Of skin that needs care

Not mine for thee

I am reminded of a phlebotomist who would never succeed in extracting a droplet of blood from out of my veins, no matter how hard he tried. That he is in that position must mean he is fully qualified to attend to such a delicate matter.

Yet, at closer to 7 than 6 feet tall and with a frame that would well be found with lumberjacks than in a hospital, his hands large as fans to compare with elephant ears that no matter how soft they are their gigantic expanse presents an apparent Lilliputian to a Gulliver in scrubs, almost too terrifying to countenance.

My first sight of him as he approached with a bowl of vials and phlebotomy paraphernalia my veins seized up and decided, no dainty word of comfort said from thee shall my veins yield to thy touch. By the time I was pricked and poked that I was a humanoid representation of the Swiss cheese called Emmental, I was sent to the hospital’s blood room where dexterity and capacity meant they could make stones exsanguinate and I to them was not a stone.

Oiling of the epidermis

The other day, I thought about my chapped lips that I hate putting lip balm on as it feels so irritating, I am ready to wipe it off in minutes. Surprisingly, I endured a whole night of the application of the lip balm and not since I used Wet Lips way back in Nigeria, a liquid balm with a roll-on applicator that gives a glistening and glossy look that might appear unusual on males but worked a treat.

That I have preferred to peel off dried skin from my lips despite the bruising and pain than using a balm is strange but convenient. Then moisturisation is a necessity I too often decline to my detriment, from hands to skin shedding on the soles of my feet and certain hard hands that might entertain a visit from a version of lib balm for the manicurist’s table.

I guess whilst parts of my face can seem to be oily, my skin needs a bit more care than I readily submit myself to essential grooming. I get the best care for my skin when Brian not only insists but is at hand, those hands to give my feet more than the kneading and care required.

Opinion: Oiling Diezani's prison wagon

Oiling the wheels of hedonism

I had previously passed commentary on Twitter about the case of the erstwhile Nigerian Minister for Petroleum Resources, Mrs Diezani Alison-Madueke.

In a statement released by the US Department of Justice last week, they are after the recovery and forfeiture of $144 million in assets that are proceeds of corruption and money laundering conducted within the jurisdiction of the United States of America. [DOJ]

Kolawole Akanni Aluko and Olajide Omokore, both of whose Wikipedia pages are urgently in need of an update because the colourful profiles therein are anything but, they apparently conspired with others to bribe Mrs Diezani Alison Madueke with gifts including property and furniture to win lucrative oil contracts in Nigeria.

Oiling global scrutiny

Kola Aluko for instance, owns the luxury super-yacht, Galactica Star, it is the world´s largest fast displacement yacht [Wikipedia]. It is valued at about $65 million and it gained a rather high social profile when it was hired by Jay-Z and Beyoncé for her 32^nd birthday. [Business Insider]

Basically, Aluko and Omokore seem to have gotten their hands on lots of money from their nefarious activities and have not been reticent about living high profile lives of acquisitive hedonistic eye-watering ostentation.

In any case, let’s look at an aspect of this matter that does not seem to be dawning on Nigerians of power and influence yet. The fact that no one has the resources to completely control the narrative anymore. The power you wield in Nigeria that could be overwhelming in that locality is paltry in global terms, Nigerian smarts do not essentially suggest you are smart about things, you might well be stupid when taken out of that setting.

Oiling the sheen of stupidity

It brings me to a few trivial, yet interesting conclusions about Mrs Diezani Alison Madueke who we deign to call Diezani.

Diezani, has been both stupid and smart, smart in her involvement with her co-conspirators in crime to have recorded conversations of their wanton thievery and yet stupid enough to allow those recordings to become key evidence for indictment, because she somehow failed to sequester the material far from reach, it’s like being caught in the act, red-handed.

