[DEBATE] : (Fwd) Nnimmo Bassey sez: leave Niger Delta oil in the soil

[Patrick Bond]

Way Out for Nigeria: No More Oil Blocks!

Let’s leave the oil in the soil

Environtmental Rights Action brief[1] by Nnimmo BASSEY

As the Niger Delta boils and as Nigeria looks towards a bleak future 
with diminished oil revenues, the oil corporations operating in Nigeria 
continue to garner obscene profits. This happens because the 
corporations are not paying for environmental costs of their operations 
and because ecological debts go unattended to. Local communities have 
shouldered the burdens while the corporations laugh all the way to the 
banks secured by their opaque Joint Venture agreements.

The trend of profits made by oil companies over the past couple of years 
are very telling. These companies reap profits in the face of whatever 
woes the world is confronted with.

In 2007 Shell's net profit rose to $11.56 billion from $8.67 billion a 
year earlier.[2] According to reports, Exxon, the world’s largest 
privately held oil company, reported a 14% rise in profit to a record 
$11.68 billion, which was adjudged to be the largest ever for a US 
corporation. In the first quarter of 2008, Exxon made nearly $90,000 
profit a minute![3]

Today, we expect Shell to declare another big profit underscoring the 
fact that the Niger Delta environment is still not receiving the 
attention it deserves. Spills remain unattended to at Ikarama in Bayelsa 
State, Ikot Ada Udoh in Akwa Ibom State, Uzere and Iwerekhan in Delta 
State. Today we demand that they use their “profit” to clean up their 
mess in the Niger Delta.

The convulsions currently gripping the global system have directly 
impacted on the economic outlook of Nigeria. Banks and other 
money-gobbling corporations have begun to bop belly side up and citizens 
of the world have been forced to bear the brunt of their profligacy. 
What we are witnessing may be on a new scale, but certainly it is not a 
novel thing. We do well to note that crises of capital would always heap 
the burden on the producer and consumer while the middlemen constrict 
both and live off their blood.

The major challenge of the Nigerian Sate is related to the collapse of 
crude oil revenue from an unprecedented height of about $150/barrel to 
below $40/barrel. This crash has revealed that behind the cheap piles of 
petrodollars is the true face of active fingers behind the forces that 
shape the market. We quickly note at this point that the so-called 
market forces are not as free as international financial institutions 
would want the world to believe.

Some Nigerians are equally worried that even the cheap oil that we 
depend on may soon be set aside due to the real possibility that the 
world will move on to new alternative energy sources. If that happens 
and crude oil attracts less attention, what will be the consequence for 
the Nigerian economy?

While these are legitimate concerns, they also present us with a great 
opportunity to transform our environment and by extension our economy. 
And this is why we are making this proposal.

Cheap petrodollars drove us into believing that money was not a problem 
but how to spend it. They drove us into debt and debased our sense of 
nationhood. Cheap petrodollars turned Nigerian politics into a struggle 
for the control of the national purse and led to a massive regime of 
conversion of public funds and properties into private control. That has 
been the visible meaning of privatisation in our nation. Cheap 
petrodollars invited the jackboots into Dodan Barracks and into Aso Rock 
and rocked and overturned every sense of common good and collective 
ownership in our dear nation.

The drive to maintain the flow of foreign exchange into the national 
coffers made it impossible for the government to see that a safe 
environment is a basic requirement for citizens to be productive. The 
government overlooked the fact that in a largely subsistence economic 
system where the vast proportion of the citizens thrive outside of the 
formal economy, the first thing that must be secured for national health 
and productivity is an environment that supports the people’s efforts in 
the areas of family farming and livelihoods. The grave inability to 
grasp this truth allowed oil companies (national and transnational) to 
operate with impunity in the oil fields and to pollute, destroy and 
dislocate the very basis of survival of the people in the region. This 
inevitably spread to the entire nation since we run a quirky unitary 
federalism.

