Big Oil's Gambit in the Niger Delta

After over six decades of oil exploration, the five multinational companies that dominate Nigeria’s energy sector are divesting from onshore oil fields, sparking concerns from oil producing communities and climate activists. 

The companies - Eni, Equinor, ExxonMobil, Chevron, Shell and Total Energies - secured regulatory approval last year to sell their Oil Mining Licenses to domestic players in an unprecedented massive asset sale. 

Except for gas exploration, the divestment ends the reign of the oil giants in Nigeria’s onshore fields, which served for nearly a century as the primary base for the extraction and development of Nigeria’s vast hydrocarbon reserves. 

In exchange, they would be moving to Deepwater fields in the Gulf Guinea. The move has, however, been opposed by oil producing communities who accuse the oil giants of abandoning them to deal with pollution and extensive environmental degradation. 

“I feel like my God-given fundamental rights as a human has been deprived. I feel sabotaged by the oil companies,” PrayGod Moses, a 58-year-old fisherman who resides in Otuasega community in Ogbia Local Government in Bayelsa State, told FairPlanet. 

Bayelsa State produces about 40 per cent of Nigeria’s crude oil and communities like Otuasega along the Kolo Creek in the Ogbia local government play host to oil wells operated by Shell Nigeria’s subsidiary, SPDC. A 2022 oil spill from Shell pipelines at Yenagoa/ Imirigi road ruined farmlands and waterways truncating the livelihoods of the local people like Moses. 

A retired civil servant and community leader who inherited the fishing profession from his father, Moses says he now has to row to the farthest section of the sea to avoid areas on the Kolo Creek that were polluted and have not been cleaned up by Shell. Although the journey takes hours of backbreaking paddling, the profit he makes is less than desired. 

Oil giants leave communities behind as they cash out

“I used to be able to feed my family and pay for my children’s education through my earnings from fishing. Now all I get is a small catch. Also because of the distance, some of the fishes would have nearly spoiled before I am able to row back to sell them at the market,” Moses added. 

A crucial issue in the controversy surrounding the divestment process is how to clean up historical pollution and avoid future spills. Due to frequent oil spills, the Niger Delta has been transformed into one of the most polluted places on earth. At least 13 million barrels - or 1.5 million tonnes - of crude oil have been spilled in the Niger Delta in 7,000 separate incidents since 1958 when crude oil was first discovered in commercial quantities. 

This, together with gas flaring, has devastated Niger delta’s ecosystems, making it uninhabitable for humans, animals and plants. A state-sanctioned investigation from a local NGO discovered the presence of the toxic chemical compound, Benzene, 900 times above World Health Organisation (WHO) thresholds in groundwater and soil of the Niger Delta. This has led to devastating health outcomes: Residents at theNiger Delta have a high rate of under-five mortality as well as the lowest life expectancy in Nigeria. Many babies have been born with deformities and respiratory illnesses are prevalent.

Since last year, villagers from the Niger Delta together with environmental activists have held a series of protests to demand the cleanup of polluted farmlands and waterways by the oil giants before they leave. 

“While we are not saying they should not divest their assets, we are saying they must remediate the environmental degradation oil exploration has caused in their plants locations,” said Isaac Botti, Programme Coordinator for Social Action, one of the groups leading the campaign against oil divestment. 

Earlier this year, simultaneous protests took place in the Rivers State and at the UK Court of Appeal in London. The hearing of a ten-year long case filed by 30, 000 farmers from Ogale and Bille in Rivers State demanding Shell to take responsibility for oil spills between 1989 and 2020, began on 13 February this year. 

Rights groups accuse IOCs like Shell of routinely evading responsibility for cleanup of polluted communities. They say such companies often blame oil spills on sabotage and oil thefts, but they believe the main cause is aging pipelines, manifolds, oil wells and other oil infrastructures. 

In 2008, a leaked US diplomatic cable confirmed “that most oil spills in the Niger Delta occur because 73 percent of pipelines are corroded and need to be replaced; pipelines, which have a technical life of 15 years, have often been in use for thirty years.” 

A clean up of Ogoni land mandated by  theUN report 13 years ago has stalled, with only 11 percent of contaminated sites reportedly fully remediated. Recently, revelations have emerged, detailing how Shell ignored repeated warnings of corruption in HYREP, the agency responsible for the cleanup. 

