Loss of Shell's Oil Rights in Ogoni: Matters Arising


Ifeanyi Izeze




President Umaru Musa Yar’Adua is obviously a very interesting man and this clearly manifests in his kind of policies and choice of venues to announce them. It may not be apt to think that something may be wrong with the President’s style however, his recent announcement in South Africa on the loss of all oil rights in Ogoniland by Shell Petroleum Development Company of Nigeria (SPDC) heavily supports the notion that either the President or his handlers may need a second look at the administration’s style of announcing policy decisions.


Choosing Cape Town South Africa to announce such a sensitive policy decision, President Yar’Adua in what seemed like government’s ultimate solution to the over 15 years of anti-Shell protest by the Ogonis said, within the next six months, Shell would divest all its operations in Ogoniland for a new firm to come in. The company’s operating license in Ogoniland would be revoked and new operator (s) would take over the company’s oilfields and facilities in the area.

And very interestingly, Yar’Adua also said that agreements have been reached on the compensation to be paid by Shell for the environmental damages arising from the spillage of crude oil as a result of its operations in the area.

The President explained that since there is a total loss of confidence between the Ogoni people and Shell, government believes it would be wise to allow another operator acceptable to the Ogonis to take over exploitation activities in the area.

His words: “There is a total loss of confidence between Shell and the Ogoni people”, and so “another operator acceptable to the Ogonis will take over. Nobody is gaining from the conflict and stalemate, so this is the best solution.”

So except the federal government reverses itself, as has been the case in its oil and gas policy-like pronouncements, Shell will in the next six months forfeit all its oil fields and investments in Ogoni area of Rivers State .

The company has 98 oil wells in about seven oilfields in Ogoniland and five flow stations in Bodo West, Bomu , Yorla, Korokoro and Ebubu before its expulsion from the area in 1993. Daily output from the area, according to Shell statistics, was at about 28, 000 barrels per day before the shut-in in 1993.

Although it does not matter much now but could the federal government have taken a decision on the eviction of Shell from Ogoniland without putting the company on notice? This is the puzzle as Shell claimed it was yet to be formally informed about the federal government’s decision. This is just an aside.

There are serious hidden issues in the President’s Cape Town declaration. First, if the federal government has ordered Shell to relinquish its operational rights in Ogoni oil fields to a new operator, how is the government going to get Shell to pay the compensation for alleged environmental irresponsibility in the area? Secondly, is the new operator going to inherit only the assets of Shell without the accompanying liabilities or both? There is something not very clear in the President’s declaration concerning compensation for damages.

Another serious issue borders on the choice of the new operator (s). The question now is: Which of the oil companies would be acceptable to the Ogoni people and who are the real Ogoni people- the few select elite group; the emerging middle level power brokers or the grassroot Ogonis? These are very sensitive issues that need to be address even before a new entrant ventures into the area to avert a repeat of what led to the Shell crisis.

The issue of the acceptable definition of the “Ogoni people” is very crucial because needless to say that many interest groups have sprung up in the area since the death of the “Ogoni- 13”. And whether well or evil-intended, it is only appropriate to carry everybody along in the ongoing reconciliation and reorganisation exercise if the peace and reconciliation is to be total. This may also help in the new era to avoid sabotage or opposition from certain quarters of Ogoni society.

On the choice of acceptable company, Shell operated in Ogoniland with a joint venture conscription comprising the French Total/Elf, Italy ’s Agip and the Nigerian National Petroleum Corporation (NNPC).

So as Shell, Total, and Agip were critical parts of the joint venture that has been declared persona non grata in Ogoniland, the likelihood that one of them could be singled out as a good boy to operate in the area is completely ruled out.

It also follows that any existing or proposed oil company that is in a joint venture partnership with one of the culprit Ogoni operators- the NNPC is completely or rather should be completely ruled out of the Ogoni restart operation.

The above scenario rules out ExxonMobil and Chevron as likely acceptable partners in the Ogoni acquisition.

As was rightly pointed out by an analyst, Addax Petroleum seems to be the only current operator with a clean bill as pertains to community and social relationships. However, whether the Ogoni people would want to gamble again with a player that has been on the local scene for sometime is a matter only the Ogonis can decide.

Another option for the Ogoni people is to look eastward towards the new Chinese, Russian and Korean brides that have indicated interests in the Nigerian oil and gas arena.

President Yar’Adua’s Cape Town declaration has left the Ogoni people with the power for a decent choice. They now need a proper debate on the available options.

Earlier in an analysis I had maintained that the Movement for the Survival of Ogoni People (MOSOP) as a frontline umbrella Ogoni people’s assembly would have been better off today if it had since the beginning of the conflict incorporated an oil exploration and exploitation and refining company. If MOSOP had done that, it would have easily been discussing a joint venture relationship with company (s) of its choice for the Ogoni restart operation. This would have provided a credible platform for them to bargain on companies to work with or rather work in the area.

It is still not too late especially now that the federal government has mustered enough will power to ask Shell to relinquish its oil rights in Ogoniland. This is the only option that can completely eliminate the Shell-like behaviour by a new operator in the area- that is if any new operator would actually come to Ogoni. This is because if it happens, that singular action by government would change the entire face of the ongoing Niger Delta militant struggle for resource control.