Tag Archives: Nigeria oil

Nigeria – Malabu Scandal: After telling lies for years, Shell admits it knew Etete would benefit from $1.1 billion

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epa05113059 (FILE) A file photo dated 30 July 2015 showing a company flag flying infront of the head office of Royal Dutch Shell in The Hague, The Netherlands. Royal Dutch Shell plc on 20 January 2016 reported a sharp fall in profits for the last quarter of 2015 as low oil prices hit earnings and the company restructured to reduce costs. Shell said it expected fourth-quarter earnings to be between 1.6 billion and 1.9 billion dollars, down from 4.2 billion dollars in the fourth quarter of 2014. Full-year earnings, including the impact of lower prices on the company's oil inventory, are expected to total 10.4 billion to 10.7 billion dollars, about 45 per cent lower than the 19 billion dollars reported in 2014.  EPA/JERRY LAMPEN [Photo Credit: Financial Times]

30 July 2015 showing a company flag flying infront of the head office of Royal Dutch Shell in The Hague, The Netherlands. Royal Dutch Shell plc on 20 January 2016 reported a sharp fall in profits for the last quarter of 2015 as low oil prices hit earnings and the company restructured to reduce costs. Shell said it expected fourth-quarter earnings to be between 1.6 billion and 1.9 billion dollars, down from 4.2 billion dollars in the fourth quarter of 2014. Full-year earnings, including the impact of lower prices on the company’s oil inventory, are expected to total 10.4 billion to 10.7 billion dollars, about 45 per cent lower than the 19 billion dollars reported in 2014. EPA/JERRY LAMPEN [Photo Credit: Financial Times]

After repeated denials in various countries, Anglo-Dutch oil giant, Royal Dutch Shell, on Monday finally admitted it had foreknowledge that the $1.3 billion itself and ENI paid to Nigerian government for the OPL 245 oil block licence would ultimately be used to settle convicted former Minister of Petroleum, Dan Etete.

“Over time, it became clear to us that Etete was involved in Malabu and that the only way to resolve the impasse through a negotiated settlement was to engage with Etete and Malabu, whether we liked it or not,” The New York Times quoted Andy Norman, a spokesperson for Shell, as saying in an email Monday.

The Dutch oil giant knew the Nigerian government “would compensate Malabu to settle its claim on the block,” Mr. Norman added.

The confession came a day after intercepted telephone conversation between Shell’s chief executive, Ben van Beurden, and his then chief financial officer, Simon Henry, revealed the oil firm knew Mr. Etete was the main beneficiary of the multi-billion dollar deal.

Shell and ENI had hitherto maintained ignorance that Mr. Etete would benefit from the deal prior to the settlement agreement that was reached with Goodluck Jonathan’s government in 2011. The agreement saw Shell and ENI assume ownership of the lucrative oil field after paying $1.1 billion to Malabu via a Nigerian government account. Another $200 million had earlier been paid by Shell.

Past denials

Shell had in the past told PREMIUM TIMES and others that it did not know its payment would end up with Mr. Etete or Malabu.

“Shell was not aware that that money was to be paid to Malabu,” Precious Okolobo, a communications officer with Shell, told PREMIUM TIMES by telephone in May 2012.

“As we have previously stated, no payments were made by any Shell company to Malabu Oil and Gas in relation to the issuance by the Federal Government of Nigeria (FGN) of the OPL 245 licence to Shell Nigerian Exploration & Production Ltd and Nigerian Agip Energy (NAE).” Andrew Vickers, Shell’s Vice President NGO and Stakeholder Relations, said in a 2015 letter to Global Witness, an anti-corruption campainger.

Shell and Italy’s ENI had issued other similar denials since then. But the latest revelations, which were part of an ongoing probe of the deal by Italian authorities, have now put the oil majors on the defensive.

But Shell officials, nonetheless, maintained that they “believe that the settlement was a fully legal transaction,” the New York Times reported.

Global Witness said in a statement that the leaked phone conversations of Shell executives forced the company to finally give in.

“This is a huge U-turn that reveals Shell’s duplicity,” Simon Taylor, founder of Global Witness, said in an email to PREMIUM TIMES Monday night.

“For six years it has asserted it only paid the Nigerian government, insisting it has “never been anything but transparent” about the deal for the oil block, and that its actions were “morally OK”.

“Now its private emails have come to light, Shell has admitted it dealt with Etete – a convicted money launderer – to ensure it got its hands on this valuable oil block, at the expense of the Nigerian people.

“This shows that Shell has not only knowingly deprived a country of life-saving funds, but has repeatedly misled its investors and the broader public over this corrupt deal.”

Mr. Etete, who was petroleum minister under Sani Abacha. had awarded the oil block to Malabu, a company he partly owned alongside Mohammed, Mr. Abacha’s son, in contravention of Nigerian laws.

The OPL 245 oil block, believed to contain more than nine billion barrels of crude oil, is considered one of the richest oil blocks in Africa.

In 2007, Mr. Etete was convicted in Paris in a different case that bordered on money laundering.

Monday’s revelations came a day after PREMIUM TIMES reported that Mr. Jonathan might have received up to $200 million in bribes to approve the controversial deal.

The report was based on Italian court documents obtained by BuzzFeed and Italian business newspaper, Il Sole 24 Ore.

In the documents, Italian prosecutors quoted Ednan Agaev, a middleman who helped negotiate the transfer of the oil block to Shell and Eni, as saying that Dan Etete, the former Petroleum Minister at the heart of the oil scandal, said he intended to dole out as much as $400 million in bribes if the deal went through.

If Mr. Etete actually paid out such an amount in bribes to Nigerian officials, “Agaev stated that he would think President Goodluck Jonathan got at least $200 million of this money,” BuzzFeed quoted an excerpt of FBI submissions to Italian authorities as saying.

The revelations were made when the FBI interviewed Mr. Agaev, whom prosecutors also said met with Mr. Jonathan on more than one occasion in Nigeria during the OPL 245 negotiations.