Smart to express a sense of proportion in admonishing the men about their hedonism whilst stupid enough in her cant to exhibit the same characteristic in accepting $4 million worth of furniture for her many properties. [Premium Times]

Smart to find ready patrons lacking in integrity and character to probably insulate her from the corrupt enterprise she presided over, but that itself was stupid because whilst she apparently got away with it in Nigeria, she could not in the UK and the US. [Newsweek]

Oiling the arm of the law

Carrying on the previous thought, smart to have absconded Nigeria since 2015 where she has escaped the hounding of ineffectual law enforcement and prosecution, but stupid enough to think they could not only provide influence but add value to the investigations and indictments instigated abroad.

To reiterate an earlier thought, invariably, what we stupidly assume as smart in the Nigerian context could very well be exposed as stupid in the global scheme of things. Everyone forgets that in our global village, that nothing of note in a secret local grotto is entirely isolated from the global klieg lights.

Decade Blogs - Tolu Oloruntoba - Royalties at the end of a river

Decade Blogs

In Royalties, for my decade of blogging, Tolu Oloruntoba looks at a source of constant conflict in Nigeria from the history linked to an explorer who perished far from home to those who for exploitation perish in their own lands.

Blog - To Celebrate My Decade of Blogging

We are left with questions about rights; the rights of ownership in conflict with the rights to exploit without which the resource is a meaningless deposit with much potential yet undiscovered or wasted, so is the capacity we have to express our thoughts, some written and others left unknown how do you determine the royalties between expression and silence?.

Tolu Oloruntoba uses the Twitter handle @ToluOloruntoba, I guess his royalty check is in the post. Thank you.

Who owns the oil river
and the carbonaceous secrets of the Delta?
Why, the guys upriver, of course,
in silenced Sahara marshes,
saving in these banks for others to take;
Adamawas eaten by the river rising, oily;
And poor old Mungo,
at the end of his Niger at last,
in disillusioned increments we cremate, in pistons,
with forgotten insurrections and dynasties,
hunters, hunted, fishers and fish
writing themselves into strata of future,
beneath our feet.
You didn’t know?
It ends in fire.

Postscript

1. Geography teaches us about the millennia of deposits it really takes to create crude oil, thousands of feet down. Who, then, in our case, should really get Nigerian oil royalties? The Niger Delta, Federal Government, or all the highlands and places bypassed and collected from? At any rate, crude oil, like most other fossil fuels, is a legacy of bygone eras. Those who left it to us are long gone. It’s a pity we have to be so human in our squabbles to share it. One also wonders what we are laying down now, and what will be left of us, millennia hence.

2. Mungo Park, the Scottish explorer who died seeking the source of the Niger, is buried at Jebba. One can imagine how the circle of life would have brought him, eventually, to the end of his tragically shortened journey.

3. I have followed Uncle Akin’s blog for at least five of his last ten years of blogging. Here’s to many more, if only (we’re selfish, I know) to enjoy his sensitivity, cracking wit and depth of conviction. It has been an honour to glean from his uniquely fertile mind, and be moved by his thoughts, sense of justice, and bravery in the face of truth, triumph or tragedy. We cannot pay him enough, in glowing words or royalties J, for the bolstering of our conscience, and deposits into our soul.

Nigeria: The NEXT awards expose an unconscionable kakistocracy

Our pride

It is always heartening to read of Nigerians winning awards or receiving international recognition for their work most especially if they are resident in Nigeria.

At the best of times, it is not the easiest country to set up business in and going from the experience of some, it is even harder to be a newspaper and a quality newspaper at that.

A few weeks ago, we were informed that the NEXT newspaper will no more appear in print, many lamented the prospect whilst opining about the course that newspaper charted that made it a pariah to advertising agencies thereby starving it of essential revenue to thrive.

NEXT was the best

This blog is not being written as an exegesis to those failings; those issues are for others to ponder. However, accolades have been raining on the newspaper like Noah’s flood; last week, Dele Olojede the founder won [1] the 4^th John P. McNulty Prize and the citation read “in recognition of his ground breaking work to deliver unbiased information to the Nigerian public, demand government transparency and advance journalistic standards in the country.”

On Tuesday, at the FAIR [2] (Forum for African Investigative Reporters) African Investigative Journalism Awards in Johannesburg, South Africa, NEXT reporters Peter Nkanga and Idris Akinbajo emerged as African Investigative Reporters of the Year for their joint work, entitled “Last Minutes Oil Deal that Cost Nigeria Dear” whilst the editor Musikilu Mojeed carted away the Courage Award.

