Nigeria: Shell – We’ll Remain Shareholders in Ogoniland

This Day (Lagos)

18 June 2008
Posted to the web 18 June 2008

Chika Amanze-Nwachuku With Agency Report
Lagos

Royal Dutch Shell said yesterday that it would remain a shareholder in Ogoniland operations even if the Nigerian National Petroleum Corporation (NNPC), also Shell’s joint venture partner, becomes the operator of the oil fields.

The company also ruled out the possibility of suing the Federal Government over the revocation of Ogoni oil fields.

President Umaru Musa Yar’Adua had announced over a week ago that oil fields abandoned by Shell in Ogoniland 15 years ago would be given to the NNPC to operate.

Justifying government’s decision to withdraw Shell’s operatorship in Ogoniland, Yar’Adua had said since there was a total loss of confidence between the Ogoni people and Shell, government decided that the best solution was to allow another operator acceptable to them (Ogonis) to take over exploration activities in the area.

He however announced last week that the NNPC would take over the company’s interest in the area.

But reacting to the development in an interview with Bloomberg yesterday, the Managing Director of Shell Development Company of Nigeria (SPDC), Mr. Mutiu Sunmonu, said Shell would continue to be a shareholder in the Ogoniland operations even though NNPC will become the operator.

Sunmonu also disclosed that SPDC currently has as much as 400,000 barrels of crude oil shut in as a result of militant attacks on its facilities.

“Militants attacks as recent as last month and as old as February 2006 have halted about half the venture’s production,” the Bloomberg report said.

The company also said yesterday that it would not mount a legal challenge to government’s plan to take over its oilfields in Ogoniland later this year.

“Shell will not challenge this in court,” said Precious Okolobo, a spokesman for Shell in Nigeria, was quoted as saying by Reuters.

“If this action will bring peace to Ogoniland, we will support it,” Okolobo said.

Shell’s activities in the area had suffered set backs due to strained relationship between it and the Ogoni people over the company’s alleged failure to pay compensation for damages done to their environment as a result of exploration activities.

Shell has since maintained that it has never been found wanting in its social responsibility to its host communities.

The relationship between Shell and the Ogonis was further strained following the execution of nine Ogoni activists, including Ken Saro-Wiwa, leader of the Movement for the Survival of the Ogoni People (MOSOP), in 1995 by government of the late General Sani Abacha.

The development effectively crippled the company’s activities in the area while its infrastructure including oil wells, flow lines which bring crude oil to the flow stations, rotted away due to lack of access to them.

THISDAY had on Monday reported that Russian oil giant, Gazprom, and several foreign companies were jostling for the Shell’s the oil fields in the area.

THISDAY was also informed that many Chinese companies have indicated interest in the oil fields, which hold proven reserves of over 10 trillion cubic metres of gas – one of the world’s largest.

It was learnt that Yar’Adua’s decision to re-allocate the fields was informed by his desire to address the power situation in the country through the use of gas to generate electricity. Gas is one of the cleanest sources of power.

In line with the policy of the Yar’Adua administration to involve host communities in the ownership of oil fields in order to address the issue of marginalisation, THISDAY reported that there ewas intense mobilisation by the communities in preparation to take up equity in the ventures.

Any new company that gets the oil fields is expected to begin production within a year.

Gazprom, although not an oil company, is said to be interested in gas production in which it has global acclaim.

Gazprom is the largest extractor of natural gas in the world, accounting for about 93 percent of Russian natural gas production. With reserves of 28,800 cubic km, it controls 16 per cent of the world’s gas reserves.

http://allafrica.com/stories/200806180125.html

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