Mr. Agaev, who was Mr. Etete’s representative in the negotiation, said the convicted former petroleum minister told him of the $400 million bribe to Nigerian politicians when he approached him for his payment.

He also repeated the claim in a follow-up interview with Italian prosecutors, led by Fabio De Pasquale in Milan.

“I said that if it’s true, that he paid, he had to pay 400 million, I assume that at least 200 went to Goodluck (Jonathan).”

“I heard from Chief (Etete), he claims that he had to pay 400 million, so, if this is true, if he paid 400 million, then most probably the President, as the biggest boss, took at least the half of it,” BuzzFeed wrote, quoting documents prepared by Italian prosecutors.

Mr. Jonathan’s spokesperson, Ikechukwu Eze, could not be reached for comments about the latest revelations. But he denied the former president’s involvement in a January 10 statement about the Malabu oil deal.

“We wish to make it clear that former President Jonathan was not accused, indicted or charged for corruptly collecting any monies as kickbacks or bribes from ENI by the Italian authorities or any other law enforcement body the world over,” the statement said.

Nigeria – Shell CEO and oil scandal

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What Shell CEO told colleague about $1.3 billion OPL 245 scandal

epa05113059 (FILE) A file photo dated 30 July 2015 showing a company flag flying infront of the head office of Royal Dutch Shell in The Hague, The Netherlands. Royal Dutch Shell plc on 20 January 2016 reported a sharp fall in profits for the last quarter of 2015 as low oil prices hit earnings and the company restructured to reduce costs. Shell said it expected fourth-quarter earnings to be between 1.6 billion and 1.9 billion dollars, down from 4.2 billion dollars in the fourth quarter of 2014. Full-year earnings, including the impact of lower prices on the company's oil inventory, are expected to total 10.4 billion to 10.7 billion dollars, about 45 per cent lower than the 19 billion dollars reported in 2014.  EPA/JERRY LAMPEN [Photo Credit: Financial Times]

A file photo dated 30 July 2015 showing a company flag flying infront of the head office of Royal Dutch Shell in The Hague, The Netherlands. Royal Dutch Shell plc on 20 January 2016 reported a sharp fall in profits for the last quarter of 2015 as low oil prices hit earnings and the company restructured to reduce costs. Shell said it expected fourth-quarter earnings to be between 1.6 billion and 1.9 billion dollars, down from 4.2 billion dollars in the fourth quarter of 2014. Full-year earnings, including the impact of lower prices on the company’s oil inventory, are expected to total 10.4 billion to 10.7 billion dollars, about 45 per cent lower than the 19 billion dollars reported in 2014. EPA/JERRY LAMPEN [Photo Credit: Financial Times]

The boss of one of the world’s biggest corporations was placed under secret surveillance as part of a pan-European corruption investigation into the way the firm paid $1.3 billion for an oil block in Nigeria, explosive documents leaked to Finance Uncovered reveal.

The leak includes a recording of a wiretapped telephone conversation between Shell’s chief executive, Ben van Beurden, and his then chief financial officer, Simon Henry, in the immediate aftermath of a raid by Dutch financial police on the corporation’s headquarters in The Hague.

In the 14-minute tape, Mr. van Beurden is heard discussing the raid earlier that day in which thousands of documents relating to a deal it struck in Nigeria were seized – a deal currently being investigated over allegations that $1.1 billion knowingly flowed to a convicted money launderer.

Mr. Van Beurden is heard on the intercept warning Henry not to volunteer any information that is not requested if approached by the police and discussing the ramifications for the company’s share price.

And in one extraordinary passage, he bemoans “loose…pub talk” by two former MI6 operatives the company had employed to gather intelligence in Nigeria ¬– and who had speculated which politicians might get “payoffs” if Shell secured a deal.

The conversation took place in February last year when Dutch authorities raided Shell’s HQ after a request from counterparts in Italy.

Italy and the Netherlands are investigating the $1.3 billion purchase of the Nigerian oil block OPL 245 by Shell and Italian oil major Eni in 2011.

The Italian case centres on allegations that Shell and ENI knowingly paid $1.1-billion to a former Nigerian petroleum minister for OPL 245, a concession he had improperly awarded to himself while in office.

Most of the money allegedly flowed as kickbacks to Nigerian government ministers and Eni executives.

The intercept is understood to form part of the Italian prosecutor’s case against Shell, which is now being prosecuted together with Eni in Milan. The Nigerian Economic and Financial Crimes Commission is pursuing a separate prosecution in Abuja against Shell, Eni and others.

As part of the Italian legal process, the evidence that the prosecutor intends to use has been shared with the implicated parties ahead of a court hearing on April 20 to confirm the charges.

Shell and Eni strongly deny any wrongdoing, and there is no suggestion that Mr. van Beurden, who only became CEO in 2014, played any part in the deal. Both companies insist they have cooperated fully with the authorities.

The February 2016 raid came at a sensitive time for the Shell CEO.

Two days earlier, Shell had finalised a merger with BG Group. Touted as a legacy-defining moment for Mr. van Beurden, who earns more than $20 million a year, it turned Shell into the world’s biggest producer of liquefied natural gas.

The evening of the raid, February 17, Mr. van Beurden phoned chief financial officer Simon Henry to discuss what police might have discovered, and how Shell could limit the fall-out.

At the outset of the conversation, he tells Mr. Henry he is stepping out of the room so he can’t be overheard by the family nanny – unaware of the police eavesdroppers and a far wider audience.

They then discuss the raid and which of their offices had been examined. Mr. Van Beurden then refers to an ongoing internal investigation led by Shell’s own legal chief.

When Mr. Henry asks for an update on that, the CEO replies: “I don’t think they have found anything that was clearly incriminating or that sort of suggested that we were colluding or doing anything inappropriate.”

