Foreign Policy Blogs

Nigeria Round-up

1) Although Nigeria reached a tentative peace agreement with the militants in the Niger delta region in October, the fledgling peace was threatened by attacks of a Chevron Nigeria pipeline last week. The Movement for the Emancipation of the Niger Delta (MEND), according to the Associated Press, claims they sanctioned the attack but did not carry it out. MEND also was involved in a pipeline attack in December — one can only assume all this is to keep continuing pressure on the government while President Umaru Yar’Adua is ill and the massive Petroleum Industry Bill (PIB) — which seeks a more efficient and transparent national petroleum industry — is inching its way though the legislative process.

2) Royal Dutch Shell is considering selling off its onshore oil assets, worth (the Wall Street Journal says) between $4-5 billion. Maybe it figures, on top of all the headaches, the new Bill will make it unprofitable. The company is apparently not planning on divesting its gas holdings.

The militant attacks, fueled by years of poverty and government corruption, have caused manifold operational headaches for Shell because the company often gets blamed by locals for the oil spills and environmental damage resulting from attacks on its pipelines and facilities. Security risks mean Shell usually has to wait days, if not weeks, before going into remote swamp areas to repair damaged facilities.
‘I think one can say that Shell is looking to throw in the towel for its onshore Nigeria operations to focus on the offshore, where it doesn’t have the problems it has onshore,’ one of the people familiar with the matter said.” WSJ 12-21-09

Unsurprisingly, one of the most promising potential buyers is China.

3) The Financial Times reported a few weeks ago that at least some of Nigeria’s politicians are pressing for direct cash payments to the local population, emulating (distantly) Alaska’s tax rebate and trying to “manufacture a constitutency” by handing 10% stakes from the petroleum joint ventures. If they succeed, it will be incorporated into PIB, which has created almost as much political wrangling as the US health care bill.

It’s considered a way to make stakeholders shareholders of sorts. Financial remuneration is an idea whose wisdom has finally been acknowledged, but will it work in a place as thoroughly corrupted as Nigeria? The cash amount comes to $20 a year for each person in the Delta, scarcely enough for anything, even there.  Will it become an entitlement or an economic engine? Will it aggravate the already tense situation between any number of ethnic groups? How can this pittance make a difference?

The Bill also includes the requirement that corporations submit a detailed sustainable development plan for local communities — which is weird. (Shouldn’t this be in the hands of the local people and communities, or at the very least be based on services the national government is supposed to provide?)

 

Author

Jodi Liss

Jodi Liss is a former consultant for the United Nations, the United Nations Development Programme, and UNICEF. She has worked on the “Lessons From Rwanda” outreach project and the Post-Conflict Economic Recovery report. She has written about natural resources for the World Policy Institute's blog and for Punch (Nigeria).