The sale of these marginal fields such as OML 40, referring to oil and gas assets that have yet to be developed due to difficult location, infrastructure, and access, are bringing about a sharp increase of participation by indigenous companies. New players in the Nigerian oil sector include Mike Adenuga’s Consolidated Petroleum, Femi Otedola’s African Petroleum (AP) Consortium, Elcrest, and Neconde Energy. There are other indigenous companies which are actually backed by international finance, such as Oando (China), Perenco (Afren – a Nat Rothschild entity), and Equinox Group (Gazprom).

But the reasons motivating Shell’s divestitures may be more complex than the challenges of violence, insecurity, and public scrutiny. After all, the company has survived some of the roughest periods of Nigerian history, including the murder of activist Ken Saro-Wiwa by the Abacha regime, which resulted in a $15 million lawsuit settlement. In 2008, attacks by militant groups such as the Movement for the Emancipation of the Niger Delta (MEND) had reached such heights, that Shell was forced to steeply cut production, driving global oil prices to record highs well above $120 a barrel. And yet, despite these harsh circumstances, the company persevered and held on up to the 2009 amnesty, which helped production recover.

The problem for the company may be bigger than just oil spills, theft, and attacks, as some observers point to the pending passage of the Petroleum Industry Bill (PIB), which would revolutionize the tax and royalty structure for international oil companies doing business in Nigeria, carving out a sphere of participation in production and exploration (as opposed to simply regulation) for parastatal companies. First proposed in 2008 by the presidential administration of Umaru Yar’Adua, the PIB is a complex, 100-page document that has been repeatedly stalled in the legislature due to controversy and disputes over its contents and purpose. According to the former Minister of the Federal Capital Territory of Abuja, Nasir El-Rufai, international oil companies such as Shell stoutly oppose the passage of the PIB and are actively lobbying against it because the bill contains new royalties structures for offshore production (because the Nigerian government forfeited these rights in a 1991 agreement).

And while the PIB remains stalled, much-needed foreign investment is put on hold. According to one analyst interview by The Financial Times, “The wait for the adoption of the PIB is very damaging. It’s why the big new investments have been put on hold. The impact becomes exponentially more problematic [because] if reserves don’t get replaced, there is the risk of production capacity in Nigeria dropping for the first time in 30 years.”

As demonstrated by the overwhelming protests and public outrage over President Goodluck Jonathan’s decision to remove the fuel subsidy at the New Year, there is a strong social aspect to the country’s economic policies concerning the energy sector. For most citizens, who live on less than $2 a day, the fuel subsidy was seen as the only way that the oil wealth was shared – and, with its removal, there could be increased public support for the passage of the PIB that aggressively targets the traditional energy players with higher taxes and more difficult conditions.

For the moment, public anger is directed toward President Jonathan and a small group of advisers. But if this pressure translates into real political costs for the administration, it is possible to imagine President Jonathan finding a scapegoat in the foreign oil companies, and satiating voters with promises to pass the PIB and enforce payments on environmental clean-up costs. If that’s the case, Shell’s divestitures may accelerate, while local companies – which are in no way more accountable – will take over more and more critical onshore production fields, posing an unknown risk to global energy supplies.

Continue reading full article here.

http://www.nigeriaintel.com/2012/01/04/shells-declining-role-in-nigeria/

http://www.nigeriaintel.com/2011/12/14/lamordes-herculean-anti-corruption-task/

Acting Chairman of Nigeria’s Economic and Financial Crimes Committee (EFCC), Ibrahim Lamorde, is in a tough spot.

It has now been almost four years since the controversial ouster of former EFCC Chairman, Nuhu Ribadu, back when the anti-corruption unit held some level of international legitimacy, as well as a local reputation as a hammer used against Olusegun Obasanjo’s opponents.  Ever since then, with Farida Waziri serving as EFCC Chairperson, the agency has become at best a joke, and, at worst, a tool used to persecute some of Nigeria’s fledgling reformers.

But President Goodluck Jonathan’s abrupt firing of Waziri and appointment of Lamorde has given hope to some observers that the lost prestige could be regained.  Writing in Next Newspaper, columnist Stephen Davis argues that “Replacing Waziri is a bold step by President Jonathan. It clearly shows this is not a puppet President but a man who may yet be the leader Nigeria desperately needs to carry the nation through a dark and difficult time.”

For better or for worse – and sometimes such endorsements are actually unhelpful – Lamorde appears to have the backing of the United States.  In a statement published on the website for the US Mission to Nigeria, Ambassador Terence McCulley supported the new appointment:  “I applaud President Goodluck Jonathan’s recent move to change the leadership of the Economic and Financial Crimes Commission (EFCC), and his willingness to seek a strong candidate to lead the Independent Commission to Prevent Corruption and other related Offenses (ICPC).  The United States stands ready to help build these institutions to address corruption effectively and make impunity a thing of the past.”

It is positive that Lamorde is receiving such vocal support, which will hopefully boost his influence against the resistance he is likely to find within the agency and other structures of the administration, but what are the chances for his success?  Aside from the welcome feeling of seeing a familiar face (Lamorde served as EFCC Director of Operations during Ribadu’s tenure), what grounds do we have to assume that this government, which up until the moment has shown no willingness to fight corruption, will suddenly change its view?  Lastly, is it without meaning that Lamorde was present on the staff of the EFCC during the lost years of Waziri?

No one has the right to judge the performance of Lamorde before he is even given time to act, however it is time for observers of Nigerian public affairs and supporters among the anti-corruption community to open the debate on what kinds of technical steps are going to be required to reform the EFCC into a meaningful prosecutorial body with sufficient independence and powers to act as a check on corruption.

Already there are several moves being initiated.  Yesterday Chief Justice Dahiru Musdaphe announced the creation of special courts to expedite some of the long-overdue corruption cases (James Ibori, among others).  The creation of these special tribunals, which would run for a trial two-year period, would move jurisdiction to the less corrupt Federal High Courts, requiring that the EFCC strongly bolster the number of investigators they deploy in order to proactively build strong cases.  In order to make sure investigators and prosecutors within the EFCC aren’t swayed by bribes, Lamorde has suggested implementing an internal affairs investigative unit, that may administer lie detector tests to employees.  Lamorde has already asked the FBI to take in more EFCC trainees, and already numerous groups are appealing directly to Lamorde to open up old cases, such as the investigation of bloated road contracts in the Federal Capital Territory.

There is obviously a strong demand for accountability and successful prosecutions of state corruption in Nigeria, however this eagerness may lead some to overlook just how difficult it will be for Lamorde to reform the EFCC.  There are numerous structural constraints, legal weaknesses, and internal complicity that make this a Herculean task – one that cannot be accomplished alone.  According to a report this past summer by Human Rights Watch, “executive interference with the commission, and a political establishment that continues effectively to reward corruption, has undermined the country’s anti-corruption efforts and derailed key prosecutions. The commission’s chairperson remains deeply vulnerable to the whims of the president and lacks security of tenure.”

So until we see a stronger, more principled stance by President Goodluck Jonathan alongside the lone warrior Lamorde, it would be completely unfair and unrealistic to expect serious change to occur against such tragically stacked odds.