He adds: “But there was apparently some loose chatter between people from the [OPL 245] team, particularly the people that we hired from MI6 who, er, must have said things like, “Well, yeah, you know, I wonder who gets a pay-off here and whatever”, so it’s unhelpful email exchanges. It’s, it’s … I haven’t seen them but apparently they were judged to be, you know, just pub talk in emails which was stupid. But nevertheless it’s there.”

Finance Uncovered believes these are Guy Colegate and John Coplestone, who worked for Shell as “senior business adviser” and “strategic investment adviser” respectively.

According to documents seen by Finance Uncovered, they had been instrumental in gathering the intelligence that helped Shell to acquire the much-prized oil block, OPL 245, a field that increased Shell’s proven oil reserves by a third.

In the wiretap, Messrs. Van Beurden and Henry then agreed about the need to inform the UK Serious Fraud Office and the US Department of Justice about the raid, especially because the OPL 245 deal “happened at a time we were of course under deferred prosecution agreement, so, we should have maybe at the time been a more open with the DoJ [US Department of Justice] than we now find we have been.”

With all eyes on Shell’s share price following the BG Group merger, both men expressed their reluctance to disclose all but the most limited information to shareholders via the US Securities and Exchange Commission.

As Mr. van Beurden put it, “the last thing you want of course is some sort of request to issue a stock exchange release when there is nothing to be said other than we are being asked to provide information”.

Finally, Mr. van Beurden rang off with a friendly reminder to Mr. Henry, who planned to go in to the office the following morning despite the ongoing police operation: “You probably … know this, [but] don’t volunteer any information that is not requested.”

In response to questions posed to Shell, Messrs. van Beurden and Henry, a spokesperson said: “Given this matter is currently under investigation, it would be inappropriate to comment on specifics. However, based on our review of the Prosecutor of Milan’s file and all of the information and facts available to Shell, we do not believe that there is a basis to prosecute Shell. Furthermore, we are not aware of any evidence to support a case against any former or current Shell employee. If the evidence ultimately proves that improper payments were made by Malabu or others to then current government officials in exchange for improper conduct relating to the 2011 settlement of the long-standing legal disputes, it is Shell’s position that none of those payments were made with its knowledge, authorization or on its behalf.

“We are taking this matter seriously and are fully co-operating with the relevant authorities. This includes when appropriate having shared the key findings of an investigation led by Debevoise & Plimpton LLP, an independent international law firm. We have also accurately reported on the OPL 245 settlement in our annual reports.

“Shell attaches the greatest importance to business integrity. It’s one of our core values and is a central tenet of the Business Principles that govern the way we do business.”

He added: “We notified the US and UK authorities of the visit to Shell’s office by the Dutch Prosecutor, and we subsequently shared with them the findings of our internal investigation.”

John Copleston and Guy Colegate could not be reached for comment.

OPL BACKGROUND

Until a prosecutor in Milan launched an investigation in 2014, few outside the oil industry had heard of OPL 245.

But it is estimated to contain 9.3 billion barrels of oil, enough to power Africa for seven years.

It also contains vast gas reserves and was eyed by companies from China and Russia for years.

But out of all the majors, Shell, which has a long history in Nigeria and can count on powerful contacts right to the top of the Abuja government, was most determined to secure the drilling rights.

In 1998, Nigeria’s then oil minister, Dan Etete, had awarded the licence to a front company, Malabu Oil and Gas, in which it later emerged he held a significant stake.

After a new president came to power, Malabu lost its rights as they were reassigned to Shell. Later, the position reversed and Shell began legal proceedings against Nigeria.

In 2007, Mr. Etete, by then out of Nigerian politics, was convicted in a Paris court for his part in a separate money laundering scandal. The conviction was upheld on appeal in 2009.

Undeterred, Shell, which had spent hundreds of millions of dollars on initial testing in the OPL 25 waters, joined forces with Italy’s Eni. Negotiations were conducted with Mr. Etete and his advisers in luxury hotels in Europe and Nigeria.

In 2010, as Shell continued to negotiate the acquisition of OPL 245 with Mr. Etete, Goodluck Jonathan, his close ally, became Nigeria’s president.

In documents seen by Finance Uncovered, a deal was almost reached in October 2010 in which Shell and Eni would pay Malabu directly.

But this was scuppered by the threat of a legal challenge from a third party in Nigeria.

With Shell receiving intelligence that Mr. Jonathan was keen to see a deal finalised ahead of presidential elections, further negotiations took place on how to avoid any direct payment to Malabu.

In April 2011, Mr. Etete and the oil giants agreed a fee of $1.3 billion.

Under the terms, Shell and Eni were to make payments only to the Nigerian government.

The thinking behind this arrangement, memorably described by one fixer as a “condom” between the buyer and seller, was that at no point would Shell or Eni make direct payments to Malabu or Etete, by now officially recognised as a criminal.

Instead Eni paid $1.1bn direct into the Nigerian government’s escrow account with JP Morgan in London, while Shell settled the $210m ‘signature’ fee with Nigeria.

By August 2011, the bulk of the $1.1bn was transferred from the ownership of the people of Nigeria to Mr. Etete and his alleged conspirators.

Where all of it ended up will probably never be known – tens of millions were used to buy a private jet and armoured cadillacs in the US.

It is also alleged millions were paid to Nigerian government officials and fixers, including Goodluck Jonathan himself who denies the allegation.

The Italian court case, which is due to start on April 20, may shed more light on the affair.

“PUB TALK, OR DEAL TALK?”

Finance Uncovered believes the “loose chatter” and “just pub talk” mentioned by Shell CEO Ben van Beurden in his wiretapped phone conversation refer to emails sent and received by John Copleston and Guy Colgate.

The pair have been described by the public prosecutor in Milan as former MI6 officers employed by Shell. They were key figures in Shell’s attempt to secure the OPL 245 rights from Dan Etete and Malabu.

