By Akanimo Sampson
Nigeria’s oil industry appears to be the safest haven in the world for corruption, and with what the COVID-19 pandemic has thrown up, the country is immersed in a financial crisis. Nigeria has also fallen foul of the ‘resource curse’; a situation where an abundance of natural resources is breeding corruption, stagnation, and economic contraction.
Ironically, Nigeria is the richest economy in Africa, but despite having large resources of oil and gas millions of its political sovereigns are poor.
The Military Writers Society of Nigeria (MWSN) is raising serious concern on alleged huge revenue loss in Nigeria’s oil and gas sector. According to it, transnational oil corporations operating in the Niger Delta, the country’s main oil and gas region, have been illegally exporting crude oil from the country.
The military writers’ society that is currently pressing President Muhammadu Buhari to take decisive action in curbing corruption in the oil and gas sector by introducing an efficient metering in the sector, is alleging that foreign oil corporations have been failing to properly declare the quantities of their exports.
The Society which is concerned with protecting the integrity and respect of the Nigerian military, is claiming that Nigeria is losing trillions of naira annually due to inappropriate computation of crude production, taxes and royalties.
‘’This major leakage in the oil and gas sector can only be plugged with an effective metering system’’, the military writers say.
A Chatham House study entitled Nigeria’s Criminal Crude suggested the problem has reached an “industrial scale”. In the study, the institute wrote: “Officials outside Nigeria are aware that the problem exists, and occasionally show some interest at high policy levels. But Nigeria’s trade and diplomatic partners have taken no real action, and no stakeholder group inside the country has a record of sustained and serious engagement with the issue.
‘’The resulting lack of good intelligence means international actors cannot fully assess whether Nigerian oil theft harms their interests… Nigeria’s dynamic, overcrowded political economy drives competition for looted resources. Poor governance has encouraged violent opportunism around oil and opened doors for organised crime.”
In 2016, Nigeria sued the oil majors, including Chevron, Shell, Eni, and Total, claiming that the foreign oil firms failed to declare $12.7 billion worth of Nigerian oil exports to the United States in the period between 2011 and 2014, The Wall Street Journal reported at the time.
Big oil, which collectively produce around 80 percent of Nigeria’s crude oil, have always denied the claim that they have failed to properly declare their exports, Bloomberg notes.
In 2011, a Nigerian oil contract went awry after it was marred in a corruption scandal. The controversial oil deal — the OPL 245 oilfield — was said to have been signed off to Shell and ENI after both companies allegedly paid bribes to Nigerian officials to the tune of $1.1 billion.
The man who is alleged to have received a bulk of the bribe is former Petroleum Minister, Dan Etete, who allegedly used his company to receive kickbacks from the deal. The deal is the basis for the ongoing corruption case involving everyone from Eni, Shell, and some of its top officials.
Unsurprisingly, the two oil majors have continued to deny their alleged involvement in the shadiness that characterised the OPL 245 deal.
In December 2018, the Federal Government dragged the Anglo-Dutch oil and gas major, Shell, and the Italian oil and gas major, Eni, before a London commercial court over the scandal. The government is demanding for $1.1 billion.
A global human rights group, Amnesty International has been pushing for Shell to be investigated for alleged complicity in” horrific crimes” committed by the armed security forces in Nigeria in the 1990s.
Shell, according to the rights group, allegedly encouraged a crackdown, which led to killings and the burning of villages in the oil-bearing Ogoni axis of Rivers State. The Anglo-Dutch oil firm has been insisting the allegations were “without merit”.
Yet, the Ogoni area was hit by protests over oil pollution and poverty in the 1990s. It led to a massive crackdown by the then military dictatorship in the country. Nine activists, including writer and environmental activist Ken Saro-Wiwa, were executed in 1995, causing global outrage.
In a statement, Shell which is operating in Nigeria as Shell Petroleum Development Company (SPDC), said it had always denied involvement in the executions.
“We were shocked and saddened when we heard the news of the executions. Shell appealed to the Nigerian government to grant clemency. To our deep regret, that appeal, and the appeals made by many others within and outside Nigeria, went unheard”, the oil company said.
Apparently not persuaded, Amnesty said it had studied thousands of internal documents of the company and witness statements which pointed to the need for the UK, the Netherlands and Nigeria to launch an investigation into the firm’s alleged complicity in human rights abuses in Ogoniland.
“The evidence we have reviewed shows that Shell repeatedly encouraged the Nigerian military to deal with community protests, even when it knew the horrors this would lead to – unlawful killings, rape, torture [and] the burning of villages”, the rights group said in a statement.
“In the midst of this brutal crackdown Shell even provided the military with material support, including transport, and in at least one instance paid a military commander notorious for human rights violations. That it has never answered for this is an outrage”, Amnesty added.