Courage in the abyss

It is important to recount the citations that accompany these awards; in the case of the reporters, “The report is one of the six-part ground-breaking series which catalogued a courageous journey into our heart of darkness, the oil industry, as we investigate brazen attempts by our senior officials, including petroleum minister, Diezani Alison-Madueke, to corner the oil industry for themselves, openly demanding bribes, and using cronies and fronts to grab oil blocs in secretive deals.”

Having compiled their report, it was left to the editor to weigh the consequences of the age-old saying, “publish and be damned,” he courageously published the report and for that he “was honoured for demonstrating rare courage and providing the right kind of leadership to get the stories published in spite of high-level pressures, police harassment, attempted monetary inducement and threats to his life.”

They never cared for corruption

From the analysis that followed awarding these prizes to the now eminent personnel of NEXT, it was suggested that in any other country less corrupt and less tolerant of malfeasance, prebendalism or neopatrimonialism, the minister will not only have lost her job in disgrace, she would duly have lost her freedom too, having to go to jail.

Sadly, it is Nigeria where with all the incontrovertible facts and evidence presented to all that matter, the President with his transformational agenda re-nominated the minister for her old position after the elections and the Nigerian Senate being derelict, irresponsible and nonchalant about these rotten allegations barely questioned her but ratified her appointment thereby granting a seal of approval to a corrupt enterprise that reeked to the high heavens.

The award corroborates the reports

Now, there is no reason for FAIR to wade into the political quagmire of Nigeria and expose the sows with their snouts deep in the trough of corruption, they could easily have adopted other less politically inflammatory pieces to grant their award.

Each entry would have been judged on more than its merits for good reporting but would have been reviewed against the kinds of pressures militating against such activity being exposed to public knowledge.

It automatically lends a lie to the idea that everything that constitutes this government we now have in Nigeria with the majority PDP ruling party have a desire to tackle corruption at any level. They instigate, promote, espouse and embrace corruption as their modus operandi suborning as many as can be bought to that same cause.

They are a corrupt lot

Where the President might have had the backbone to stem the tide at the top, he acquiesced and celebrated the epitome of corruption as the lifeblood of his regime and in swearing-in the minister gave license to impunity, the minister probably continuing from where she left off knowing nothing will come of the investigations of the puny inconsequential reporters of the moribund NEXT newspaper stable.

With this award, one will hope the whole Corrupted Industrial Complex (CIC) that makes up the totality of the Federal Government of Nigeria is duly exposed to the world and our foreign partners that they have no consideration for good governance, probity or transparency and sadly, Nigerians thinking they have a democracy are in fact, caught in the merciless iron grip of a heartless and unconscionable kakistocracy – a government by the worst of men.

For the salvation of Nigeria – woe betide them all.

Sources

[1] 234Next.com | Olojede wins John P. McNulty Prize

[2] 234Next.com | NEXT editor, two reporters win African investigative journalism awards

[3] 234Next.com | Last minute oil deals that cost Nigeria dear

Nigeria: NaijaLeaks and why China is bad for Africa

The cables are still coming

The need to continue to mine the WikiLeaks diplomatic cables must not wane even after the spotlights have moved on, there is much to be seen in those cables and this one must be highlighted.

NaijaLeaks, the Nigerian side of the things in this cable [1] presents a very interesting perspective to governance, leadership and accountability issues in Nigeria.

Playing one off the other

At the end of 2009, the Nigerian legislature was busy debating versions of the Petroleum Industry Bill (PIB) which many International Oil Companies (IOCs) thought was not structural or strategic but about asserting greater ownership of our national resources, in ways, this was a disincentive for new investment by IOCs but an opportunity for negotiation for the Government of Nigeria (GON).

Shell Nigeria had brashly suggested to the National Assembly that if the PIB were passed, the “Nigerian oil industry would be dead”, so the GON brought in the Chinese. Considering Shell has the best deal in the Nigerian oil industry they felt they could use that leverage to thwart a legislative process.