“The HYREP fund has become a slush fund for politicians to steal,” Phillip Godfrey, the head of the Bayelsa State office of the Youth and Environmental Advocacy Centre, told FairPlanet. “Even the areas claimed to have been cleaned up have been polluted again because the spill is a recurring decimal,” Godfrey added. 

The Niger Delta experiences at least 300 spills annually, leading to consistent leakage of hazardous hydrocarbons into farmlands and waterways. “It is like using a basket to fetch water,” Godfrey said. 

The divestment process has also been enmeshed in the opaqueness and murkiness characteristic of such deals in Nigeria, critics say. Activists have accused Nigeria’s President, Bola Ahmed Tinubu - an accountant at Mobil Nigeria before switching to politics in 1992 - of pandering to the whims of the IOCs while ignoring the cries of host communities. The president’s nephew, Wale Tinubu, owns Oando, one of the beneficiaries of the divestment process. 

Last year, the domestic oil company closed a $783 million deal with the Nigerian subsidiary of the Italian IOC Eni for purchase of four onshore blocks, thereby doubling Oando’s crude production to 50, 000 boe/d. 

Furthermore, communities are worried that the successor company could lack both the technical and financial capacity to handle oil production installations like pipelines and oil wells being left behind by the IOCs. Most of them are obsolete and approaching the end of their working life. 

“The firm taking over the asset, a conglomerate of five companies, has a total asset of less than $200 million, meanwhile, the value of the Shell facility they are taking over is $1.5 billion,” said Isaac Botti, who claims to have investigated the balance sheet of the company along with other activists in Nigeria.  

“How will they be able to handle the liabilities associated with the oil assets they are purchasing from Shell? For instance, the Petroleum Industry Act (PIA) requires oil companies to set up a host community trust fund. If you look at the framework for the implementation of the Trust Fund, a certain period of time, one year maximum, was given for it to be done. PIA is over 2 years old now and from our findings, no oil company has complied with this regulation. So who is going to bear responsibility for this going forward? Is it the seller or the buyer?” Botti asked.

Following the completion of the divestment process, ExxonMobil immediately unveiled a $10 billion investment in Nigeria’s deep-water oil operation. Likewise, Shell and its partners announced plans to expand drilling at the Bonga North floating facility which holds an estimated recoverable resource volumes of more than 300 million barrels of oil equivalent (boe). 

“Deepwater is a compelling consideration for Nigeria if the country must meet its oil production targets and implement ambitious development programmes,” Ronald Adams, the Managing Director of Shell’s Nigeria subsidiary, Shell Nigeria Exploration and Production Company Limited (SNEPCo,) said at  the 9th Sub-Saharan Africa International Petroleum Exhibition and Conference (SAIPEC) which met recently in Lagos, Nigeria. “They are switching from onshore to offshore where the communities will not be able to see all the shenanigans they are doing including pollution,” Godfrey noted. 

As Big Oil moves offshore, pollution concerns grow

Globally, Deepwater fields are renowned for lax regulation which exacerbate the risk of fossil fuel exploration to the ecosystem. Unfortunately despite evidence to the contrary, Big oil always minimizes the risk associated with Deepwater oil drilling especially on climate change, aquatic life and adjacent coastal environments. 

In a recent blog post, Mark Brooks, a senior specialist oil and gas at the conservation advocacy group, WWF-Canada, warned against oil drilling in Atlantic Canada arguing that offshore oil and gas activities are inherently risky and are a genuine threat to the ocean ecosystem and could exacerbate climate change. 

“If a major spill or a well blowout (an uncontrolled release of crude oil after a pressure release system fails) was to occur in the Atlantic Ocean—where extreme weather and Deepwater drilling are commonplace—it would seriously imperil the surrounding marine environment, potentially destroying habitat for whales, fish, sea birds, and many other animals” Brooks wrote. 

Oil spills in deepwater fields have been frequent.Two years ago, a spill unveiled to have come from the 67-mile Main Pass Oil Gathering pipeline system in the Gulf of Mexico which transports crude oil from seven different offshore drilling operators, resulted in the release of over one million gallons of crude oil into the ocean. 

Prior to that, the Deep Horizon spill in 2010 was the largest oil spill in marine operation. In that single incident, about 11 workers died when the rig exploded and sank while at least 4 million barrels of crude oil flowed into the Gulf of Mexico over an 87-day period resulting in devastation of marine life.