In its response, Shell said Amnesty’s allegations were false, claiming it did not collude with the authorities to suppress unrest and in no way encouraged any act of violence in Nigeria.
“We believe that the evidence will show clearly that Shell was not responsible for these tragic events”, the oil major said.
Shell is the oldest multinational oil company in Nigeria, and is involved in joint ventures with the government, represented by the Nigerian National Petroleum Corporation (NNPC). Its investment and those of other firms have long been dogged by controversy.
In 2015, Shell agreed a $84 million settlement with residents of the Bodo, an Ogoni community, for two massive oil spills in 2008 and 2009.
In 2011, a UN report on oil pollution in Ogoni said the area could take 30 years to recover fully from the damage caused by years of oil spill.
Already, communities are facing a severe health risk, with some families drinking water with high levels of carcinogens. And, communities say the spills have had a devastating effect on farming and fishing, worsening poverty.
At the moment, a Divisional Police Office in Bori, the traditional headquarters of Ogoni, Bako Angbashim, a Superintendent of Police, is appealing to the Niger Delta Basin Development Authority (NDBDA), to provide Kpon community in Khana Local Government Area with potable water. He made the appeal when the management of NDBDA management led by its Managing Director, Tonye David-West, an engineer, paid him a courtesy call.
The DPO pleaded, “more so, there is a need for pipe borne water to be provided in the community because as you know, the incessant oil spills have contaminated the source of drinking water. We also know that hydrocarbon pollution remediation project, HYPREP, is working hard to clean up the polluted Ogoni environment. Partner also with the agency in the area of water provision for the community”.
“Security is the backbone to every business. NDBDA is under my command. When I came on board, things were almost destroyed. Before now, there was heavy demand on matching ground for everything and people were displaced in IDP camps”, he told the visitors.
Angbashim called on the management of NDBDA to integrate cow grazing and rice farming in to project to create more jobs for the youths of the community as a way of diverting their minds from crimes. “It was a big challenge to deal with rising insecurity situation in this community and the entire Ogoni kingdom in general. What I will want to plead with you is to integrate cow and rice farming into what you are doing. There is green vegetation here that cow can graze on.
Angbashim said agriculture should be extended to all parts of Ogoni, appealing that cows should be graced and youths be educated on methodology of farming. “This land is suitable for rice farming, fishing, fowl, piggery, snail, cassava, yam, sweet potatoes farming”.
Earlier, David-West had announced the readiness of the authority flood the market with assorted foodstuff from its Songhai Integrated Farm at Kpon community, Khana local government area of Rivers state and reduce food insecurity in Nigeria, pointing out that the agency, is going into partnership with the Nigeria Police to provide adequate security presence at its large expanse of farm settlement in the area.
He explained that partnering with the police was necessary to provide security to the over 84 hectares of farmland located at Kpon community, adding, this multi-million naira federal government sponsored project is so dear to the Minister of Water Resources, Engineer Suleiman Adamu because it has the propensity to create jobs and provide food sufficiency for Nigerians.
“As federal agencies, it is only important we partner with you to provide the needed security to the facilities we have at the farms. As you know, we are just about to go into full operations after successfully completing the construction of different infrastructural projects at the Songhai integrated farm. Our cardinal objective is hinged on the promise of President Buhari of providing food security to all Nigerians. We have also set machinery in motion to train the youths of the Niger Delta region on skill acquisition for self-reliance and improve their individual economic base”.
While acknowledging the security challenges within the farm community, thanked the security agencies for changing the ugly narrative, and noted that the constant presence of police patrol team within the farm settlement would stave off any form of security threat to the project, he adds, “since we are all federal government agencies, we do not need to work in isolation from each other. As partners, I want to assure you that we will do the best we can to ensure that your men do not have any problems in helping us to keep watch over the settlement.
“It will also interest you to know that the farm settlement is capable of providing sufficient foods for the Niger Delta region. Our eggs, chickens, plantain, banana, fish and different cash crops will soon be on sale. There is also an opportunity to employ thousands of youths through direct and indirect labor”, he said. One of the core objectives of the federal government is food security. We have about 25,000 birds, eggs.”
In the mean time, the military writers say Nigeria has been in dispute with big oil corporations over the production sharing revenues from the fields they operate in partnership with NNPC.
In 2019, Nigeria began talks with big oil over the dispute about the production-sharing revenues. Nigeria claims that international oil majors owe it $62 billion in oil revenues because they have not complied with a 1993 law that entitles Nigeria to reap a higher share of revenues if oil prices are above $20 a barrel. The OIL majors are challenging this claim, too.
‘’While receiving a delegation from Human Rights Writers Association of Nigeria (HURIWA) led by its National Coordinator, Emmanuel Onwubiko, the Executive Secretary of Nigeria Extractive Industries Transparency Initiative (NEITI), Waziri Adio, promised that ensuring installation of adequate metering infrastructure in the oil and gas sector operations is top on NEITI’s agenda.