For those who advocate Chinese investment in Africa and sing the highest praises of China, this is one cable you should read and comprehend.

Introducing the Chinese in Africa

This is what they did, “The Chinese are very aggressive because they need the oil. They came in with big money, and they were ready with large loans with low interest rates.”

I have to give Nigerians credit for this, playing competing interests against each other whilst keeping control of the process, "We know what had happened in the Sudan and Chad and we know enough about them to know where we want them and where we don't." Then, the person goes on to say, "No one really desires to see the IOCs go when we have worked with them so long. Long-term friendships develop, a lot is learned from them, and we know how they do business.”

However, what was most revealing was because the Chinese oil companies are run, by which I think they mean owned by the Chinese government, their representatives in the oil industry do not know how to deal with democratic governments.

The Nigerian democratic experiment can be flawed but the core elements of it are working, efficient, functional and aggressive too in protecting Nigerian interests.

It is not for sale in Mandarin?

The Chinese because of their incentive of cash and softer loans had come to cherry-pick the oil fields and many of those fields were already allocated to other partners in the Nigerian oil industry. The cable says the Chinese acted dumbfounded and I think what was intended was dumb and of the fields already operated by other interests the Chinese said, “You mean we can’t have it?”

Therein lays the reason for the Petroleum Industry Bill, to create partnerships and binding contracts where interlopers cannot with their money make us rescind agreements in their favour and the punch line to this episode is, “We are lucky we have a democratic government, under the military, the Chinese and Russians would be here.”

If the Chinese had gotten their way, they would have successfully jettisoned the PIB and abridged our democratic process which is by no means perfect, this crucial bill showed that Nigeria had to keep its nerve and resist the incentives offered to pervert due process whilst protecting partnerships that have existed for decades.

Apparently, the Russians through Gazprom had tried similar tactics and the Nigerians did not like it at all, in fact, it appears Nigerians were more comfortable with the devil they know in the existing IOCs than the moneybag Russians and Chinese along with a willingness to maintain business agreements regardless of alternative business incentive.

Rotten command structure

Interestingly, the labour unions also did not want the Chinese in the Nigerian oil industry, with China featuring in the list of the five worst countries to work for; they do not have industrial relations representatives or formal human resources processes. The immediate supervisor exercises all power without being accountable to anyone and most of the Chinese officials are non-English speaking hindering constructive interaction, according to the cable.

Zambia is another African country that had suffered at the hands of the Chinese and if I recall, the writer of Dead Aid, Dambisa Moyo [2] is from Zambia and I do wonder what she has to say about the unions chasing the Chinese out of Zambia.

The issue of corruption is probably moot as well as it is global, but this is a very cautionary note, “The Chinese have no respect for local laws, and they compromise a lot of things, including safety.” According to the cable, “the Chinese were the first to bribe local officials to win contracts and get around local laws.”

This sets a very dangerous precedent in any setup that the Chinese seek to have influence, especially in Africa, if this kind of business practice is norm, we should not be blinded by the idea that the presence of money is the solution to development at the expense of other rather more established capitalist business practices which include the whole spectrum of management, accountability, industrial relations, human resources and more recently corporate social responsibility.

Know how to handle the Chinese

Therefore, it is, “The poor image of the Chinese helps to explain why they never seriously threatened renewal of the IOCs' oil mining licenses.”

Nigerians were playing the diplomacy game with relish and offered this statement from the minister in charge in which he said, “There was never any consideration of selling or trading one firm for (I think he meant against) another. NNPC has a right to relinquish any part of its equity to any third party that expresses interest and it is in that regard that the discussions with the Chinese have been carrying on.”

Nigerians have signed agreements with the Chinese and Shell get 45% of joint venture deals with the GON compared with other IOCs that get 40% and I would suppose the Chinese might be offered a lot less whilst doing well to keep a rein on their activities within Nigeria.

Sources

[1] Viewing cable 09ABUJA2170, Chinese oil companies not so welcome in Nigeria’s oil patch

[2] Dead Aid - Review

Newswatch Magazine - The Draft Petroleum Industry Bill 2009

What’s the Fuss about the Nigerian Petroleum Industry Bill?

