Shell’s Nigerian Withdrawal Underscores Human Rights-Energy Gap

The year 1995 was very tragic for Nigeria: after years of starvation and exploitation, the ethnic minority in Ogoniland, an area rich in oil and gas, began mounting a peaceful civil society movement to demand a greater share of the oil wealth to fund infrastructure in their impoverished communities. Led by the political activist Ken Saro-Wiwa, the Movement for the Survival of the Ogoni People (MOSOP) began holding multitudinous protests of 300,000 people in the early 1990s, particularly targeting the activities of oil multinational Royal Dutch Shell. After several arrests and high profile human rights trials, Saro-Wiwa was executed by hanging by the military dictatorship. Just this week, government officials have announced that Shell is being ousted from its concession in Ogoniland, which has been inactive as far back as 1993, opening the opportunity for the entrance of a new operator. Ken Saro-Wiwa Junior, the son of the famous activist, gave an important interview with Reuters, commenting on what Shell’s departure means for the Ogoni people, and what kind qualities the next foreign operator will have to offer to earn the rights to the fields. The Shell ouster, says Saro-Wiwa Junior, is evidence that the government is listening. Over the past number of months, I have become more and more immersed in Nigerian affairs on behalf of some of my clients, and my contacts in Abuja are telling me that there is currently a dramatic shift happening in the government of President Umaru Yar’adua – that the administration is serious about taking on the Delta issues head-on, something that the Obasanjo administration was never able to handle. If this is indeed the case, then we are going to see a very careful negotiation between government, communities, and international energy companies which should establish an entirely new level of engagement – closing the gap between human rights and oil that has plagued the country for so many years.

My sources tell me that the Ogoniland arrangement is the first in a series of new approaches from Yar’adua, which will focus on a structural approach to provide funding to local communities. Many are optimistic that this is the first ray of light after decades of darkness.But the tough job still lies ahead. The tiny community of Ogoniland cannot be compared to the other violent rebel groups such as the MEND (Movement for the Emancipation of the Niger Delta), whose leader Henry Okah is currently on trial. A high number of the attacks, sabotage, violence, and kidnappings targeting the oil sector is attributed to MEND, which has pushed up oil prices, driven down production, and choked the Nigerian economy – creating a self-perpetuating cycle of greater poverty and discontent.Yar’adua is no doubt hoping that this olive branch extended to the Ogoni will show that peaceful dialogue is rewarded with results.As I discussed in a recent speech in Houston, the underpinnings of the Nigerian Delta crisis are very complex, with baffling social cleavages among different tribes, and a recurring lack of success on behalf of energy companies of engaging the community. The crisis in part stems from the corporate foreign policies of big oil – in that the choices made in terms of government and community relations has in the past left much to be desired. The next operator which hopes to work in Ogoniland, which is said to contian “trillions” of cubic feet of natural gas, will have to play a much bigger role in helping the Ogoni and FG provide for basic needs – the social responsibility has to go beyond the flaks and press releases to actually achieve results and build a relationship of mutual benefit.The IOCs may not yet understand corporate foreign policies, but the state-owned firms most definitely do. My sources tell me that the Russians, Indians, Chinese, and even Malaysians are quickly becoming major players in Abuja, and their ability to couple an oil development bid alongside major infrastructure projects or debt forgiveness or even arms is quickly creating a new competition gap.Nevertheless I still strongly believe that there are important opportunities for the private sector to jump on in Nigeria, and a close understanding of Yar’adua’s new licensing regime is key – which will in theory provide a stabilizing distribution of the oil rents through all levels of government. It’s true that things are getting more expensive and effort intensive in almost energy extraction market, but that’s the reality we’ll have to learn to live with. To help Nigeria solve the Delta crisis, strong and transparent partnerships are needed, based on the mutual interest in developing the resource. As Saro-Wiwa Junior says, “it is in the national interest that we develop those resources, not just for Nigeria, but also for the local community.“