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Oily
Matters
By MUYIWA
AKINTUNDE Lagos, Nigeria
For Nigeria,
OPEC’s sixth largest oil producer, the product is a curse rather
than a blessing. Amid the grandiose landscape of flashy skyscrapers,
sleek cars, swashbuckling politicians and businessmen in sharp pinstripe
suits, poverty and irony pervade the land like a plague. The poorest
sections of Nigeria are the villages from whose land the crude oil
and natural gas come. They host the multinational oil corporation
who exploit and export on behalf of the Nigerian government but
they are not considered a major factor in the sharing of the huge
wealth or the social structure that comes with it.
They are just
there as cultural and traditional owners of the land but grumpy
neighbours of the oil firms. Dwellers of the oil-rich southeastern
coast of Nigeria had turned the Atlantic Ocean into their playground
until it became a monster. Fuelled by poverty and ignorance of the
risks involved, hired hands and a few greedy people go to burst
oil pipelines to fetch fuel and make quick money. But the scavengers
often end up being the dead exhibits of the nefarious activity.
The infamous fire that grabbed front-page attention in the international
media three years ago was a consequence of pipeline bursting by
the villagers of Oviri court near the oil city of Warri. Few days
later when this reporter visited the scene the air of the sleepy,
rural community was still dense with the foul, stinging vapour of
petrol. It is unlikely that this land would bear fruit for a long,
long time.
“This land is
finished. No fish will ever grow here,” a villager mourned. The
vandal’s job is made easier because most sections of the 5,000-kilometre
pipelines that link the crude oil depots with the refineries are
old and rusty. They have been installed in the 1970s. Over 200 cases
of pipeline sabotage are reported yearly. Often in this region known
as the Niger Delta, instead of drinking water from the vast water,
kids return home with their calabashes filled with crude oil because
the multinational oil corporations hardly worry about the environmental
impact of their operation. In 1998 Nigeria recorded its biggest
oil spill for 18 years in form of a 24-inch rupture in a gas pipeline
at an offshore platform in a fishing village. Frequent oil spillages
render villagers economically handicapped. But oil multinationals
violate compensation agreements as quickly as they sign them. In
protest angry youths would block access to the oil installations
and paralyse production. Damage to plants and vegetation of the
Niger Delta from gas flaring and oil spillage may never be quantified.
Anglo-Dutch
firm Shell is still reeling from a US circuit court landmark judgment
against it for a 1970 oil leakage it claims was not its fault. Recently
a high court in Port Harcourt, capital of the Niger Delta region,
ordered the Anglo-Dutch firm to pay about $32 million to some communities
for ecological damage. But typical of the big corporations that
take advantage of the Nigerian corrupt system to get away with their
sins, Shell filed an appeal causing an angry young man representing
the land owners to query: “What message is Shell sending to the
Niger Delta by going to appeal: That you can cause damage to someone
and because you have money you keep dragging, instead of accepting
liability?” Many martyrs had been made in the course of demanding
for the rights of the Niger Delta and its people, the most prominent
being playwright Ken Saro-Wiwa who was judicially murdered by the
military regime eight years ago against world opinion. He had demanded
that his Ogoni kith and kin in the region should be heavily compensated
by Shell for despoiling their land. Nigeria was suspended from many
international bodies for killing an environmental rights campaigner.
Nigeria’s ministry
of environment notes that scores of abandoned ecological projects
across Nigeria would need about $11.2 million to revive and complete.
Most of these projects are located in the Niger Delta, the cash
cow of the Nigerian state, which gets very little for the huge revenue
contribution. Nigeria exports over 2 million barrels of oil per
day, and that accounts for more than 80 per cent of its foreign
exchange earning. With OPEC’s suspension of production quota as
a result of the bombing of Iraq the basket price of crude oil that
shot up from $25 per barrel to $30/barrel now stands at the cartel’s
preferred price range of $22 - $28/barrel. Nigeria pegs its 2003
federal revenue at $20/barrel oil price, meaning that a Gulf War
II oil windfall is in the offing since the war and its fallouts
may be with us for a long time to come. “We (Nigeria) should just
keep selling as much oil we can to boost revenue generation required
for financing infrastructure development needed for the survival
of our local industries,” says Dr Adetokunbo Adedeji who heads a
government environmental agency.
