Environmental remediation and IOCs’ questionable divestments from Nigeria


After 60 decades of pollution in the Niger Delta through exploration of fossil fuels, International Oil Companies (IOCs) have engaged in a frenzy of divestment’s from the region, prompting environmental activists, leaders of host communities, traditional leaders, lawyers, youth groups and other stakeholders to conclude that the IOCs were criminally evading responsibility for remediation of the environmental devastation’s their activities had caused over the years.

There have been divergent views on the IOCs’ decision to divest from the country. While the Minister of State for Petroleum Resources, Timipre Sylva, argued that the oil giants were exiting onshore business due largely to a hostile environment, Chief Executive Officer of Seplat Energy Plc, Roger Brown, said indigenous energy companies with the right competencies and wherewithal are natural partners to the Nigerian government in the quest to fully harness oil and gas assets.

Sylva traced divestments in Nigeria’s upstream oil and gas sector by the IOCs to 2006, adding that it increased in 2010 mainly due to the hostile environment exacerbated by massive crude oil theft.

He said: “As global energy consumption grows, it is apparent that oil and gas will remain significant components of the future energy mix. Therefore, there are ample opportunities for profitable investments in the Nigerian petroleum industry, with its enormous oil and gas reserves of over 37 billion barrels and about 209 trillion cubic feet (TCF).

Chairman of AA Holdings and former Chief Executive Officer of Seplat Energy Plc, Austin Avuru, blamed the drop in Nigeria’s oil production to just a little above one million barrels per day on the decline in capital spending in the industry from $20 billion to $6 billion yearly, adding that to reverse the decline in the sector and play catch-up, the industry needed to raise the capital spending to as much as $30 billion yearly in the next 10 years.

On his part, Group Managing Director of the Nigerian National Petroleum Company (NNPC) Limited, Mele Kyari, who argued that the IOCs were not withdrawing investments from Nigeria’s oil industry due to lack of opportunities, insisted that they were divesting to meet net-zero commitments and paradigm shifts in their investment portfolios.

He explained that net-zero refers to the reduction of greenhouse gases produced to achieve carbon neutrality following Seplat Energy Plc’s announcement that it had signed an agreement to acquire the share capital of Mobil Producing Nigeria Unlimited (MPNU) from Exxon Mobil Corporation, Delaware (ExxonMobil).

“Similarly, Royal Dutch Shell had said it was discussing with the Federal Government to sell its onshore oil assets in Nigeria. Despite the net-zero initiative, data from ShareAction shows that big banks are still pumping billions of dollars into the new oil and gas sector. Companies are divesting and leaving the country. Literally, that is the best way to put it.

“They are not leaving because of lack of opportunities, but because the companies are shifting their portfolios where they can add value and not just that, but where they can also add to the journey towards carbon net-zero commitments,” he said.

Kyari stressed that energy transition must ensure energy justice and take into cognisance the unique needs of developing countries like Nigeria, adding that transition must have sanity and there must be justice in the energy transition.

“That justice means that it helps to get to a point where we can transport our ordinary people from their homes to their workplaces in the short term. And ultimately also assist in ensuring that we have the most friendly fuel that is put in place between the next five to ten years, ultimately as we also build our ability to put the renewable energy on the table and even that we can’t do without financing and we also know that there is shortage of financing in this respect,” he added.

But Nigerians view the divestments of Royal Dutch Shell and its Nigerian subsidiary, the Shell Petroleum Development Company (SPDC) Limited, ExxonMobil, Chevron Nigeria Limited and others as a criminal abdication of responsibility in their failure to clean up or remediate the mass of mess that is now the lot of oil producing communities in the Niger Delta region before ever contemplating divesting their assets from the region.

Sadly, local investors including Heirs Holding Plc, Seplat Energy Plc with support of the Nigerian government, are offering billions of dollars to buy off what some analysts described as ‘weary and dilapidated facilities’ the IOCs are leaving behind and foisting their liabilities on the investors in the name of local content acquisitions.

A senior counsel and indigene of Ellu, an oil producing community in Isoko North Council Area of Delta State, Barrister Felix Omoviro, said the local oil firms acquiring assets of IOCs in the name of divestment should be pitied in the sense that investing in some of IOCs facilities after over 60 years of exploring and exploiting the Niger Delta oil in both onshore and offshore was not a good investment decision on the part of the local companies, because according to him, their facilities have been overstretched, while the crude oil resources they were going after were fast depleting.

“What the local oil firms are doing is akin to what happened to the defunct Dunlop Nigeria Plc. As a consultant to Dunlop in the 1980s and early 1990s, the management of Dunlop decided to engage in an expansion programme under the Chairmanship of the late Gamaliel Onosode and former Managing Director, Dayo Lawuyi, who later succeeded Onosode as Chairman.

“We advised against the company’s decision to buy refurbished equipment from South Africa, but management was fixated on the expansion programme. Even installing the obsolete equipment bought and brought in from South Africa was a very huge challenge. To the best of my knowledge, the equipment were scraps and that was the beginning of the fall of Dunlop Plc.

“The Nigeria local investors are buying scraps, as far as I am concerned and they should not expect robust returns on their investments (RoIs). In no time at all, they will realise that they have just made the worst investment decision of their lives” he stated.

A traditional ruler and the Akpu Ukwu I of Utagba Ogbe, headquarters of Ndokwa West Council of Delta State, Chief Okpor Ezeukwu, said although it was not totally wrong for corporate entities to divest from their areas of operations when necessary, the way and manner the IOCs were doing it in Nigeria elicits suspicion due to the peculiar circumstances and nature of the environmental hazards in the Niger Delta region.