From October 2009 onwards, they met with Mr. Etete or his advisers and fed intelligence back to senior Shell managers.

In Shell internal documents seen by Finance Uncovered, the duo told their superiors that money was likely to flow to President Goodluck Jonathan and other powerful figures. This intelligence also made its way into briefings supplied to Shell’s top executives.

After Mr. Jonathan became acting president of Nigeria, Mr. Colegate emailed a senior Shell executive in The Hague on March 9 2010 to brief him on a meeting he had just had with a source in Paris. He said Mr. Etete “can smell the money” and that “others in the mix might not let him” walk away from a deal at this stage. The following day, Mr. Colegate’s email was forwarded to then-Shell CEO Peter Voser.

On July 15 2010, Mr. Colegate had a long meeting with a source in Paris, and then briefed Mr. Copleston and Peter Robinson, Shell’s then vice-president for Commercial in Africa.

According to the email, the source, seemingly an Etete intermediary, claimed President Jonathan had confirmed Etete’s right to the oil block.

Mr. Copleston wrote this move is “clearly an attempt to deliver significant revenues to GLJ [Goodluck Jonathan] as part of any transaction”.

He added that “the clear driver is to get cash into the system ASAP”, and that, for Jonathan and his oil minister, “this is about personal gain and politics”.

On August 23 2010, Mr. Robinson prepared briefing notes for his boss, Shell then head of exploration Malcolm Brinded, ahead of his meeting with his Eni counterpart.

The briefing note, informed by his intelligence on the ground, said: “In country view [from Nigeria] is that the President is motivated to see 245 closed quickly – driven by expectations about the proceeds that Malabu will receive and political contributions that will flow as a consequence – reinforces need for a solution quickly.”

In another briefing document written in the late stages of the negotiations, Mr. Brinded briefed Simon Henry and Mr. Voser about the transaction structure to say: “Eni will pay on behalf of itself and SNEPCo [a Shell subsidiary], an amount of $1.09bln. This will be used by the FGN [Federal Government of Nigeria] to settle all claims from Malabu.”

Shell, Eni, and Mr. Jonathan deny any wrongdoing. Etete did not respond to requests for comment.

Simon Taylor, director of campaign group Global Witness, which has spent several years investigating the deal, said: “This is one of the worst corruption scandals the oil industry has ever seen. Today’s new evidence shows senior executives at the world’s fifth biggest company knowingly entered into a corrupt deal with that deprived the Nigerian people of $1.1billion. To put that in context, the deal is worth more than Nigeria’s entire health budget for 2016.”

Messrs. Robinson, Brinded and Voser – all of whom have since left Shell — could not be reached for comment.

Nigeria – presidency says agriculture pulling the county out of recession

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Rice Farmers
Photo Credit: Agro Nigeria

Rice Farmers
Photo Credit: Agro Nigeria

The presidential spokesperson, Garba Shehu, says efforts to get the nation out of its present economic challenges are beginning to yield positive results, especially in agriculture.

The presidential aide said this in Abuja on Sunday.

According to him, an increase in the volume of rice production and processing across the country is already saving the country a lot of foreign exchange.

Mr. Shehu, who is the Senior Special Assistant on Media and Publicity to the President, said that Nigeria only imported 58,000 tons of rice from Thailand in 2015 as against 1.2 million tons in 2014.

He revealed that due to the country’s growing rice production occasioned by the Central Bank of Nigeria’s decision to deny foreign exchange for the importation of rice “parboiled rice mills’’ in some Asian countries were shutting down production.

According to him, this is because Nigeria, which is one of the world’s largest importers of rice no longer, buys rice from them.

“Five of such mills in Thailand servicing Nigeria have stopped production due to the withdrawal of our patronage,” he added.

According to him, government is watching with keen interest the growing investment in rice milling by the private sector.

He said government would continue to encourage the Ministry of Agriculture on such efforts through BUA Industries in Jigawa and Dangote in Kano.

He said such encouragement would also be extended to OLAM and WACOTT in Nasarawa and Kebbi as well as a consortium of businessmen led by a former governor in Anambra.

The presidential aide noted with delight that the price of a bag of fertilizer had been reduced from over N9,000 per bag to 5,500.

“This country has about 32 fertilizer blending plants that have remained idle for many years, but that about half of that number is now in production with many of them running three shifts a day.”

He said some of the blending plants have now provided direct employment to hundreds of workers and indirect employment opportunities to thousands of others.

Mr. Shehu said that the Buhari administration’s agricultural revolution was bringing about other socio-economic changes in the country.

He said that a recent survey carried out in two urban areas of Jigawa and Kiyawa showed that jobless young men were migrating from commercial motorcycle business known as, `achaba’, to farming.

“In Kiyawa, it takes a long wait to catch a commercial motor cycle because they are rapidly disappearing.

“The young men are moving to the farms. These are development issues in the country that our media should pay attention,” he added.

The presidential spokesman frowned at the way and manner some elites have continued to attack some government policies and programmes in spite of their positive impact on the ordinary Nigerians.

“Because the elite don’t care for ordinary people, they are saying that government is doing nothing but we are doing a lot for ordinary people.

“They don’t want us to talk about the 14 solar power projects that have been licensed to boost electricity supply in the country; the Mambila power project which will soon leave the drawing board and the many Chinese projects including the standard gauge railway.

“This country has more important things to talk about instead of dwelling on trivialities,” Mr. Shehu said.

Nigeria – government releases economic recovery plan

Punch

Ifeanyi Onuba, Abuja

After months of extensive consultations with stakeholders from both the private and public sectors of the economy, the Federal Government on Tuesday finally released the Economic Recovery and Growth Plan which is expected to take the country out of recession.

The document which was released by the Ministry of Budget and National Planning contains the economic blueprint of the government for a three year period from 2017 to 2020.

The core vision of the plan is one of sustained inclusive growth to drive structural economic transformation with an emphasis on improving both public and private sector efficiency.