The Nigerian
constitution compels the central government to grant the oil-producing
region 13 per cent of the federal earnings but the constituent Niger
Delta states had to wage a dogged battle before President Olusegun
Obasanjo could comply with that law nearly a year after he took
the oath of office. Even then, he short-changed the beneficiaries
by re-introducing a long-forgotten law that ceded coastal boundaries
to the federal government. His refusal to sign the bill that would
redress that injustice is an election issue as Nigerians elect a
new president next Saturday. The Niger Delta has had more than enough
development agencies and policies. What has been lacking is the
political will to reverse more than 40 years of neglect by the government
and the multinational oil and gas companies that earn for the Nigerian
government up to $500 million from gas exports annually. Obasanjo
created his own intervention agency for the region. Known as the
Niger Delta Development Commission (NDDC), it claimed to have done
over 700 development projects estimated at about $142.9 million.
It is also designing a master plan that will uplift the derelict
nature of the area. But the government starves the outfit of funds.
Commission chairman Onyema Ugochukwu says the agency would require
more than $2.1 billion yearly to do its job well.
Such neglect
by the Nigerian government and the struggle for political control
of the area among the diverse tribes fuel frequent crises in the
Niger Delta and loss of revenue by Nigeria and the oil corporations.
Two weeks of killings from late last month forced Shell, ChevronTexaco
and TotalFinaElf to shut oil production and evacuate the area. This
led to a total loss of 817,500 barrels/day of crude output, representing
40.5 per cent of the country’s total crude oil output. Shell supply
loss amounted to 370,000 barrels/day, ChevronTexaco 440,000 barrels/day,
TotalFinaElf 7,500 barrels/day totalling $24 million. In three days
of the conflict Nigeria lost 622,500 barrels/day. In monetary terms,
that is $56.03 million. But Shell quickly beefed up production from
its fields located east of the Niger Delta to make up for the loss
in the area. Across Nigeria the nightmare of fuel shortage, which
ended with the last military dictatorship four years ago has returned.
Crude oil allocation for domestic consumption has been on the increase
from 250,000 barrels/day 10 years ago to 400,000 barrels/day presently,
all in a bid to meet the rising domestic demand for refined products.
But the poor
state of the country’s four refineries, which had suffered neglect
by past military regimes, resulted in very low output of refined
products, forcing the country to rely on importation to meet domestic
demand for fuel. A sharp increase in crude oil prices in the international
market and on-going Gulf war disrupted NNPC, the state-run petroleum
authority’s fuel importation programme and had been linked to the
current fuel crisis in the country. While the recent Niger Delta
conflict lasted, output of the refineries dropped further by another
50 per cent. The Warri refinery at the heart of the trouble spot
has a capacity for 125,000 barrels per day but multinational oil
companies in the area shut it down following the depletion of its
crude oil stock arising from the closure of operations. Up north,
the Kaduna refinery was shut down when militant Niger Delta cut
off the Escravos crude oil pipeline used to channel imported heavy
crude to that refinery. Government investigators said the youths
employed “tools suspected to be explosives.
” This is the
third time in recent time that the pipeline is being destroyed using
explosives. Last month NNPC signed an agreement ceding oil supply
from Escravos Tank Farm to both the Warri and Kaduna refineries
to American oil major ChevronTexaco. This suggests that multinational
oil firms might soon take over the control of the country’s troubled
refineries. This pact would make ChevronTexaco to take control as
well as manage NNPC crude oil tanks in the Escravos Tank Farm in
Delta state and also supervise the delivery of crude to both the
Warri and Kaduna refineries. ChevronTexaco is Nigeria’s third largest
crude oil producer, accounting for more than 450,000 barrels/day
output in joint venture partnership with NNPC. The real issue regarding
domestic supply is for the government to allow oil corporations
run the show without imposing strict price regime. The way out:
may be to offer incentives to multinational firms to build and manage
their own refineries.
On the part,
oil marketers proposed an upward review of petrol price from the
present $0.2 per litre to about $0.27 to encourage them join in
importing fuel to make up for the shortfall in local production
of refined fuel. But the government outfit managing fuel prices
says price increase is out of the way; understandably so in an election
year when the explosion that would trail such action might earn
the sitting president defeat in his re-election bid. In a country
that offers a meagre GDP per head of about $360, oil workers attract
the envy of their compatriots with their fabulous wages. Yet they
stage job boycotts almost at the drop of the hat. Local employees
are not well remunerated and live in substandard apartments compared
to their expatriate counterparts. The result is that Nigeria’s oil
crisis gets compounded more often than usual.
This article
was first published in Spanish in the April 27, 2003 issue of Cronica,
the Sunday magazine of El Mundo newspaper.
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