Deep inside our shell
The third NaijaLeaks cable  contains information that might be termed sensationalist but concentrating on that particular part of the infiltration of key Nigerian ministries does not begin to address the matters that should seriously concern us.
Ms. Ann Pickard  fully appreciates the political ramifications of her corporate brief being the head of an oil company in the largest oil-producing nation in Africa. As the Executive Vice President for Shell companies in Africa I would suppose all oil and gas producing countries in Africa would have felt her presence.
As an American, I suppose it made it easier to have senior consular staff to air her views and seek assistance part of which including trying to understand the inclinations of the Speaker of the House of Representatives.
Teasing information out of ego trips
The art of patronage is perfected in Nigeria by the tradition of paying courtesy visits to important personalities, this process of massaging egos probably allows for the visitors to tease our pertinent information from their hosts who might well be unguarded in the glow of adulation.
It would inform why Shell felt they could help out the General Managing Director of NNPC who she thought was spread so thin that an oil-producing company with a not too stellar record in Nigeria was going to help him prepare the material to present at the climate change summit in Copenhagen, Denmark.
One can only wonder what Dr. Barkindo would done in gratitude for saving his profession, academic and prestigious bacon by presenting a flash climate change lecture from the perspective of an oil and gas conglomerate.
A government fully exposed
Shell’s interest in the passage of the Petroleum Industry Bill seems to have been converged with that of other companies operating in Nigeria; the sources at the bottom of this blog give a general overview of the contents and import of the bill.
The government of Nigeria appears to have been trading information of oil-industry companies in Nigeria with other countries as Russia and China which might have offered companies in those countries undue advantage in contractual negotiations and whilst the government had denied involvement in facilitating corporate espionage Shell moles in relevant ministries had reported back to mother-ship of clandestine government activities.
Shell did not hold much store for the amnesty programme and whilst the Joint Task Force of Nigerian military personnel appeared to have been gaining more control of the militancy Israeli security experts seemed to helping the security situation in Bayelsa State but not in Rivers State.
If the Petroleum Industry Bill at ratification did appear to contain negative elements the companies felt they could use the services of the embassy to inject the changes they would like to see.
The difficult questions
Besides all this there are questions, very difficult questions that need to be asked and ones that have no ready answers because one begins to wonder if we do still have our country anymore.
The issue here is not how many moles are being paid by Shell in our key ministries but how many other organisations have Nigeria by the balls whose interests are protected by having Nigerians “seconded” to high positions to inform of government, corporate, economic, legal and political activities?
Highly placed people in the Nigerian establishment now commit treason and espionage with impunity it is no doubt the state of affairs and how do we purge our whole system of this cancer?
Fearfully, one serious question is how do the activities of Nigerians in high places affect the ability for Nigeria to make progress if the enemy is amongst us?
A battle lost?
If the government has to militate against low-level espionage like the Russians presenting full transcripts to rivals - how much politicking, blackmailing, strong-arming goes on behind the scenes away from the corridors of power but really change the power dynamic and decision making process in Nigeria?
For each bill being debated in our legislature how many moles are in the system and how many are part of the drafting exercise in ministries covering for conflicts of interest and vested interests; in the legislature and in the Presidency? Even more pertinently, how much money is changing hands to these ulterior ends?
With the kind of access and power that legislators have, who is in the pay of Nigerians and who is a double-agent?
These questions are hardly exhaustive but they begin to give a perspective on how the NaijaLeaks cables might just reveal how we have been sold out by our people and are being used as pawns in international conglomerate games for the capitalist benefit – Nigerians in charge does not necessarily protect Nigerian interests and that is the most scary part of this situation.
Tuesday, 20 October 2009, 06:17
C O N F I D E N T I A L SECTION 01 OF 04 ABUJA 001907
DEPT PASS USAID/AFR/SD FOR CURTIS, ATWOOD AND SCHLAGENHAUF
DEPT PASS TO USTDA-PAUL MARIN, EXIM-JRICHTER
DEPT PASS TO OPIC FOR BARBARA GIBIAN AND STEVEN SMITH
DEPT PASS USTR FOR AGAMA
JOHANNESBURG FOR NAGY
USDOE FOR GEORGE PERSON
TREASURY FOR TONY IERONIMO, ADAM BARCAN, SOLOMAN AND RITTERHOFF
EO 12958 DECL: 02/04/2029
TAGS EPET, ENRG, EINV, ECON, ETRD, PGOV, NI
SUBJECT: (C) SHELL MD DISCUSSES THE STATUS OF THE PROPOSED PETROLEUM
Classified By: Deputy Chief of Mission Dundas McCullough for reasons 1.4. (b & d).