‘’Adio noted that due to inadequate metering system, accurate measurement of crude production and liftings as well as appropriate computation of taxes and royalties have been difficult, leading to huge revenue loss to the Nigeria.
‘’He said metering is an issue that is very dear to us. NEITI has long established this issue in its first audit of the sector. Since then we have been pushing, and we will continue to push until the issue is addressed’’, the military writers said.
NEITI’s work is about how to make natural resources work for every Nigerian. It is not an issue for a few. It is an issue for everybody. Adio explains that NEITI has the responsibility to ensure transparency, accountability and good governance of Nigeria’s oil, gas and solid minerals sector.
NEITI does this by conducting regular industry audits, disseminating the audit reports, and working with relevant government agencies on remedial issues in the reports.
‘’However, NEITI is regreting the neglect of the solid minerals sector in the past which has led to its underdevelopment and poor regulation despite huge potential for jobs and wealth creation as well as economic diversification’’, the military writers said.
Continuing, they said NNPC has sealed a preliminary agreement with two companies over a dispute about foreign firms exporting Nigerian oil from some offshore fields, which could pave the way to resolving all disputes with international oil majors about oil exports.
NNPC signed the agreement with China National Offshore Oil Corporation (CNOOC) and Nigerian South Atlantic Petroleum (SAPETRO), signifying a major milestone towards the resolution of all disputes related to Oil Mining Lease (OML) 130 Production Sharing Contract.
OML 130 consists of producing fields such as Akpo and the giant ultra-deepwater Egina oilfield. France’s Total, via its Nigerian subsidiary, operates OML 130 with a 24-percent interest, in partnership with NNPC, SAPETRO, CNOOC E&P Nigeria Limited, and Petrobras Oil and Gas BV.
French oil and gas major, Total, says it started up production on December 29, 2018 from the Egina field, located in around 1,600 meters of water depths, 150 kilometers off the coast of Nigeria.
At plateau, the Egina field will produce 200,000 barrels of oil per day, which represents about 10% of Nigeria’s production.
The Floating Production Storage and Offloading (FPSO) unit used to develop the giant Egina field is the largest one Total has ever built.
This project has also involved a record level of local contractors. Six of the eighteen modules on the FPSO were built and integrated locally, and 77% of hours spent on the project were worked locally.
Startup has been achieved close to 10% below the initial budget, which represents more than 1 billion dollars of CAPEX savings, due in particular to excellent drilling performance where the drilling time per well has been reduced by 30%.
President Exploration & Production, Arnaud Breuillac, says “Total is proud to deliver a project of this size under the initial budget and to contribute to the development of Nigeria’s oil and gas sector by generating employment as well as building industrial capability.
‘’Egina will significantly boost the Group’s production and cash flow from 2019 onwards, and benefit from our strong cost reduction efforts in Nigeria where we have reduced our operating costs by 40% over the last four years. Furthermore, some upside potential nearby remains to be developed and we are studying in particular Preowei discovery tie-back to the Egina FPSO.”
Initially discovered in 2003, the Egina field is the second development in production on the Oil Mining Lease (OML) 130 following the Akpo field, which started-up in 2009. The Preowei field is another large discovery made on this prolific block for which an investment decision is scheduled for 2019.
Total Upstream Nigeria Limited operates OML 130 with a 24% interest, in partnership with Nigerian National Petroleum Corporation (NNPC), South Atlantic Petroleum – SAPETRO Ltd. (15%), CNOOC E&P Nigeria Limited, a wholly owned subsidiary of CNOOC Limited (45%) and Petrobras Oil and Gas BV (16%).
Total has been present in Nigeria for over 50 years, both in upstream and downstream activities.
The Group’s production in the country was 267,000 barrels of oil equivalent a day in 2017. It operates five production licenses (OML) on the 34 leases in which the Group has interests (including two exploration licenses).
In addition to OML 130 where the Akpo, Egina and Preowei fields were discovered, Total operates other offshore assets such as OML 99 (40%) where the Ikike discovery is located, OML 100 (40%) and OML 102 (40%) where the Ofon 2 project was completed in 2016.
Onshore, Total is the operator of OML 58 (40%) under its joint venture with NNPC. The Group is also developing Liquefied Natural Gas (LNG) activities with a 15% stake in the Nigeria LNG Ltd company, which operates six LNG liquefaction trains on Bonny Island.
In the downstream sector, Total operates in a leading position with an extensive distribution network of over 550 service stations nationwide and a wide range of top quality energy products and services.
The Group is committed to working closely with its host communities in Nigeria and is supporting many projects in the field of health, education, infrastructure and economic development, through its sustainable development and community relations programs.
With a diverse workforce of several nationalities and cultures working together, Total is proud of its contributions to the socio-economic development of Nigeria.