Citing the experience with oil companies in Umuseti Community in Kwale, he said the companies usually keep the results of Environmental Impact Assessments (EIAs) a secret knowing that communities would protest against the results and sue the firms for the gross violations of their environment and despoliation of their means of livelihoods.

He, however, stressed that in spite of the scenario, communities that are aware of the pollution and environmental degradation of their waters, creeks and means of livelihoods could sue the divesting and local companies acquiring their assets.

“The divesting companies are selling their assets and liabilities, while the local investors are also buying those assets and liabilities. But the point is that like everything Nigerian, the local investors, unlike their foreign counterparts, will naturally trample on the rights, privileges and working conditions of their employees by paying peanuts compared to the IOCs. They don’t prioritise the welfare of their workers, just as they might continue to neglect the rights and privileges of the host communities.”

Also speaking on the development and the plight of impacted communities of the Niger Delta in an interview, Executive Director of the Environmental Rights Action, Friends of the Earth Nigeria (ERA/FoEN), Chima Williams, said: “We have always maintained that owners of assets have the right to sell when they wish, but in the circumstance of divestments by the IOCs and because there are legacy problems of pollution, which affect people not involved in the business of buying and selling crude oil and fuel-related products, our position is simple:
“First, the IOCs should clean up the mess they created and restore the environment to the way it was before they started their operations. They should improve the livelihoods of the communities and not destroy the environment further.

“Following up on that, we sent a caveat emptor (buyer beware) notice, which is to say that whoever buys assets buys the liabilities. So, if they do their due diligence checks, they should know that the challenges of acquiring such assets will come after them. It should be a total package for the Nigerian government and the investors to join forces with the communities, civil society and all stakeholders to ensure that the right things are done. If the IOCs must divest, they should restore the environment to the way it was.

“Two, if they won’t restore the environment, they should put in place an environmental remediation bond, which will be assessed by a collective interaction of all stakeholders to arrive at an amount that can take care of the problems they have created over the years.

“Thirdly, most of the domestic oil companies (DOCs) buying those assets do not have the technical and financial capacity to take care of the situation on the ground, let alone what will happen in the future. So, the investors should also put in place their environmental remediation bond so that everybody will know that they have the capacity and if they fail to do the needful, the necessary authorities can then use the money to effectively clean up the polluted environment.”

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He said those were some of the steps that could be taken, maintaining that the communities could litigate against the divesting and investing companies to stop the process until they were assured that their environment and sources of livelihood have been restored.

Williams stressed that such litigations could be initiated at national and home country levels so that in organising, states that are heavily impacted could work with communities, citizens and civil society organisations to mobilise for national action against all agents of oppression in terms of environmental pollution, just as some communities in Akwa Ibom State sued Shell at the international court and won.

On the effective clean-up of Ogoni land and the Niger Delta, he said: “We cannot put a price tag on the remediation process because we have been advocating that there should be a $100 billion fund set aside for the clean up of the Niger Delta. So, we can take from there, while the regulatory authorities and relevant stakeholders can come up with a figure that can adequately take care of the clean up of impacted sites in the Niger Delta.”
Insisting that the Ogoni clean-up was not moving at the pace it should with the investments already made there, he said the more the government wait to clean up Ogoni land, the more problems and the more polluted the area gets.

“It is the collective responsibility of communities, the media, civil society and all stakeholders to put more pressure on the government to do the needful to release funds to those saddled with the responsibility of the cleanup and monitor what is being done. And it is not just to ensure that money is released, but also to monitor the purpose for which the money is being deployed. It can also be made a campaign issue in the 2023 general elections, not targeted at any political party, but all political parties,” he stated.

Also, the Stakeholders Alliance for Corporate Accountability (SACA), recently convened 27 lawyers in Yenagoa, Bayelsa State to review regional and national laws as they pertain to environmental degradation, land acquisition and use, social impact on indigenous people, community engagements and consultations, as well as mechanisms for addressing violations and grievances.

Executive Secretary of SACA, Kingsley Ozegbe, who noted that the Human Rights Due Diligence Committee (HDDC) in the communities was in line with the United Nations Guiding Principles on Business and Human Rights (UNGP), maintained that the programme tallies with the premise of protection, respect and remedy of human rights breaches in the host communities of oil companies for harmonious relationship without necessarily breeding conflicts.

Ozegbe lamented that the risks associated with oil and gas activities in the Niger Delta region were frightening, just as the investment climate continues to shrink.

He said: “Oil spillages in the environment are becoming alarming and 76.24 per cent of spillages are caused by human interference with oil facilities. This prompted stronger teamwork to safeguard humanity and improve the environment to attract investors with a view to creating opportunities for working population, rather than divestments by the IOCs.”

But in spite of the collaborations, the question is if the oil and gas industry holds so much promise, with opportunities for realising hundreds of billions of dollars, why are the IOCs bent on divesting from the country? And if as Kyari argued, the IOCs were divesting to meet net-zero commitments, why divest to meet such commitments, instead of putting measures in place to mitigate the impacts of climate change in the country?

Viewed from all perspectives, the IOCs’ divestments from the Niger Delta represent a questionable and criminal evasion of their responsibility for remediating the polluted Niger Delta environment, aided by the Federal Government’s lack of foresight and penchant for always accepting every proposal pushed to it, but the IOCs and investing companies should be ready to face the litigations and other resistance awaiting them before, during and after the divestments.

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