Ref: Abuja 1836
¶1. (C) Shell EVP for Shell Companies in Africa met with the Ambassador on October 13 to discuss the status of the proposed Petroleum Industry Bill. She said the GON wanted the National Assembly to pass the bill by November 17 and that the international oil companies would have to move quickly if the House passed the bill in the coming weeks. She said there was “total alignment” among the IOCs and with the Nigerian oil companies.
She said it would be helpful if the Embassy would continue to deliver low-level messages of concern and call on the Speaker of the House to see where he stood on the bill. She expected the situation in the Niger Delta to be “quiet” until the end of the year but would get “out-of-hand” when the election cycle starts up at the end of the year. Shell’s views of the PIB track closely with ExxonMobil’s views as reported in reftel. END SUMMARY.
CURRENT STATUS OF THE PIB
¶2. (C) Shell EVP for Shell Companies in Africa Ann Pickard met with the Ambassador at the Embassy on October 13. The DCM and Economic Counselor joined the Ambassador, and XXXXXXXXXXXX accompanied Pickard. The Ambassador asked Pickard for her views about the status of the Petroleum Industry Bill (PIB). Pickard said the GON wanted the National Assembly to pass the bill by November 17 in order for the GON to be able to announce it at the upcoming CWC Gulf of Guinea Conference in London November 17-19.
She said that if the House passes the PIB in the coming weeks, “we need to move quickly” to obtain any necessary changes before it becomes law. Fortunately, she added, “We are working with the House and the House appears to want to work with us.” She continued that if the Senate passes the PIB, “We aren’t worried.” Unfortunately, she explained, “We think the Senate will pass a bad bill” but it won’t really matter. She added that she would be at the Nigerian House and Senate later that day and would let the Embassy know if there were any unexpected developments.
¶3. (C) The Ambassador asked if Shell had had engagements with the GON outside the National Assembly, such as with the Ministry of Finance and the Central Bank of Nigeria. Pickard said, “We are meeting with them at all levels.” She noted that an IMF team headed by Charles McPherson was in Abuja to look at the PIB and that Shell would be meeting with them as well. In contrast, she said, “We are worried about the World Bank’s political agenda and it is not clear what their agenda is.” She said the World Bank was working on how to make the IJVs “bankable” so that they would be able to go to international and domestic banks for financing.
GAS FLARING AND CLIMATE CHANGE
¶4. (C) Pickard said the PIB requires an end to gas flaring by 2010. She said the industry won’t be able to do that due to the lack of QShe said the industry won’t be able to do that due to the lack of investment and security. Shell is ahead of the other IOCs and could be ready by 2011. Shell would have to spend $4 billion to do this, but the GON would also have to fund its part and that is a risk. Shell would shut in oil production in fields where it is uneconomic to end gas flaring, and it would let others have the gas for free where it is economic to do so.
¶5. (C) Pickard continued that NNPC General Managing Director Dr. Mohammed Barkindo was interested in doing something on climate change in preparation for the climate change summit in Copenhagen December 6-18. Barkindo was spread pretty thin so Shell will ask him how they can help him prepare for the summit. She added that Shell had recently told the oil producing countries that coal will squeeze out oil as a result of the CO2 footprint issue if the oil producing countries and IOCs do not do more to address the issue.
¶6. (C) Pickard summarized the PIB’s potential benefits. The creation of fully integrated and independently functioning international joint ventures (IJVs) would solve the oil and gas industry’s longstanding funding problems if the proposed IJVs are done right. The Nigerian National Petroleum Company (NNPC) was previously forced to reduce its ownership of some existing joint ventures to 49 percent to make them profitable enough to obtain financing. The proposed division of responsibilities between the NNPC and the Directorate of Petroleum Resources also would be good. The IOCs currently do not know if the NNPC is their partner or regulator.
COHESION WITHIN THE INDUSTRY
¶7. (C) The Ambassador asked if the industry was united in its approach to the PIB. Pickard replied that there was “total alignment with the international oil companies at every level.” She acknowledged that Shell had more exposure to the loss of acreage than any other company. “We could lose 80 percent of our acreage,” she said. The problem comes from the fact that the PIB will redefine how a company can hold on to its exploration and production blocks, limiting what can be kept to two kilometers around each well.
“Everyone offshore loses a lot,” she continued. “We will have to bring satellites on fast or we will lose the blocks.” However, the problem with that is that the companies have to be able to pass things through to the blocks quickly and it takes years to get a rig in due to delays in the Nigerian approval process. (NOTE: Pickard told Econoff in Lagos that Shell “sent away” three platforms in late September. END NOTE.)
ALIGNMENT WITH NIGERIAN OIL COMPANIES
¶8. (C) The Ambassador asked about the IOCs’ alignment with the Nigerian oil companies. Pickard replied that “the Nigerian companies are with us” because they will be taxed at the same rate in the current version of the PIB. The IOCs are starting to see what the Nigerian companies want to do.