The aim is to increase national productivity and achieve sustainable diversification of production, to significantly grow the economy and achieve maximum welfare for the citizens, beginning with food and energy security.

The plan envisages that by 2020, Nigeria would have made significant progress towards achieving structural economic change with a more diversified and inclusive economy.

Overall, the plan is expected to deliver on five key broad outcomes,which are a stable macroeconomic environment; agricultural transformation and food security; sufficiency in energy (power and petroleum products); improved transportation infrastructure and industrialization focusing on small and medium scale enterprises.

Nigeria – Shell and ENI ask court to lift forfeiture of oilfield

Reuters

By Camillus Eboh | ABUJA

Royal Dutch Shell (RDSa.L) and Italy’s Eni (ENI.MI) have asked a Nigerian court to lift a temporary forfeiture of a long-disputed oilfield, the firms said on Tuesday.

A Nigerian court last month ordered the temporary forfeiture of assets and the transfer of operations of the OPL 245 field owned by Shell and Eni, among others, to the federal government.

The Nigerian court case is the latest of several inquiries, following those by Dutch and Italian authorities, into the 2011 purchase of the OPL 245 block which could hold up to 9.23 billion barrels of oil, according to industry figures.

In a court filing, Shell said Nigeria’s Economic and Financial Crimes Commission had conducted “a gross abuse of process and an abuse of power” to get a court order asking for the forfeiture, according to a document obtained by Reuters.

The commission “misrepresented material facts in obtaining the ex-parte order” and it was “in the interest of justice that the ex-parte order be discharged,” the document said.

According to court papers seen last month, the inquiry is investigating whether the $1.3 billion purchase of OPL 245 involved “acts of conspiracy, bribery, official corruption and money laundering.”

Spokesmen for Eni and Shell confirmed both companies had filed motions to lift the court order, but declined further comment.

The Nigerian court will hear the case on Feb. 27, judicial sources said.

In a statement issued later on Tuesday, Shell said it received notice of a request for indictment related to the settlement of disputes over the OPL 245 block.

A tribunal in Milan has fixed the preliminary hearing for April 20, the company said.

“We don’t believe a request for indictment is justified and we are confident that this will be determined in the next stages of the proceedings. We continue to take this matter seriously and co-operate with the authorities,” Shell added.

The oilfield’s licence was initially awarded in 1998 by former Nigerian oil minister Dan Etete to Malabu Oil and Gas, a company in which he held shares.

It was then sold for $1.3 billion in 2011 to Eni and Shell. According to documents from a British court, Malabu received $1.09 billion from the sale, while the rest went to the Nigerian government.

Earlier this month, Eni backed CEO Claudio Descalzi after judicial sources said prosecutors had asked for him to be tried over alleged corruption in Nigeria.

Italian prosecutors in December wrapped up a probe into the head of Eni, its former CEO, the company itself and Shell over alleged corruption surrounding the licence’s acquisition, sources told Reuters at the time.

(Reporting by Camilus Eboh, additional reporting by Libby George in London and Vijaykumar Vedala in Bengaluru, writing by Ulf Laessing; editing by Ruth Pitchford, G Crosse)

Nigeria’s oil-rich communities abandoned in shocking poverty despite huge wealth

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Government Primary School, Isotoyo, Eastern Obolo
Photo: Cletus Ukpong

Government Primary School, Isotoyo, Eastern Obolo
Photo: Cletus Ukpong

The man wearing T-shirt on a wrapper lowers his head and frame slightly, to enable him step out of a small opening that serves as entrance door to his thatched house. He identifies himself simply as Fingesi.

“I teach in that school over there,” Fingesi says, pointing at a makeshift structure with zinc roof, near his house, which serves as the community’s only primary school.

Apart from two chalkboards nailed loosely onto wooden pillars, nothing suggests this is a place for learning. A goat lies on the only school desk, and what would have been a second desk is broken.

As many as 40 pupils sometimes cram inside the small space to receive lessons on Mathematics, English, Social Studies and other subjects from Fingesi and one other teacher who also serves as the school head.

That is a bit of how life unfolds in Isotoyo, in Amazaba community of oil-rich Eastern Obolo Local Government Area of Akwa Ibom State.

Eastern Obolo lies on the coastline of the Qua Iboe River, and covers a landmass of 117.000 square kilometre according to state government record.

Amazaba has eight villages, all of whom were displaced from their original homeland after a 2008 communal clash with Ikot Udo, a village in neighbouring Mkpat Enin Local Government Area.

The Isotoyo primary school, which serves the Amazaba group of villages with a population of more than 7,000, is owned by the state government but run by the community.

“I sometimes feel like crying,” Fingesi says about the state of the rundown school. “But you know I can’t do that before the pupils.”

He has been teaching for 10 years, and believes the school has been abandoned by local authorities.

“The community is my own,” he says. “If I abandon my job, it means that this school will be closed down.”

Like most other Eastern Obolo communities, Amazaba is cut off from Okoroete, the local government headquarters, by a river. Access is only by water, using canoes.

Evidence of civilisation is scarce here: no electricity or pipe borne water. Locals drink from open ponds that are available throughout the community. And nearly all the houses here, including a local branch of the Church of Nigeria, Anglican Communion, are built with palm fronds.

Gogonte Nglass, the village head of Ama Nglass, one of the villages that make up Amazaba, told PREMIUM TIMES he sent his children out of the community “so they could have a better life”, and now lives only with his wife.

Some of Mr. Nglass’ children are at Okoroete, the capital, while others are at Ibeno, a neighbouring oil-producing local government area in the state.

His three-year-old daughter died of an unknown ailment last year in Amazaba, before he could rush her across the river to Okoroete for medical help.

“Raped and forgotten”

Despite its shocking scale of deprivation and lack, Eastern Obolo is one of Nigeria’s richest local government areas in terms of natural resources.

