Can Petroleum Aid development?

The oil giant Shell has lost its appeal against a ruling that it is not the rightful owner of land where it runs Nigeria’s biggest oil export terminal.

Lawyers at EarthRights International, a Washington-based human rights law nonprofit, say they suspect that a new legal submission  - which was signed only by the U.S. Justice Department - reflects tensions inside the government on how to deal with multinational corporations do business in the U.S. Significantly, neither the State nor the Commerce Department signed on to the brief, despite their key roles in the case.

Filartiga v. Peña-Irala set a precedent for U.S. federal courts to punish non-U.S. citizens for acts committed outside the U.S. that violate international law or treaties to which the U.S. is a party. ATCA has brought almost 100 cases of international (often state-sanctioned) torture, rape and murder to U.S. federal courts to date.

No plaintiff against a corporation has won on ATCA grounds, although some have settled or plea bargained.

The desire to capture more oil reserves is driving exploration and development of oil and gas fields in Eritrea, Ethiopia, Somaliland, Puntland, Somalia, Kenya, Uganda, Rwanda, Burundi, Tanzania, Mozambique, Madagascar, Malawi, Mauritius, the Comoros, Seychelles and the coast of Durban in South Africa.

The National oil spill detection and response agency (NOSDRA), the United Nations Environment Programme (UNEP) and the United Nations Development Programme (UNDP) have identified over 2,000 spill sites that need to be remediated. Some of these spills happened over 40 years ago. The Ebubu spill that occurred in 1970, has not been cleaned up and Shell, the company implicated in the disaster, is vigorously appealing a judgement of a federal high court which ordered it to pay US$40 million compensation as at 2001.[3]

Even though Ikiogha is the government bureaucrat in charge of penalising Shell for the spill and signing off on the cleanup, he is also the contractor hired by Shell to do the cleanup… His cleanup operation consists of four shirtless men scooping oil from the surface of the polluted river with Frisbees… he claims that most of the oil had earlier been removed with absorbent foam and blankets.’[5]

the Jubilee Ghana MV 21 BV – a special purpose company[5] comprised of energy corporations – is incorporated in the Netherlands, one of the world’s leading tax havens that provides specific loopholes for corporate activities. The consortium owns the Kwame Nkrumah MV 21 – the Floating Production Storage and Offloading (FPSO) facility that will be used to exploit Ghana’s offshore oil during the first phase of development. Commenting on the Jubilee Ghana special purpose vehicle (SPV), Elmer explains that the intent is manifold: Protecting secrecy and providing legal, tax and regulatory relaxation. ‘In this case,’ he says, ‘there is a strong suspicion that the SPV [will] charge certain services to the company, therefore reducing the profit and the taxable profit. Another option is that certain currency or derivative deals with the company [will be] made with the same effect that the taxable profit is reduced in Ghana.’ The use of the Netherland’s opaque legal and financial vehicles are likely to facilitate revenue leakage, diminishing Ghana’s projected oil revenue, estimated to inject US$800 million into the economy from 2011 and 2029 (beginning with US$20 per person in 2011 before increasing to US$75 per person by 2017, if revenues are directly remitted to citizens).

Ironically, though corporate mispricing accounts for 60 per cent of illicit flight from resource-rich developing nations, specifically those in oil and-mineral rich West Africa, Ghana vies to become the Netherlands of Africa. ‘Under the IFSC, Barclays Bank has been given the license to operate the first Offshore Bank in the sub region.’[10] Cumulatively, US$13 trillion in private wealth is stashed by tax evaders and avoiders in secrecy jurisdictions. If taxed at a moderate 7.5 per cent rate of return, these funds would yield US$865 billion dollars annually.

However as at today three years after it came into existence as a law, the stipulations on allocation of the number of new expatriates or extension of stay of those already in the country to work in a company or particular project is only on the paper used in writing the Content Act.

The foreign operators have abused their allowed expatriate quota with impunity simply because they have found ways of circumventing the system that was supposed to monitor compliance. Some companies even bring in all kinds of funny “expatriates” under the guise of expertise without recourse to approval from any government monitoring agency.

These agencies either for outright lack of will power to be honest and do the right thing approve applications for expatriate quotas allocations and variations without recourse to existing Regulations and so you see even cooks and washer-men, security men, mechanics amongst many others  work in Nigeria as expatriates with unthinkable pay.

Nigeria's petroleum minister, Diezani Alison-Madueke oil giant, Shell Petroleum Development Company Ltd (SPDC) have been fingered in the shady sale of four oil blocks worth $380 billion (N58.9trillion), a petition to the Speaker, House of Representatives, Aminu Waziri Tambuwal disclosed, yesterday. The petition also alleged that two days before President Goodluck Jonathan dissolved the Federal Executive Council in 2011, officials of Shell and Alison-Madueke secretly transferred production rights in four large oil blocks, Oil Mining Licences (OMLs) 26, 30, 34 and 42, to Mr. Jide Omokore's Atlantic Energy Drilling Concept Limited, a company that neither tendered nor bidded for the blocks.

The protesters lamented what they described as a deliberate exclusion of indigenous rights of first refusal and the absence of transparent and open competitive bidding of Oil Mining Licences (OMLs) 26, 30, 34 and 42 respectively.

An Energy Analyst, Muhammed Amin Adam has told Citi Business News, the current delays in the completion of the gas infrastructure project could allow the Jubilee Oil field partners minimum flaring opportunity.This is as a result of the current operational challenges government is having with the lead contractor on the SINOPEC project.China’s SINOPEC has threatened to abandon the project following serious financial challenges government is confronted with in paying SINOPEC for pre-financing the project.

“in this case the law also allows that you can flare for operational reasons and you can flare when you are compelled to. So in this circumstance when we are not ready with our gas infrastructure they are compelled to flare, in that case we will have no course to make any case against them”.

The oil was discovered in the western part of C100 which extends to the Tano basin, and it’s home to several fields including Ghana’s Jubilee. This latest development could have some implications if Ivory Coast decides to develop this field.

It was towards the end of our lunch discussion that the journalist mentioned the documentary “Fuelling Poverty”, credited it to Ishaya Bako and urged me to watch it on Youtube. The filmmaker, true to his African values, was quite bashful as he smiled modestly, lowered his voice and acknowledged he made the film. It all sounded really interesting so I promised to watch the short film afterwards.

Ironically, the move by the government to ban the documentary from TV stations in Nigeria, simply fueled people’s interest in it – those who had never heard of it prior to this incident and others, like myself, who only just got round to watching it. Now the film has gone viral! Nigerians are sharing the link to the Youtube video via Blackberry Messenger, Facebook, Twitter and other social media tools. Soon, counterfeit DVD copies will be sold freely at traffic jams in Nigerian cities

But instead of protesting financial institutions that had left the economy in ruins, Nigerians turned out in droves to protest the removal of a fuel subsidy that kept gasoline affordable for the public—and also threatened to destroy Nigeria's economic stability

Replete with commentary from a Nobel laureate, it offers a pretty even-handed look at the economics of the subsidy, the protests, and the political situation in Nigeria. But when it was submitted to Nigeria's National Film and Video Censors Board for approval it was promptly banned. The film was obviously nixed because it casts the government in a critical light; but, of course, banning a controversial film without blocking it online is a surefire way to make it go viral.

The secessionist state of Somaliland has signed a production sharing agreement with DNO, a Norwegian oil and gas company.

“If governments are not going to step up to the plate, ... others are going to move in,” said Alex Vines, the African research director for London-based Chatham House. “Private security providers are licking their lips in anticipation of coming in and making good money.”