The Nigerian Petroleum Industry Bill - Part 2

The Cable – With interesting highlighted bits

E.o. 12958: decl: 11/28/2019

Tags: econ, epet, enrg, einv, pgov, prel, ni, ch

Subject: Chinese oil companies not so welcome in Nigeria’s oil patch

Ref: Abuja 2100

Classified By: Ambassador Robin R. Sanders for Reasons in Sections 1.4 (b) and (d).

Summary

¶1. (C) Two xxxxxxxxxxxx officials recently volunteered that Chinese oil companies had made a lot of mistakes in Nigeria and neither official welcomed their presence. Nigeria National Petroleum Company (NNPC) xxxxxxxxxxxx said on xxxxxxxxxxxx the NNPC is aware of how the Chinese have behaved in the Sudan and Chad and that the Chinese do not know how to deal with a democratic government.

xxxxxxxxxxxx complained on November 11 that there is no recourse when dealing with the Chinese and that the Chinese do not respect local laws. The poor image of the Chinese helps to explain why they were never a serious threat to the renewal of the international oil companies' (IOCs) oil mining licenses (OMLs).

END SUMMARY.

Ruffled feathers...

¶2. (C) Nigeria National Petroleum Company (NNPC) xxxxxxxxxxxx discussed the Chinese oil companies' recent attempts to obtain deep water oil mining leases (OMLs) with Economic Counselor and Trade and Investment Specialist on November 13.

xxxxxxxxxxxx said that Shell Nigeria had opened the door for the Chinese by resisting GON efforts to pass the proposed Petroleum Industry Bill (PIB) and telling the National Assembly that the "Nigerian oil industry would be dead" if the PIB passed. "So they brought in the Chinese," xxxxxxxxxxxx said.

¶3. (C) Asked about how the Chinese handled themselves in Nigeria, xxxxxxxxxxxx said, "The Chinese are very aggressive because they need the oil." "They came in with big money," he said, "and they were ready with large loans with low interest rates."

But the Chinese also made some mistakes. First, xxxxxxxxxxxx said, "We know what had happened in the Sudan and Chad and we know enough about them to know where we want them and where we don't." At the same time, xxxxxxxxxxxx said, "No one really desires to see the IOCs go when we have worked with them so long. Long-term friendships develop, a lot is learned from them, and we know how they do business."

¶4. (C) Second, xxxxxxxxxxxx said, "Their oil companies are run by the Chinese government and they do not know how to deal with Qthe Chinese government and they do not know how to deal with a democratic government. For example, the Chinese told the NNPC officials which fields they wanted and the NNPC officials had to say, 'No, this field is operated by someone.'" The Chinese acted dumbfounded and said, "You mean we can't have it?"

"The PIB did not come from nowhere," xxxxxxxxxxxx explained. Much consultation occurred before the GON presented the PIB to the National Assembly and all that was not going to be undone because of a Chinese official. "The Chinese caused the problem," he summarized, "and they ruffled a lot of feathers." Xxxxxxxxxxxx added that Gazprom of Russia had used a similar approach. "We are lucky we have a democratic government" he said, "Under the military, the Chinese and Russians would be here."

...and no forwarding address

¶5. (C) xxxxxxxxxxxx colleagues also told visiting Coordinator for International Energy Affairs (S/CIEA) David Goldwyn and his delegation on November 11 that he and his union colleagues did not want the Chinese in the Nigerian oil sector. Goldwyn was asking about the problems faced by xxxxxxxxxxxx said, "The Chinese are here and that is a huge problem!"

"xxxxxxxxxxxx have a list of the worst five countries to work for," xxxxxxxxxxxx said, "and they are on that list." xxxxxxxxxxxx explained that xxxxxxxxxxxx had experienced a problem with ExxonMobil when they "wrongfully fired a worker." xxxxxxxxxxxx applied pressure through the U.S. steel workers and the worker in question was given a choice of being re-hired or compensated and xxxxxxxxxxxx chose the latter. "If xxxxxxxxxxxx a problem with a Chinese company," xxxxxxxxxxxx complained, "who can xxxxxxxxxxxx to?"