We have a clear proposal on how to turn the crises into a real 
opportunity for breaking from an ignoble system and moving on to a 
sustainable path. As they say, it will require sacrifice: especially 
that of jettisoning our firmly held prejudices.

· Quench the Flares

The issue of gas flaring is a burning one that must be addressed once 
and for all. An estimated168 billion cubic meters of natural gas is 
flared yearly worldwide and 13% of this is flared in Nigeria (at about 
23 billion cubic meters per year). After years of paying lip service the 
Nigerian state must wake up to its responsibilities to protect the lives 
of Nigerians. The many health impacts of gas flaring are well documented 
and include: leukaemia, bronchitis, asthma, cancers and other diseases.

In economic terms, Nigeria sends over $2.5 billion worth of gas up in 
smoke annually, going by 2005 estimates. If we assume that this rate 
held good for the last10 years, we are talking of $25 billion wasted and 
if we extend it to the past 20 years that figure doubles. For each 
additional year that the government refuses to act in this regard the 
amount wasted continues to rise, as does the log of the dead due to the 
poisonous nature of the gases.

We are worried that at a time when the world is seeking ways to combat 
global warming we are busy cooking the skies through gas flaring. From 
pronouncements on climate change emanating from government agencies it 
is obvious that the government cannot plead ignorance of the massive 
contributions of gas flaring to global warming. This places every 
citizen of this country, and indeed the word, at risk. There can be no 
excuse for this unhealthy and uneconomic act.

At this point we want to quote a 1963 confidential communication from 
the British Trade Commissioner to the UK Foreign Office[4]:

“Shell/BP’s need to continue, probably indefinitely, to flare off a very 
large proportion of the associated gas they produce will no doubt give 
rise to a certain amount of difficulty with Nigerian politicians, who 
will probably be among the last people in the world to realise that it 
is sometimes desirable not to exploit a country’s natural resources and 
who, being unable to avoid seeing the many gas flares around the 
oilfields, will tend to accuse Shell/BP of conspicuous waste of 
Nigeria’s ‘wealth’. It will be interesting to see the extent to which 
the oil companies feel it necessary to meet these criticisms by spending 
money on uneconomic methods of using gas.”

“In the longer run, Shell/BP is going to have to consider very carefully 
how it should explain publicly the large outflow of capital that is 
likely to take place towards the end of the decade... it will no doubt 
come as something of a shock to Nigerians when they find that the 
company is remitting large sums of money to Europe. The company will 
have to counter the criticisms which will very probably be made to the 
effect that the company is ‘exploiting’ Nigeria by stressing the very 
large contribution it is making to Nigeria’s export earnings.”

 From the above quote, it is clear that the oil corporations have been 
engaged in this action for at least half a century now. The 50 years old 
script of pacification by underhand play requires urgent critical 
political, environmental and socio-economic examination and replacement.

It was not until the 1979 Associated Gas Reinjection Act that routine 
gas flaring was finally outlawed in Nigeria. Section 3 of the Act set 
1984 as the deadline after which companies could only flare gas if they 
have field(s)-specific, lawfully issued, ministerial certificates. There 
are over 100 flare sites still emitting a toxic mix of chemicals into 
the atmosphere in the Niger Delta. Through this obnoxious act the 
country has lost about $72 billion in revenues for the period 1970-2006 
or about $2.5 billion annually.[5]

The proposal by the Gas Flares Prohibition Bill before the Senate 
allowing for the penalty for gas flaring to be at the market price of 
gas being flared is a good intention but the government must order the 
immediate stoppage of gas flaring even if it means shutting down the 
offending oil wells.

· Detoxify the Land

The stoppage of gas flaring will mark a major step towards detoxifying 
the Niger Delta environment. The other steps are two fold. First is the 
immediate auditing of all oil spills, drilling mud and cuttings 
discharges, produce water handling and other related polluting incidents 
in the entire Niger Delta. Second to this is the immediate commencement 
of thorough clean up of the environment to international standards such 
as those set by WHO for safe drinking water and air quality.

