also kicked against Shell’s move to abandon the Niger Delta.
OMLs 11 & 17
If the sale of OMLs 11 and 17 eventually goes through, this means Shell would shift the focus of its operations in Nigeria to the deep offshore where the risks of attacks on infrastructure and oil theft are at a low ebb.
Sources in the know hinted that the deal would have been concluded but for financial hurdles Heirs Holding has encountered in its attempts to raise the funds for the purchase of the assets.
When contacted for a reaction on the development and the opposition to the company’s alleged plan to totally abandon the Niger Delta, Shell Nigeria spokesperson, Mr. Bamidele Odugbesan insisted that Shell was within its rights to take whatever step it deemed necessary regarding its assets. He argued that the fact that the company moved some of its departments away from Onne and Port Harcourt does not undermine its presence in the region.
Shell’s pipeline in the Niger Delta has severally been subjected to attacks by oil thieves who break into the facility to siphon crude oil.
The company facilities and personnel have also been subjected to attacks by militants in the region although there has been a ceasefire since early 2017.
The company had been at the fore of oil and gas exploration and production in the region but it faces accusations of abandonment from the locals. Shell’s host communities have accused it of neglecting development in the region as against its other oil producing communities in developed countries of the world.
This had led to tensions especially as a result of pollution, leading to crisis which escalated and drew the attention of the world when in 1995 Ken Saro-Wiwa, a well known Playwright and community rights advocate of Ogoni extraction was executed by the Nigerian government alongside eight others.
A recent statistical survey by this newspaper had found that the Shell Petroleum Development Company, SPDC’s Trans Ramos Pipeline that ruptured on May 17, had spilled 1,114 barrels of crude oil into the environment.
The oil leak had impacted and polluted an estimated area of 113.03 hectares. Shell said it had recovered 95 percent of the oil, that the ruptured pipeline had been repaired and it was already negotiating remedial actions.
“The rate of spills on the Trans Ramos Pipeline is very worrisome, for instance between April and May 26, spill incidents were reported on that line and out of these, 18 of them were caused by sabotage, eight were operational,” Shell’s spokesperson, Odugbesan said at the time.
Shell’s activities in the region continue to face scrutiny from international organisations such as the United Nations and Amnesty International, which have been at the vanguard of asking for justice for victims of oil spills. In 2011, a 260-page report by the UN’s Environment Programme said the company had run afoul of its own standards in all its years of operating in the Niger Delta and that the environmental destruction caused by its operations was worse than previously thought, creating a “tragic legacy.”
As a matter of fact, locals had at some point, blocked the company from gaining access to some of its fields which left Shell with undeveloped oil and gas reserves.
Statistics obtained from the Department of Petroleum Resources, DPR’s 2017 report, stated that out of Shell’s 35 producing fields in the Niger Delta, 25 were shut down in 2017 due to pipeline vandalism and operational issues.
Shell’s share of total production in Nigeria was 266,000 barrels of oil a day last year compared with 258,000 barrels in 2016, according to its annual report. “Security issues, sabotage and crude oil theft in the Niger Delta continued to be significant challenges in 2017,” it said in the report.
DPR, NEITI react, say monitoring Shell’s internal affairs, not their role
SweetcrudeReports sought the reactions of the Department of Petroleum Resources, DPR, and the Nigerian Extractive Industries Transparency Initiative, NEITI, on the matter, and they both said it was not their duty to monitor the internal affairs of Shell.
“This has to do with their internal business, so it is not within our purview to monitor it,” DPR’s Public Affairs manager, Paul Osu, had said.
On his part, the Director, Communications at NEITI, Orji Ogbonnaya Orji, said: “We don’t micromanage the internal affairs of companies we relate with. Our relationship with them is based on international standard. Besides, I don’t have details of this matter so I won’t be able to comment on it”.
Reacting to the development, the Ijaw Youth Council, IYC Worldwide, said it was insensitive on the part of Shell to contemplate relocating key departments from its head-office and the Onne Logistics and Supply base in the Niger Delta region to Lagos.
IYC President, Mr. Eric Omare, who rejected the moves, warned that if the company is relocating the key departments, it should also be ready to quit all its onshore and offshore operations.