It is rich in oil and gas deposits, with multinationals like Exxon Mobil, Total E&P Nigeria Limited and Amni International Petroleum Company Limited operating in the waters close by for decades.

From their homes at Edonwik and other coastal communities, locals could sight Mobil’s Osso Condensate platform and other platforms in the waters.

For several reasons, including regional politics, it is hard to come by the exact figures that show the amount of oil and gas here.

John Ukpatu, who has worked as an oil and gas consultant for several years in Eastern Obolo, told PREMIUM TIMES that there were more than 100 oil wells in the area.

 

Mr. Ukpatu, who holds a Ph.D in fisheries and aquatic science, said Mobil sees neighbouring Ibeno, Eket, Esit Eket and Onna local government areas of Akwa Ibom as its host communities to the detriment of Eastern Obolo.

“Eastern Obolo is in court against Mobil to prove that the company is operating within Eastern Obolo,” Mr. Ukpatu said.

Last year, the strained relationship between Eastern Obolo and Amni led traditional rulers in the area to call on the federal government to withdraw the operating license of the company.

Between 2010 and 2016, federal records show that Eastern Obolo received N8.22 billion in allocation that sifts through the state monthly.

But there is hardly anything on ground to show that the people benefited from that money.

FAAC Allocation to Eastern Obolo LGA, Akwa Ibom State (2010-2016)
FAAC Allocation to Eastern Obolo LGA, Akwa Ibom State (2010-2016)
Edonwik community, Eastern Obolo, Akwa Ibom
Edonwik community, Eastern Obolo, Akwa Ibom
Photo: Cletus Ukpong

Poverty lives and walks around everywhere, among the people. With no sewers, most locals in Eastern Obolo defecate in the open, a common feature of Nigeria’s slums and rural areas.

At Edonwik community, men defecate along the shores of the Atlantic Ocean, while women go over to the shores of the tributaries of the Qua Iboe River where the mangrove there provides some cover.

Several incidents of oil spillages have polluted the ecosystem in Eastern Obolo and disrupted fishing which is the major preoccupation of the people.

“To get fish in recent times, the people go after the fishing trawlers in the deep sea, and buy the rotten and smaller fishes as well as shrimp for sale,” says a 2009 research report on oil exploration activities in the area, published in African Research Review.

“Although it now becomes their means of livelihood, going after it is dangerous. Almost on weekly basis, two or three out of five persons in speed boats lost their lives while trying to buy fish from trawlers.

Although residents mainly fish, there is no evidence it is a thriving business.

In a traditional Nigerian society, a village market is seen as a communal heritage and a thing of pride for the people. But in Eastern Obolo – with a population of more than 60,000, according to the 2006 national census – the people have learned to live for decades with the humiliation of not having a market of their own.

Residents travel some 15 kilometers to Ukam, a weekly market in neighbouring Mkpat Enin Local Government Area, to buy foodstuffs and other items.

For most residents, going to Ukam market is a two-day journey. In the first leg of the journey, the people, mostly women, arrive at Mkpat Enin in the evening and rest for the day in any available space near the market.

The dawn of a new day meets them inside the market where they must quickly buy their wares – yam, rice, garri, cocoyam, palm oil, and so on – and then set forth on the journey back home, using mostly bicycles and motorcycles.

The building of market stalls is the responsibility of the local government council. But despite receiving billions of naira over decades, that has not happened.

Uduyork Aboh, a former representative of Ikot Abasi/Eastern Obolo State Constituency, Akwa Ibom State House of Assembly, suggested corruption could be the reason for the endemic poverty in the area.

Akwa Ibom State Governor, Udom Emmanuel
Akwa Ibom State Governor, Udom Emmanuel

But he also pointed at the fact that federal payments, mostly derived from oil, are held by state governments, even though the monies are statutorily meant for local government areas. The controversial practice leaves local governments across the country with meagre funding.

“Well, the local government chairmen will always say that the state is taking the statutory allocation meant for the local council,” Mr. Aboh told PREMIUM TIMES. “I don’t know how far it is true.

“At the end of the month, maybe they will just give them (the chairmen) N1 million or N2 million as running cost for the council. So, nothing will be left for development.”

Coloured Water

Many people in Eastern Obolo drink from ponds, not minding its colour and taste. During dry seasons when the ponds are dry, residents dig deeper in the soil for water.

Those who can afford, use sachet water, popularly called “pure water”, brought into Eastern Obolo from Ikot Abasi, Mkpat Enin, and other neighbouring local government areas.

“I buy water from the city, and take to the village to drink whenever I am traveling to the village,” says Iroigak Ikann, a former commissioner for lands and housing in the state.

Residents say even the few borehole available at the local government headquarters, Okoroete, do not produce drinkable water.

A little girl fetches water from a pond at Okorombokho, Eastern Obolo, Akwa Ibom
A little girl fetches water from a pond at Okorombokho, Eastern Obolo, Akwa Ibom

A 2005 study showed that water from boreholes in Eastern Obolo contained high quantity of seven species of bacteria like Bacillus subtilis, Enterococcus faecalis, Staphylococcus aureus and Escherichia coli.

The study, conducted by Alfred Itah and Comfort Akpan, from the Department of Microbiology, University of Port Harcourt, also found out that the quantities of iron and mercury in some of the boreholes were above World Health Organization acceptable standard.

The former commissioner, Mr. Ikann, blamed the Akwa Ibom state government for the underdevelopment of Eastern Obolo.

“It is an obligation of the state (to develop Eastern Obolo); we don’t have to beg for it,” he told PREMIUM TIMES.

“When someone says he wants to be a governor, he is telling the people ‘I am prepared to provide this for you’.

“But they provide it in their hometowns and ignore the places where they get the wealth from,” he said.

Multimillion naira misplaced priority

Eastern Obolo has just one hospital, a general hospital in Okoroete, built and commissioned in 2012 by the administration of Governor Godswill Akpabio.