These steps will make it possible for the people to farm and fish with 
reasonable hope of achieving living incomes from such activities. Life 
expectancy would also increase beyond the current 41 years, as the 
environment would once more become people friendly.

· No More Oil Blocks

ERA proposes that Nigeria should learn that there is no future in crude 
oil as the major revenue earner. We propose that, as a starting point, 
Nigeria should not make any new oil block concessions. We agree that 
existing fields should continue to be exploited, but at internationally 
acceptable standards. Halting the giving out of new oil blocks would not 
mean a major loss in revenue. To start with, the current lowering of oil 
prices is also leading to production cuts. This means that the current 
fields can meet Nigeria’s quota for quite some time. Leaving the oil 
underground does not translate to losses but saving. We must learn to 
save. The oil under the ground is still our oil. We must not exploit 
every resource simply because we have it. This is simple wisdom. Nigeria 
must step back and think!

Generally, it is believed that the world will soon witness a peak in oil 
production and this will coincide with the world having used more than 
half of all currently proven reserves[6]. It is already estimated that 
Nigeria reached her own peak oil level a couple of years ago. Nigeria’s 
production stands at 2 million barrels/day. That is the official figure. 
The plan to increase this production level to 5.2 million barrels a day 
by the year 2030 is a thinking that fits our profligate pattern. The 
country should at this time be working on halting the daily theft of 
crude oil from the oil fields. That amount which estimates place at 
between 200,000 to 1,000,000 barrels/day would serve either to boost 
production or to increase/sustain reserves.



Economic Considerations

Let us assume that Nigeria would have probably been in a position to 
increase her crude oil production from 2015 by say 2 million barrels/day 
from new oil blocks which we are demanding should not be given out to 
the bidders. By this simple act, Nigeria would have kept the equivalent 
tonnes of greenhouse gases out of the atmosphere. This would be a direct 
measure of curbing global warming through an infallible technology of 
carbon sequestration. This is a foolproof step that requires no 
technology transfer and does not require any international treaty or 
partnership.

If Nigeria were to trade that amount of carbon using any of the 
available market mechanisms for tackling climate change, such as the 
so-called Clean Development Mechanism, the country would surely earn 
some good income from keeping the oil under the ground. But we do not 
support the use of market mechanisms for this purpose. We would rather 
suggest the halting of the massive capital flight from Nigeria to boost 
the economy and offset whatever may be seen as ‘lose’ of projected 
revenue from crude.

But, let us do some calculations here, supposing crude oil prices 
stabilize at $30/barrel over the next several years. In that case 2 
million barrels/day would mean daily revenue of $60 million or an annual 
income of $21.9 billion. Now, assuming our population to stand at 140 
million, this means that the amount due to each citizen would be $156.4year.

If we factor in production costs (including staff salaries, payment of 
the military, etc) and company profits, we can safely say that the 
amount that would get to each citizen would be less than $156.4/year.

ERA proposes that rather than exploit new oil fields with the attendant 
pollutions, human rights abuses and malformed political system, we 
should keep the oil under the ground and require that every Nigerian 
pays $156/year as a crude oil solidarity fund (for want of a better 
name). This will bring additional revenues to whatever the country makes 
from current oil fields, including the corked ones.

ERA recognises that not every Nigerian can afford to pay $156/year into 
the national coffers. We can reasonably expect about 100 million 
Nigerians to enthusiastically make this payment if the benefits are 
carefully made public. Those who can pay multiples of the minimum 
amounts would take up the amount the remaining 40 million Nigerians 
could not pay. International aid agencies, philanthropists as well as 
other countries can be approached to symbolically buy some barrels and 
the entire budgeted income would be met.

Moreover, by 2015 there would be more Nigerians[7] and the burden would 
thus be less. We also consider that the Naira would regain strength as 
corruption goes down and as governance becomes more transparent. If that 
happens, the Naira equivalent of the amount to be contributed by each 
Nigerian would further decrease. Note that these payments would not need 
to commence until 2015 and this will give us sufficient time to take 
caravans around the nation to explain the beauty of this economic move.