“The leadership of the IYC has just been reliably informed of the planned relocation of the finance and procurement departments of the Shell Petroleum Development Company from Port Harcourt to Lagos.
“We strongly feel that this is the height of insensitivity for SPDC to contemplate relocating these two key departments from the Niger Delta region to Lagos. This proposed move clearly shows that decisions in SPDC are taken by enemies of the Niger Delta region,” he said.
He added: “The implication of this decision would be that contractors and anybody who has anything to do with the SPDC from all parts of the Niger Delta would have to go to Lagos with the attendant economic implications on the Niger Delta economy.
“While the IYC completely reject this proposed decision, we state that if SPDC insist on the relocation, then it should quit all parts of the Niger Delta both onshore and offshore. SPDC cannot stay in Lagos and be exploring the oil resources of the Niger Delta.”
Director, Professional Education, School of Media and Communication at Pan-Atlantic University, Mr. Isaac-Ogugua Ezechukwu, told SweetcrudeReports that no doubt, the moving away of a multinational of the stature of Shell will definitely have an adverse impact on the economy and social life of the host community.
“There will be several negative implications, ranging from loss of direct employment of locals to diminished patronage of local businesses in the area. Support business setups such as hotels, dry cleaning services, taxi services, hospitals, schools, restaurants, etc, will be adversely affected. Social life will not be left out as the absence of the oil company staff may take away the bubbling nature of the affected communities. The local authorities will also suffer a loss of revenue from levies and taxes,” he said.
However, he said the big question of why Shell is relocating out of Niger Delta, remains un-tackled.
“Have the host communities been good hosts to the company? Or did the communities turn the company into federal, state and local governments where they channel all their demands and whatever grievances they have?
It takes a “give-and-take” relationship situation to retain bluechip companies in one’s locality, otherwise, they will move to a friendlier environment. A business relationship is like a relationship in marriage. Both spouses must genuinely want the relationship to work and continue to make it work through sacrifices and good conducts,” he said.
Philip Jakpor, Head, Media and Campaigns, Environmental Rights Action, said it had warned about Shell and other international oil companies, IOCs’, divestment from the Niger Delta after they might have had their fill in the region.
“Shell’s divestment from the Niger Delta is not all that unanticipated. ERA/FoEN had long warned that after the despoliation of the environment which has led to conflicts and loss of livelihoods, Shell and other IOCs operating in the Niger Delta will try to evade responsibility for these crimes. The divestment is a fulfillment of what we foresaw”, he said.
Jakpor added that the devastation caused by Shell is both onshore and offshore.
He asserted: “The devastation of their activities are both onshore and offshore. Onshore, we see oil polluted farmlands, streams, and community lands. Offshore, which largely escapes the lenses of NOSDRA and other relevant government agencies, we have these recurring cases of dead whales, dead fishes washing ashore. It is now happening more frequently. Something in the water is killing the fishes.
“It is not our duty to compel the IOCs to stay in the Niger Delta to do business, however, our recommendations are clear: They must clean up their mess, compensate locals for the despoliation”.
Rivers govt says move, political
Meanwhile, the Rivers State Government has described as politically motivated the Shell movement of its key Logistics and Supply base and the Finance and Procurement departments from Port Harcourt to Lagos.
Speaking exclusively to our correspondent, the Rivers State Commissioner of Information, Mr. Emma Okah said the current government in Rivers State had since assuming office, given all cooperation to the firm hence, there was no basis for Shell to move any of its departments or activities from Rivers State to Lagos.
He said there is no reason this could have happened other than politics.
Okah explained that the state government would do everything possible to dissuade the oil firm from its plan as such plan will not augur well for the state. He said that the state government would always protect the interest of the people of the state.
“We will appeal to Shell to halt such intention, because it will not augur well for the peace and development of Rivers State and, in fostering the good relationship between the government and people of Rivers State on one hand and then Shell on the other.
“We believe that we have been partners over the years. We believe we have given all the cooperation that we need to give as government, particularly since we came on board and, so there is definitely no basis for the relocation if it is not political,” he further stated.
Okah said the implication of the action is that anyone who wanted to have any business dealing with the company will have to travel down to Lagos.
He wondered what will be left in Port Harcourt, if the key departments like finance and procurement were moved, and added that the state government will engage the oil firm to rescind the plan.