(COMMENT: Nigerian xxxxxxxxxxxx have complained to Labor Officer that the Chinese do not have industrial relations representatives or any formal human resources process other than the immediate supervisor who does the hiring and firing. Dealing with non-English-speaking Chinese officials also hinders constructive interaction.

END COMMENT).

¶6. (C) xxxxxxxxxxxx later elaborated by alleging that Chinese labor practices were not good so no one wants to be part of it. "Look at the Chinese mining companies in Zambia," xxxxxxxxxxxx said, "the labor unions there had to chase them out." xxxxxxxxxxxx noted that corrupt people in China were put to death, but overseas they quickly adapt to the local environment, including adopting corrupt practices.

"The Chinese have no respect for local laws," xxxxxxxxxxxx said, "and they compromise a lot of things, including safety."

¶7. (C) Petroleum and Natural Gas Senior Staff Association of Q7. (C) Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) xxxxxxxxxxxx said the Chinese were the first to bribe local officials to win contracts and get around local laws.

By contrast, xxxxxxxxxxxx said xxxxxxxxxxxx played by the rules and was above-board. "xxxxxxxxxxxx proud of xxxxxxxxxxxx company in that respect," xxxxxxxxxxxx said. (See reftel for additional background on Goldwyn's meeting with the xxxxxxxxxxxx).

Comment

¶8. (C) The poor image of the Chinese helps to explain why they never seriously threatened renewal of the IOCs' oil mining licenses (OMLs), the first of which the GON signed with ExxonMobil on November 20. Most of the remainder will be signed in the coming weeks.

Minister of State for Petroleum Resources Odein Ajumogobia told the joint GON-ExxonMobil press conference on the same day that, "There was never any consideration of selling or trading one firm for (against?) another." But he also said that, "NNPC has a right to relinquish any part of its equity to any third party that expresses interest and it is in that regard that the discussions with the Chinese have been carrying on."

The GON owns 60 percent of all the joint ventures with the IOCs (55 percent in the case of Shell). So, the NNPC and the IOCs could still end up having minority Chinese partners -- whether they like it or not.

¶9. (U) Embassy coordinated this telegram with ConGen Lagos.

Sanders

Nigeria: Naijaleaks and the importance of Nigeria

Searching the leaks

With the headlines items gone and the choice bits taken, let us now pick up the remnants of the Nigerian WikiLeaks cables which are now termed NaijaLeaks and hear the background chatter behind the deafening noise.

With the WikiLeaks search tool which came to me through some indirect reference in my Twitter feed it was only right to search for what else contained Nigeria but was not of breaking news media pervasiveness but still a matter of conversation.

First of all you can find the WikiLeaks search facility at Leak Search and I thank @nubiancheetah for reTweeting @rafiq with the indirect link.

Nigeria is the most important in Africa

Looking at what Nigeria represents, US Assistant Secretary of State for African Affairs Johnnie Carson was in Nigeria with a message and on a fact-finding mission which included meeting with International Oil Companies (IOCs).

In attendance were the now legendary Ann Pickard of Shell, representatives from Chevron, Exxon Mobil, Schlumberger, Hercules, the American Business council and consulate staff, from what I can see of the names highlighted in the cable, there were at least two Nigerians in that meeting too.

He had this to say, Nigeria is the most important country in Africa for the United States due to: the size of its population; presence of hydro-carbons; peace keeping role in ECOWAS, its seat on the United Nations Security Council; along with the strength and size of its financial markets. Nigeria has enormous potential and is the seventh largest Muslim country in the world with an Islamic population that will eclipse Egypt by 2015. Having no United States presence in Northern Nigeria is akin to having no presence in Egypt and is why the United States is considering opening a Consulate in Kano.

Despite what we know of Nigeria, these seem to be rather profound statements about Nigeria which places it in prominence above both Egypt and South Africa in terms of importance to the United States in Africa.

The failings and the impasse in leadership notwithstanding, one can say those terms of reference have also been mentioned in order of importance, population, oil, regional clout, UN presence, markets and religion, especially the Islamic influence.