9-Point benefits of No More Oil Blocks:

1. Carbon capture and storage thereby tackling climate change

2. No oil spills and gas flares from new oil fields

3. No destruction of communities or high sea environments

4. No socio-economic ills related to oil field activities

5. Nigerians would have a direct stake in how national revenues are 
spent. There would be greater accountability and transparency. Moreover, 
hawks would no longer gather for so-called “excess crude cash.”

6. Halt to the corrupt nature seen in the oil blocks allocation exercises

7. No bunkering since the oil will be left in the ground

8. Safe and clean environment

9. Reduction and ultimately elimination of violent conflicts in the 
Niger Delta

It is our considered opinion that the best foot forward for Nigeria is 
to halt new oil field developments and to leave the oil under the ground.

Oil in a Dead End

Decades of oil extraction in Nigeria have translated into billions of 
dollars that have spelt nothing but misery for the masses of the people. 
It is time for Nigeria to step back and review the situation into which 
she has been plunged. The preservation of our environment; the 
restoration of polluted streams and lands; the recovery of our dignity 
will only come about when we stand away from the pull of the barrel of 
crude oil and understand that the soil is more important to our people 
than oil.

Oil blocks licensing has become a bazaar in Nigeria[8]. Huge signing 
fees are exchanged as though the players in the game were soccer or 
music stars. This signals the fact that there is something fundamentally 
faulty about the entire enterprise. This is the time for all Nigerians 
to demand that no more oil block should be given out for exploration or 
for exploitation. Nigeria was richer through her great agricultural 
produce before the ascendancy of crude oil as the major foreign exchange 
earner for the nation. Crude oil brought about crude actions in every 
realm of national life. ERA is making a modest contribution to give 
Nigeria a better future by urging the nation to look away from oil and 
at the same time keep a stable economic platform from where to leap unto 
greater heights. This will be through agriculture with supporting 
governmental structures. We must end our decades old dependence on oil 
rents that has damaged our national psyche and sense of commitment to 
nation building.

Let every Nigerian contribute to the national purse. This will make it 
clear to politicians that when they misappropriate public funds they are 
indeed stealing from the suffering people. Our life and our future are 
in our hands.

29 January 2009

End Notes

[1] This briefing note issued 29 January, 2009 in Lagos, Nigeria

[2] http://www.iht.com/articles/2008/07/31/business/oil.php

[3] http://wsws.org/articles/2008/aug2008/oil-a06.shtml. This report 
indicated that “The major US oil companies appear headed for a combined 
$160 billion in profits for 2008. That compares to $123 billion in 2007. 
Exxon and other oil companies have rewarded their CEOs with 
multi-billion dollar payouts. Last year Exxon CEO Rex Tillerson cashed 
in $16.1 million in stock options in addition to his $1.75 million 
salary. He also received a $3.36 million bonus. Conoco Chairman James 
Mulva received $31.3 million last year.”

[4] Quoted in ERA/CJP, Gas Flaring in Nigeria: A Human Rights, 
Environmental and Economic Monstrosity, Amsterdam, June 2005. This 
booklet can be found at both www.climatelaw.org and at www.eraction.org

[5] ERA Fact Sheet on Gas Flaring, December 2008

[6] Multinational Monitor, The End of Oil (editorial), (Washington: 
January/February 2007 edition). P. 6. This issue of the Multinational 
Monitor illustrates, among others, that the “Corporate control of energy 
policy and energy resources, especially in the United States, the 
country that consumes more energy than any other, is the single greatest 
obstacle to slow and hopefully reverse the world’s headlong rush to 
disaster.”

[7] At a growth rate of 2.025%. See 
https://www.cia.gov/library/publications/the-world-factbook/print/ni.html

[8]New reports abound to show this. See for example, Obinna Ezeobi: FG 
suspends oil bid rounds, The Punch , Saturday, 23 Aug 2008 at 
http://www.punchontheweb.com/Articl.aspx?theartic=Art200808231593070