Bloomberg News

Oil Companies Fail to Bolster Peace in Nigeria, Adviser Says

July 15, 2011

July 15 (Bloomberg) -- Peace in Nigeria’s main oil- producing area is threatened by the failure of companies to invest in improving residents’ living standards, a special adviser to President Goodluck Jonathan said.

While a government amnesty in August 2009 ended most of the fighting in the Niger River delta and disarmed thousands of militant fighters, the oil companies “are not giving back,” Kingsley Kuku, the president’s adviser on the region, said yesterday in an interview in London.

Oil output in Nigeria, Africa’s biggest producer, has risen to more than 2.1 million barrels a day from 1.7 million barrels in July 2009, a month before the amnesty. Attacks by armed groups cut more than 28 percent of oil output between 2006 and 2009, according to data compiled by Bloomberg.

Royal Dutch Shell Plc, Exxon Mobil Corp., Chevron Corp., Total SA and Eni SpA run joint ventures with state-owned Nigerian National Petroleum Corp. that pump most of the West African nation’s oil. Nigeria is the fifth-biggest source of U.S. oil imports.

“Imagine, I’m operating in your community, your community is in darkness, and the platform is light for 24 hours. What are you telling the locals to do to you?” he said. “The first thing you owe the community you’re extracting from is to get lights to them. If they do that they are happy with you.”

Shell spokesmen Jonathan French in London and Precious Okolobo in Lagos said they couldn’t comment on Kuku’s statements. French forwarded excerpts from the company’s Briefing Notes that said its units last year contributed $161 million to the Niger Delta Development Commission and $71 million “towards addressing social and economic development challenges in the region.”

‘Genuine Peace Process’

The state and federal governments, the companies and the militants should use the relative peace “to try to consolidate a genuine peace process that begins properly to deal with the underlying causes of the unrest,” Antony Goldman, the head of London-based PM Consulting, which specializes in risk analysis in West Africa’s oil states.

“A critical part of that has to be the oil companies that in the past have looked towards short-term quick fix solutions which have contributed to some of the very problems that they are trying to solve,” he said today in a telephone interview.

The main militant group, the Movement for the Emancipation of the Niger Delta, or MEND, is preparing to resume attacks and is training new fighters, spokesman Jomo Gbomo said in an e- mailed statement yesterday. MEND says it’s fighting for control of oil revenue by the ethnic minorities of the delta region.

Kuku, who like Jonathan is an ethnic Ijaw from the Niger delta region, said oil companies should “stop complaining” about sabotage and pipeline theft.

Community Protestors

‘ Protesters from four communities in the delta besieged the Shell Nigeria’s Kolo Creek logistics base and “tampered” with installations because residents are unhappy about not being supplied electricity from Shell’s facilities, company spokesman Tony Okonedo said yesterday in an e-mailed statement.

Shell’s local unit declared force majeure on Bonny Light oil loadings June 13, after multiple fires on the Trans Niger Pipeline. The company lifted force majeure, a legal clause allowing companies to miss deliveries because of circumstances beyond their control, on July 1.

“We must solve this problem once and for all under this president, who is willing, who understands it, who is from one of the tiniest communities in the Niger delta,” said Kuku.

--With assistance from Dulue Mbachu in Abuja. Editors: Karl Maier, Phil Sanders

To contact the reporter on this story: Chris Kay in London at ckay5@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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