THE USG’S ROLE
¶9. (C) The Ambassador asked what the Embassy could do to help with the Joint House Committee on Petroleum Upstream and Downstream and Justice that is working on the PIB. Pickard said she hoped the current level of dialogue between the GON and the IOCs continues. Unfortunately, “We have not been able to meet with President Yar’Adua for nine months,” she said. “They have him protected.”
She said it would be helpful if the Embassy would continue to deliver low-level messages of concern. In particular, she thought it would be helpful for the Embassy to call on Speaker of the House Dimeji Bankoke to see where he stood on the bill. Beyond that, she would like to keep the Embassy in reserve and use it as a “silver bullet” if the PIB passes the House. The Ambassador noted that the U.S., U.K., Dutch and Qthe House. The Ambassador noted that the U.S., U.K., Dutch and French Embassies had already made a joint call on NNPC General Managing Director Dr. Mohammed Barkindo.
CHINA’S INTEREST IN NIGERIA’S OIL BLOCKS
¶10. (C) Pickard mentioned China’s recently reported interest in Nigeria’s oil blocks. She said Shell had received a copy of the letter that Special Advisor to the President on Petroleum Matters Dr. Emmanuel Egbogah had sent to the Chinese which said that their offer for oil exploration blocks was not good enough. Minister of State for Petroleum Resources Odein Ajumogobia had denied that the letter had been sent, but later conceded that the GON was only “benchmarking” to see what the IOCs should pay for shallow-water licenses.
Pickard said Shell had good sources to show that their data had been sent to both China and Russia. She said the GON had forgotten that Shell had seconded people to all the relevant ministries and that Shell consequently had access to everything that was being done in those ministries.
CHANGING RESPONSIBILITIES WITHIN THE GON’S TEAM
¶11. (C) Pickard observed that there might be changes with how the GON management of the petroleum sector is organized. Minister of Petroleum Resources Rilwanu Lukman may be given the responsibility for implementing the PIB, while Minister of State for Petroleum Resources Ajumogobia may get the Directorate of Petroleum Resources and ongoing business. The problem with these changes is that the GON could still get “unempowered people” who are not able to address the issues.
The question is whether Ajumogobia would be able to step up. (NOTE: Press reports on October 17 reported that Lukman will be given overall responsibility for the formulation of policy, and oversee the implementation of the PIB, the Integrated Joint Venture negotiation and rollout, the fiscal terms transition and implementation, the new organization implementation, and stakeholder management.
We will also supervise the NNPC and its subsidiaries, the Organization of Petroleum Exporting Countries, the African Petroleum Producers Association, and the University of Petroleum. Ajumogobia will be in charge of the Gas Master Plan Transition Implementation, the Gas Exporting Countries Forum, the Nigerian Liquefied Natural Gas, the alternative fuels, and the Petroleum Equalization Fund. He will also oversee the Directorate of Petroleum Resources, the Petroleum Training Institute and the Pricing Regulatory Agency. END NOTE.)
SHELL’S CURRENT PRODUCTION
¶12. (C) The Ambassador asked about the level of Shell’s current operations. Pickard said Shell was producing 663,000 barrels per day as of October 13, including the Bonga field. Approximately 80,000 barrels per day had been brought back from the Forcados field on the previous day. Some 900,000 barrels per day of capacity was still shut in. Of that, Shell could bring back 600,000 barrels per day, while the remaining 300,000 barrels per day is “too unreachable.”
AMNESTY IN THE NIGER DELTA
¶13. (C) The Ambassador asked Pickard what she thought about the future of the GON’s amnesty offer to militants in the Niger Delta. She responded that Shell expected the situation in the Niger Delta to be “quiet” until the end of the year.
It will then get “out-of-hand” when the election cycle starts up in December, January and February. She expressed particular concern about Bayelsa State, home to Shell’s 500,000 barrel-per-day capacity Bonny field. Pickard also noted that Q500,000 barrel-per-day capacity Bonny field. Pickard also noted that Shell saw Israeli security experts in Bayelsa, but not in the Delta, and that there had been “a big drop in kidnapping” as a result.
¶14. (C) XXXXXXXXXXXX
¶15. (C) Shell’s views of the PIB and the alignment among the IOCs and with the Nigerian oil companies track closely with the views of ExxonMobil, as reported in reftel. The main difference is that Shell tends to minimize the different tax concerns and financial vulnerabilities of the individual IOCs.
Shell is much more vulnerable than the other IOCs because its operations are concentrated in less favorable JV concessions that are located in the violence-prone Niger Delta. ExxonMobil and Chevron’s operations are concentrated in more favorable production sharing contracts (PSC) in the relatively violence-free offshore areas. In the event that the PIB retains negative terms or violence returns to the Delta, Shell can be expected to hurt the most and cry the loudest.
¶16. (U) Embassy Abuja coordinated this telegram with ConGen Lagos.