Nigeria’s spilled community demands more from oil industry law

Twelve oil workers celebrated and high-five each after covering a leaking wellhead that spewed more than 20,000 barrels of oil per day into the Nembe waterway in Bayelsa, Nigeria.

An oil spill that mysteriously erupted in a capped non-production well on November 1 caused environmental destruction, including the death of marine life and damage to mangroves and waterways.

Aiteo Eastern E & PCo, a Nigerian oil company. After investigating the damage at OML29 Wellhead, which is run by Nigeria, Nigerian Environment Minister Sharon Ikeazor said, “It was like a Hiroshima site.” The license is operated under a joint venture with the state-owned Nigerian National Petroleum Corporation (NNPC).

River and sea tides have caused spills to the neighboring Rivers community, which is also part of the Niger Delta, where most of Nigeria’s oil and gas reserves are located. A unit from US service giant Halliburton has joined to block the well.

The oilfield was one of the largest local acquisitions made when Shell reduced its business in Nigeria and was purchased by Shell and its partners in 2014 by Aiteo for $ 2.7 billion.

Historical tolls

The Delta region Since Shell-BP became the first joint venture to drill oil in 1956, it has been blamed for the environmental damage caused by the activities of the oil industry.

Despite Nigeria becoming one of the world’s largest producers of oil and gas, the expected development of oil benefits is rarely achieved in the region. Life expectancy in the Nigeria Delta is 10 years shorter than elsewhere in Nigeria, and oil from wells and pipelines that have spilled or been disrupted continues to clog and choke mangroves, water supplies, and the atmosphere.

Environmental damage and lack of economic opportunities in the region have fueled sporadic rebellions in the region targeting oil infrastructure and government forces.

Nigeria’s President Muhammadu Buhari has been waiting for a long-awaited move in August after blocking long-standing legislative efforts as a way to deal with dissatisfied communities and bring broad reforms to profitable but problematic industries. Finally signed the Petroleum Industry Law (PIA).

The PIA contains a directive to create a trust fund for the host community. This allows local communities to claim a 3% share of the region’s oil assets generated from production.

This is an improvement in the status quo, much less than the 10% promoted by community activists.

The PIA version of the House of Representatives has approved an increase in the share of regional oil assets generated from production that the host community can claim from 2.5% to 5%, but the Senate has discussed a higher share from NNPC. Subsequently, it will eventually block foreign investment in the sector that approved 3%.

The result has offended the oil and gas community and its leaders after decades of exploitation, negligence, and damage to ecosystems.

“The 3% awarded by the PIA is not enough to protect the environment and secure future fishing supplies,” said a nationalist group that led protests in Bayelsa’s capital, Jena Goa, after the November spill. Allenjona, the secretary of the Nembese Conference, says. ..

“It’s a sad story because our environment has been devastated by the quest for oil and gas activity and people are still suffering from their destiny. Gas and oil activity continues to be profitable. But 3% is not enough.

“Without resources from this region, the country of Nigeria cannot be fully self-reliant, so the government should pay real attention to the well-being of the people.”

Overdue industrial reform

As a way to ensure the industry’s long-term competitiveness, Nigeria relies on about 90% of its export revenues, and PIA offers opportunities to overhaul sector routes and branches to attract foreign investment. ..

NNPC is incorporated as a limited liability company and will create a financing mechanism in which 30% of NNPC’s production profits will be used for the new Frontier Exploration Fund.

NNPC liberalization will spur multinational oil and gas companies to partner with it after decades of corruption and mismanagement, ending chronic underinvestment in this sector. Is expected.

“I want people to see this as an important step,” Godswill Akpabio, the current minister of the Niger Delta, told reporters. “People are talking about percentages, I’m not interested in it. I manage this 3%. The main thing is to use it well.”

However, the intention to use 30% of NNPC’s profits for further hydrocarbon exploration is ranked, especially in distant parts of northern Nigeria.

“We believe that securing 30% for further oil exploration in the Frontier Basin limits insults to the Niger Delta,” said the Niger Delta Congress, a socio-political organization of ethnic groups in the region. Chairman Nuvalisata said. African business..

“That is, there is a situation where northern Nigeria, with little or no oil, has succeeded in defeating the first ten while securing 30% of the profits spent primarily in northern Nigeria. This is the” Frontier Basin. Serves as the majority of. Percentage of spending on previous versions of the bill set aside for the host community in the oil-contaminated Nigeria Delta. Myopia is shocking. “

“It’s hard to justify using government funding to fund oil exploration,” said Joachim MacEbong, senior analyst at SBM Intelligence in Lagos.

MacEbong states that 30% of NNPC’s profits would have been more effectively used to fund early childhood education and health care, and to build infrastructure.

Mr. Sata said the people of the Niger Delta consider the law to be a “legal looting” of the region. Saatah says the government should expect further disruption to the pipeline as the young population of Delta is coping with job shortages and inflation and trying to reach its goals.

Establishment of Host Community Trust Fund

The government set a deadline for establishing the Host Community Trust Fund in August 2022. It is the responsibility of oil companies operating in the region to establish a trust in a region and name its management committee, but the PIA stipulates that each trust must include one member of the host community. doing. The available funds will be allocated 75% for capital projects, 20% for reserves and 5% for administrative expenses.

The Board is tasked with funding community development projects, creating economic opportunities, and strengthening peaceful coexistence between licensees and host communities.

However, Article 257 of the PIA states, “Every year, in the event of vandalism, sabotage, or other public anxiety that damages oil or designated facilities or interferes with production activities within the host community. The community shall lose that right. The scope of repair costs for damages resulting from the act. “

Nigeria lost 85.184 billion N ($ 2.78 billion) in 2019 due to oil theft and pipeline disruptions.

Was PIA too late?

President Buhari continues to seek Nigerian’s light, sweet, high-quality Bonnie light crude oil for diesel, jet fuel and gasoline, which are the most profitable products for the world’s refineries. We have been working on the diversification of oil-dependent economies.

But as the world’s most developed economies move to cleaner fuels and plan to ban new internal combustion engines by 2040, it means PIA is “one day late and less than $ 1”. To do.

“It’s unlikely that a commercial amount of crude oil (in northern Nigeria) will be found, so it’s likely to go down a few pockets and disappear,” he said.

The community sees PIA as a means to “never get rich at the expense of much,” and the perception of the transfer of wealth from the Niger Delta through a network of northern politicians is a recipe for further anxiety. is. In this area, he says.

“For oil companies that continue to operate in the region, do it at your own risk, because the truth remains that peace cannot exist without justice,” said Serta.

Nigeria’s spilled community demands more from oil industry law

Source link Nigeria’s spilled community demands more from oil industry law

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