There are only two doctors in the hospital, against the WHO recommendation of one per 1,000 people. In addition to the general hospital, the local government area has seven primary healthcare centres. But almost all the facilities are dysfunctional.

The road to the general hospital is swampy. Mr. Aboh told PREMIUM TIMES that the official car of Mr. Akpabio got stuck in the untarred road when the former governor went to commission the hospital.

“When the people wanted to present a request to Akpabio, the governor told them that their situation didn’t call for any presentation, that he had already seen the neglect (in Eastern Obolo),” Mr. Aboh said.

The former lawmaker said that Mr. Akpabio, however, failed in his promise to develop the area.

The Akpabio administration did not construct even a kilometer of road in the area throughout his eight years in office, according to Mr. Aboh.

What perhaps stands out as the clearest evidence of misuse of public funds in the area is the Godswill Akpabio Guest House, Okoroete, built by the local government council and named after Mr. Akpabio. The guest house, completely taken over by weeds, has been abandoned.

Francis Uduyork, a former chairman of Eastern Obolo, led the local government area for six years, from 2008 to 2015. It was during his tenure that the Godswill Akpabio Guest House was built.

Godswil Akpabio Guest House, Okoroete, Eastern Obolo, Akwa Ibom State
Godswil Akpabio Guest House, Okoroete, Eastern Obolo, Akwa Ibom State

Mr. Uduyork defended the project as an example of good planning.

“We conceived the idea because visitors who came to the local government area would go back at the end of the day to sleep in the neighbouring local government areas,” said Mr. Uduyork who now represents Ikot Abasi Federal Constituency at the House of Representatives, Abuja.

Mr. Uduyork said it was a better decision to build the guest house than to build market stalls.

“Market is one of the things we tried to do,” he said. “Market is meant for exchange of goods. If there are no people to exchange goods for money, then the market won’t be functional.”

The local council, under the administration of Mr. Uduyork, constructed a building for a skill acquisition centre and another building meant for use as legislative chambers by the councilors. But sadly, both buildings are not in use.

Mr. Uduyork said he was not aware of the state government tampering with the money meant for the local government area.

Visiting only during political campaigns

Edwin Ukorem, the village head of Edonwik, told PREMIUM TIMES that his people had been living by the mercy of God. He said the coastal community, with about 6,000 people, has no school, no borehole or health post.

Apart from their fishing business, the only thing they have in the community are churches – the local branches of the Holy Mt. Zion Church and the Mt. Zion Mission.

Mr. Ukorem said the people were frequently locked in and prevented from leaving the village whenever the river tide ebbs away.

“No matter how critical your situation is, you’ll have to wait for the tide to come back before you could see a canoe that will take you out or into the community,” he said.

Edwin Ukorem, village head, Edonwik, Eastern Obolo, Akwa Ibom State
Edwin Ukorem, village head, Edonwik, Eastern Obolo, Akwa Ibom State

Some residents also fear that the people of the community could someday wake up to behold their community and others along the coast submerged.

PREMIUM TIMES, during its visit to Edonwik, saw evidence showing that some parts of the community had been washed away by ocean waves.

The village head, Mr. Ukorem, said the only time government officials visit the area is either during political campaigns or oil spillages.

Ibeno, also ravaged by poverty

The situation in Ibeno, another oil-producing local government area in Akwa Ibom, is not much different from Eastern Obolo’s.

Ibeno is host to ExxonMobil. The firm’s operational office, Qua Iboe Terminal, is located at Mkpanak in Ibeno.

Okoritak community, Ibeno.
Okoritak community, Ibeno.

As Akwa Ibom is amongst Nigeria’s top oil producing state, Ibeno and Eastern Obolo are amongst the state’s leading oil producing local government areas.

While Mobil and the Niger Delta interventionist agency, the Niger Delta Development Commission (NDDC), have constructed several projects like roads and boreholes in the area, especially in the local government headquarters, Ukpenekang, poverty is still very visible everywhere.

Worst hit areas are communities across the Qua Iboe River where villagers living in shanties have to contend with stench from dirty ponds.

The two main secondary schools in Ibeno – St. Peter and Paul Technical College, Mkpanak, and Secondary Grammar school, Upenekang – were built through community effort, with substantial support either from a church, PREMIUM TIMES learned.

IBENOInfographics

A model secondary school at Atabrikang, started by the Akwa Ibom state government during the administration of Governor Victor Attah, has been abandoned for years now. Mr. Attah left office in 2007.

The case of the Government Primary School, Okori-Itak, is shocking.  While the six-classroom block, commissioned in 2011 by the immediate past administration of Mr. Akpabio, is furnished with school desks, no activity takes place in the school, as the classrooms and the staff office are locked.

Locals told PREMIUM TIMES no single teacher has been posted to the school.

Ibeno is also plagued with the water crisis. Abandoned borehole project is a common sight in several of the communities PREMIUM TIMES visited.

At Okori-Itak, the community spokesman, John Eyo, led this reporter to the site of a dilapidated water project, where the overhead tank said to have been blown away by wind is yet to be replaced for more than five years now.

For now, the community source of drinking water, according to Mr. Eyo, is either rain or “pure water” brought in for sale from Mkpanak.

Somewhere in the community, PREMIUM TIMES saw young girls fetching water from a weed-infested shallow pit near a corked oil well. The pit, they said, was where they get drinking water from.

Among the abandoned projects in Ibeno is a federal government-owned multi-billion naira skill acquisition centre at Iwuoachang. The project, which could help upgrade the capacity of the youth of the area when completed, was handled by the Federal Ministry of Niger Delta Affairs.

Huge funds, nothing on ground

Ibeno received a total of N8.645 billion from the federation account between 2010 and 2106.  While the amount is by far insignificant compared to the town’s oil wealth, it is still unclear where the money has gone to over the years, as there are no signs of projects done by the local government council.

FAAC Allocation to Ibeno LGA, Akwa Ibom State (2010-2016)
FAAC Allocation to Ibeno LGA, Akwa Ibom State (2010-2016)

Samuel Eyo, a former councilor in Ibeno, laughed when asked why the local council was not executing development projects in the area. “When there is no financial autonomy for the local government area, what do you expect local government councils to do?” Mr. Eyo asked PREMIUM TIMES.

Mr. Eyo’s thinking, which is shared by most people in Ibeno, is that the federal government and the Akwa Ibom State government have conspired against the area.

Mobil, Mr. Eyo said, is no longer the good neighbour it used to be in the past. “I don’t know what we have done to the rest of the world that they can’t sympathise with us over what we are going through.”

Sunday Akpanowong, the village head of Iwuo Okpom, accused both the federal and the state government of colluding with Mobil to deny Ibeno people of the benefits that should accrue to them from the exploration of oil.

Pond where health workers scoop water near the parameter fence of the General Hospital, Okoroete, Eastern Obolo
Pond where health workers scoop water near the parameter fence of the General Hospital, Okoroete, Eastern Obolo

New government

The Commissioner for Information in the state, Charles Udoh, told PREMIUM TIMES that the current administration of Governor Udom Emmanuel was just 20 months old in office, and that the administration was doing everything possible to carry along every community in the state’s development plan.

“You know that development can’t take place everywhere across the state at the same time in just 20 months. Things happen in phases. Nobody will be left out.

“Government has a plan in place to motivate local government authorities to be on top of their game. Government shouldn’t function only at the centre; government should also function in those local areas.

“This government is committed to making sure that no part of this state is left out in its development process.”

The former commissioner, Mr. Ikann, believes the solution to the poverty and the shameful neglect of the oil producing communities in Akwa Ibom lies in the 13 per cent oil derivation fund.

“If the federal government pays 13 per cent derivation to oil producing states, is it not fair that the state, in turn, pays 13 per cent of the fund to the oil producing local government areas?

“If the government continues to neglect the area, I think a day is coming when Eastern Obolo will get its due,” said Mr. Ikann.

The Natural Resource Governance Institute provided support for this reporting.

Nigeria must prepare for world where oil has little value, says Osinbajo

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Vice President Yemi Osinbajo has warned Nigerians of the challenges the country would face in the future if it continues to depend on oil for income.

Mr. Osinbajo, while speaking in Gbaramatu kingdom during a visit to Delta State on Monday, said that countries who buy oil from Nigeria are now devising alternative means of power such as solar and wind energy.

Therefore, “We must be smart and act intelligently and fast,” he said.

Mr. Osinbajo’s visit on Monday is part of his peace tour across oil producing communities in the Niger Delta.

The visits are part of the ongoing efforts of the Buhari administration to achieve a permanent resolution of the Niger Delta crisis which in 2016 reduced Nigeria’s oil output y half.

The vice president, who spoke to an enlarged crowd after a closed-door meeting with the Gbaramatu leaders at the palace of the Pere of Gbaramatu kingdom, Oboro Gbaraun II, said fire incidents that arose from pipeline vandalisation have killed thousands of people.

“In 2013 alone, there are over 3700 incidents of pipeline vandalisation. From January to June 2016, there were over 1447 incidents of vandalisation.

“The Niger Delta of today is one where aside environmental degradation, between 1998 and 2015, over 20,000 persons have died from fire incidents arising from breaching of the pipelines.

“To prepare for a great future for the Gbaramatu kingdom, three things must happen: we must recognise the unique environmental challenges the Niger Delta is facing, we must also recognise that the Niger Delta is a special economic zone for this nation so we must treat it as a special development zone.

“This means the federal government, state government, National Assembly, NDDC, civil societies representing Niger Delta must sit together and develop a plan for rapid development.

“There is no excuse for not planning together. The federal government cannot solve the problem of Niger Delta. It is impossible for the FG to do it alone. The state should devote substantial portion of its budget to this special project,” Mr. Osinbajo said.

He added that the PAN Niger Delta Forum, PANDEF, has submitted a concise list of 16 dialogue issues that will be extremely helpful in ascertaining the key development priorities.

“It is an important working document that represents an excellent road map to the future of Niger Delta,” the law professor said.

Mr. Osinbajo noted that the critical issue the federal government is concerned with is infrastructure.

“In the 2017 budget, we have provided for the commencement of the Lagos – Calabar rail way which will go through Delta. We are working with the Chinese on this project.

“When I leave here we will visit the site of the Maritime University. The president has directed the ministry of petroleum to work quick to see to the realisation of all of the objectives of implementing this crucial educational institution.

“Establishing this university has passed the second reading in the National Assembly and I know we have the commitment of the members of the national assembly to fast track this bill so that the maritime school will be completed as soon as possible,” he added.

The Maritime University is expected to commence fully in September.

Mr. Osinbajo said the university and other government projects cannot work without adequate revenue which is being hampered by pipeline vandalisation and militancy in the region.

“If there is no revenue, we are deceiving ourselves. There must be revenue and it can only come when there is peace. There should be commitment to peace.”

The Vice President also spoke on the necessary cleanup of contaminated oil producing communities in the Niger Delta.

“The Ogoni cleanup has been flagged off. For the cleanup not be a waste of money, we must enforce strict environmental standard for the oil producing companies. And all our communities must prevent vandalisation which is also a major source of environmental degradation.”

In elaborating his warning for Nigeria to prepare for a future where oil could be irrelevant, Mr. Osinbajo said Nigerians must “recognise that the future is full of challenges for the oil industry.”

“In another 20 to 30 years, our oil won’t be as precious as it is today and that is reality,” he said.

“America has stopped buying oil from us. All the countries of Asia that buy oil from us are building alternative means of power, China and Japan are developing electric cars. In fact, Japan has more charging stations than petrol stations. Solar power is getting cheaper.

“We must be smart we must act intelligently and fast,” Mr. Osinbajo said.