Royal Dutch Shell Plc  .com Rotating Header Image

Will Buhari’s Visit to Niger Delta Solve Shell and Chevron Problems?

Screen Shot 2016-06-27 at 13.33.21

By Staff Writer on Jun 27, 2016

Screen Shot 2016-05-21 at 10.18.28Problems of international oil and gas companies, including Shell and Chevron Corporation (NYSE:CVX), in Nigeria might end in the near future as the militant group, Niger Delta Avengers, has asked the Nigerian President Muhammadu Buhari to visit the southern region of the Niger Delta. The group has asked the President to hold a referendum in the country and to assess how the multinationals and the government are adversely impacting the locals. The talks between the two parties are expected to bring an end to the political turmoil in the country, which has been haunting Africa’s biggest economy for the past few months.

Avengers on the Roll

Since February, Niger Delta Avengers has carried out multiple attacks on foreign companies’ oil and gas facilities. The group’s first major attack was on Shell’s Forcados terminal and under-water pipeline. Since then, it has attacked several production facilities and pipelines of Shell, Chevron and Eni SpA (ADR) (NYSE:E).

Nigeria earns 70% of its income from the sale of crude oil. However, the Niger Delta Avengers believe that only a small proportion of the crude sales revenue is invested in the local infrastructure.

The group highlighted the fact that while Chevron’s oil and gas facilities have not faced any power outages in the Niger Delta for the past 40 years, the locals are suffering from lack of schools, hospitals, clean water and electricity. On their website, the Avengers said that while the multinationals are living like “Kings and Presidents” in the country, the residents continue to struggle with a lot of problems. The poverty level in Nigeria is high while the standard of living is extremely low.

The militants want international energy companies’ to halt their operations and exit the Niger Delta. The group said on its twitter account that foreign companies are “robbing the Niger Delta of oil and gas for quite a long period.”

The Avengers set May 31 as the deadline for foreign companies to halt their operations and exit the region. If the companies didn’t leave by the set deadline, the militant group said it would continue to target their facilities, electricity feeders and pipelines. The group has also warned against any repair works on the damaged sites.

Peace Talks

In May, Nigerian officials said that they are in talks with the Avengers. The government pulled back army troops from the region to ensure the group is ready to engage in peace-talks. However, the talks didn’t bear fruit and the attacks continued.

Earlier this month, the Niger Delta Avengers said they were ready to negotiate with the government if it would maintain a “genuine attitude and conducive atmosphere.” The group said a “genuine dialogue” is necessary to create a short and long-term framework for the energy sector in Nigeria.

On Saturday, the group called the Nigerian President to visit the southern region of the Niger Delta. Mr. Buhari was scheduled to visit the area last month, however, he cancelled his trip due to an ear infection. The postponement of the visit angered the Avengers, and there was an attack on the state-owned oil company’s boat. The group, however, didn’t claim responsibility for the attack.

This would be Mr. Buhari’s first trip to the region after he was elected President last year. The Avengers have accused him of completely ignoring the locals, especially the minorities. The group said he should visit Ogulagha and Ugborodo communities, which are host to Royal Dutch Shell plc (ADR) (NYSE:RDS.A), Chevron and other international energy companies.

The militant group said: “Mr. President come and see for yourself what the host communities are going through in the hands of Nigeria government and the multinationals.”

Mr. Buhari’s visit might end the tensions between the two parties, which would positively impact the oil and gas majors in Nigeria. The militant attacks have adversely impacted the financial position of the energy companies and have dented the Nigerian economy. Nigerian crude oil production has dropped from 2.2 million barrels per day (bpd) to around 1.6 million bpd. Moreover, the country has also lost its status as Africa’s biggest oil producer.

The attacks have also created problems for foreign oil and gas companies in the country. The companies are already struggling with weak commodity prices for the past two years. According to news sources, a number of energy companies including ConocoPhillips, Shell, and Total are planning to divest assets in the region.

Another Brexit?

Separately, the Niger Delta Avengers have asked Mr. Buhari to “call for a referendum and let Nigerians decides like they did to vote you into Power.” The Nigerian President should follow in the footsteps of David Cameron of Great Britain and should allow the locals to decide whether they would opt to stay as Nigerians or not, the group added.

The Avengers are of opinion that the locals are not happy with the government and thus would opt for the exit. Market experts are expected to keep a close eye on Buhari-Avengers talks as they would determine the future oil and gas production of Nigeria.

SOURCE

Read Also: Militants Claim Responsibility for Another Attack in Nigeria

Comments are closed.

%d bloggers like this: