Vested Interests Behind Transfer Of OML 11 To NPDC –– Naanen
to the Ogoni struggle would be stoutly resisted. Other critical stakeholders, who equally see the development as an illegality that must be challenged in the law court say they smell a rat for such an order to be generated from the Office of the Chief of Staff to the President, as against the Ministry of Petroleum that has the statutory authority. According to them, by overriding the board of the NNPC chaired by the Minister of State for Petroleum Resources, Ibe Kachikwu, they have validated the power play, which has reportedly prevents him from taking key decisions, consequently limiting the growth of the sector. OML 11 is regarded as one of Nigeria’s most important oil assets, containing 33 oil and gas fields. Eight are reportedly producing. The lease is currently being operated by a Joint Venture of which the NNPC owns 55 per cent, Shell 30 per cent, Total 15 per cent, and Agip five per cent.
It is governed by a Joint Operating Agreement (JOA). Any JOA has two types of parties: The operator and non-operators. The operator is the leader of the consortium, as this is the person responsible for conducting the daily operations in the name of the consortium. For decisions to be made, the parties must jointly reach a consensus.
A memo signed by the Chief of Staff to the President, Abba Kyari, dated March 1, 2019 with reference number SH/COS/24/A/8540, directed the corporation to take over OML 11 from Shell.
The letter directed “NNPC/NPDC to take over the operatorship, from Shell Petroleum Development Company, of the entire OML 11 not later than 30 April 2019 and ensure smooth re-entry given the delicate situation in Ogoni Land.
“NNPC/NPDC to confirm by May 2, 2019 the assumption of the operatorship,” the memo stated.
The development is coming over two decades after the fields, which was turning out over 28, 000 barrels of oil per day were shut following the killing of Ken Saro Wiwa and others.
The former chairman of the Movement for Survival of the Ogoni People (MOSOP) Council, Prof. Ben Naanen, told The Guardian that some politically exposed persons who are trying to hijack the operation and eventually take up the concession of the Joint Venture partners represented by Shell were behind the presidential directive.
Naanen recalled how he resisted pressure to support the transfer of OML 11 to NPDC as MOSOP’S provisional chairman, adding that the unfolding scenario may be the thin end of the wedge. According to him, a number of Nigerian companies backed by some powerful political forces have been pressurising the government to use NPDC to grab OML 11, which he described as one of the most important oil blocks in Nigeria. “I think some people want to use NPDC as a front to hijack OML 11. That is the game we are seeing here. A number of Nigerian companies have quietly being pressurising the system. When I was chairman of provisional council, some interests wanted OML 11 to be given to NPDC and that is what is happening now. But we do know that these people wanted more by using NPDC as a front.” Naanen explained that late President Umaru Yar’adua’s directive that the NPDC should takeover oil fields in Ogoni Land, which is under OML 11 could not be implemented because of the intricate nature of the Joint venture agreement between international oil companies and the NNPC that represents the government.
“It is not that easy because of the geopolitics of the whole thing. Shell is AngloDutch. In that same joint venture, you have Eni, which is Italian and Total French. These are the leaders of the European Union. I am afraid even the pronouncement by the President may not take immediate effect because if the joint venture partners decides to go to International Court of Arbitration, that is going to have its own impact. And besides, if you say you want to attract foreign investments and you wake one day and say you have taken over assets that is governed by all sorts of protocol and agreements, then what signal are you sending to the outside world. We have to try to avoid things that are contradictory. There seems to be more complex situation at play.” The don added that the lingering Ogoni conundrum has literally scared away many other investors who would have loved to invest in OML 11, and reiterated that Ogoni people were completely opposed to reopening the oil and gas fields without a systemic agreement on how the fields would be operated.
Naanen informed that last year, MOSOP and the Ogoni people set up a committee, which he heads, and which has been saddled with the task of drawing up a roadmap regarding the Ogoni position on the fields and OML 11.
Similarly, the founder of Ogoni Solidarity Forum, Celestine Akpobari, said the presidential directive might also be informed by government’s perception that relationship between Ogoni people and Shell have become irreconcilable and if OML 11 is allowed to be in Shell’s name, it will remain a wasted asset. Hence, the decision of President Muhammdu Buhari to end that challenge once and for all.
Akpobari also disclosed that there have been speculations that the Presidency wants to remove licenses from private individuals and return oil blocks to government.
If this were true, he said the government must bear in mind that oil business in Ogoni Land did not just shutdown, but was as a result of a struggle, which culminated in the death of Ken Saro-wiwa and other Ogoni leaders. He urged the government to resist the temptation of resuming crude oil and gas production in Ogoni Land without first reviewing the tribunal trial of Saro-wiwa and others, just as it should be willing to address the legitimate demands of the Ogoni people as contained in the Ogoni Bill of Rights. “There are a lot of issues that the government needs to settle with the Ogoni people before we can talk of resumption of crude oil production. There is no way government will resume production in Ogoni Land without addressing the demands of the struggle. Ninety per cent of oil wells are domiciled in the Niger Delta and yet, these people that live here do not have oil wells,” he said.
A Niger Delta leader, Mike Loyibo called for caution on the matter, adding that the region would carefully assess the development.
The Movement for the Survival of the Ogoni People (MOSOP) has already rejected the directive, stressing that the resumption of oil exploration in Ogoniland in the face of current pollution remained unacceptable.
MOSOP’S President, Fegalo Nsuke said despite the severe impact oil exploration would bring to bear on the lives of Ogoni people, government was quick to take decisions on the region.
An international law professor, and the Executive Director of Institute for Oil, Gas, Energy, Environment and Suitability (OGEES), Prof. Damilola Olawuyi said the joint venture agreement provided room for NNPC to become the operator of the asset.
He however, noted that the process of selecting who manages the asset could be decided based on extant regulations.
“What is unclear is whether the decision for the NNPC to take over as operator was cooperatively arrived at by all the other JV partners or whether it is a unilateral decision of the Nigerian government. While the former will be less controversial, the latter could be opened to legal interpretation and challenge,” Olawuyi said. He added that to avoid protracted legal disputes, it was important to ensure that fundamental changes to the terms of the joint venture proceed with the knowledge and consent of the JV partners.
Olawuyi, global Vice Chairman of International Law Association (ILA) noted: “Typically, any of the partners in a JV can serve as the operator, while others provide financial and other contribution. There is therefore room for the NNPC to be designated as the operator of the OML 11 joint venture. What is however unclear is whether the decision for the NNPC to take over as operator was cooperatively arrived at by all the other JV partners or whether it is a unilateral decision of the Nigerian government. While the former will be less controversial, the latter could be opened to legal interpretation and challenge.