The failure of our democratic systems

What is alarming is the suggestion that only 10% of Nigerians saw a ballot ticket in 2007, that is damning as it is worrisome and I hope that the elections in 2011 do aim to have a healthy majority exercise their right to vote and have their votes counted declaring the wishes of the people.

The managers of the election should aim for 70% or better and not just a slight improvement on the performance of 2007, but with the theft of registration machines from the international airport last week, one worries about how much success can be expected.

The assertion that Lagos is better than Cape Town and the most important in the Nigerian federal system is interesting, it is the commercial capital of Nigeria with the administrative capital in Abuja and though it is less salubrious compared to Cape Town, it is where things are happening and changing.

Three state governors in the south had a favourable mention for their work, development and governance and they were those of Akwa Ibom - Godswill Akpabio, Rivers - Chibulke Amaechi and Edo - Adams Oshiomhole, it is interesting that despite the seeming infrastructural improvements in Lagos State the governor does not get a mention.

Charting the course to the right future

Fundamentally, the view of the IOCs is that the Petroleum Industry Bill (PIB) is more about taking control and extracting more value for Nigeria’s resources than providing solutions in terms of security, safety and development of the resources.

It appears the PIB is in three versions with no idea of what would eventually be adopted and more damning is the idea that Nigeria can manage its resources with spreadsheets and this apparently inadequate bill. – See cable for more views on the PIB.

Looking to the future the concern is the Nigeria has the possibility of developing into a Pakistan, the parallels are developing are of serious concern and though we are not a nuclear power, oil and religion are just as explosive and capable of creating an ungovernable entity.

To reach the standard of living of Indonesia by 2020, Nigeria needs to grow at 14% a year but that is predicated on credible democratic process, the development of independent and viable institutions that adhere to the rule of law and in my view an sustainable legislature which at the moment consumes 25% of the federal overhead. With Nigeria growing at only 5% and not taking account of the growth of Indonesia, there is much capacity and potential for improvement but the opportunities are yet to be tackled with the necessary fervour.

China for China makes US rethink Nigeria

As for other foreign influences in Nigeria, this is the view they have of China and the purveyors of Chinese investment in Africa better take note of the situation - The United States does not consider China a military, security or intelligence threat. China is a very aggressive and pernicious economic competitor with no morals. China is not in Africa for altruistic reasons. China is in Africa for China primarily. A secondary reason for China’s presence is to secure votes in the United Nations from African countries.

However, China’s influence is making the United States rethink its strategy in Africa and it is working all ends to ensure that it remains significant in the Nigeria polity by locating a presence in all parts of Nigeria, in the words of the Assistant Secretary - No presence means no access, which leads to no influence. Without influence you have nothing.

Whilst Secretary Carson did not get to sign off this cable, the conclusions are clear, Nigeria in Africa, its hydro-carbons, its potential and the religious element needs that the United States be fully engaged in Nigeria by all means possible and it comes above South Africa, Egypt, Indonesia and Pakistan in terms of if its important to the interests of the United States.

Source

Viewing cable 10LAGOS75, Assistant Secretary Carson meets oil companies in Lagos

The cable – with interesting portions highlighted.

Tuesday, 23 February 2010, 08:20

C O N F I D E N T I A L SECTION 01 OF 05 LAGOS 000075

SIPDIS

DEPARTMENT FOR AF/FO, AF/W, AF/RSA, AND INR/AA

AMEMBASSY YAOUNDE PASS TO AMEMBASSY MALABO

EO 12958 DECL: 2020/02/23

TAGS EPET, ENRG, ECON, PGOV, PREL, NI

SUBJECT: ASSISTANT SECRETARY CARSON MEETS OIL COMPANIES IN LAGOS

CLASSIFIED BY: Donna M. Blair, CG, State, ConGen Lagos; REASON: 1.4(B), (D)

SUMMARY

¶1. (C) Assistant Secretary (A/S) Carson met with members of the International Oil Companies (IOCs) on February 7. The A/S stressed the fact that Nigeria is the most important country in Africa for the United States. The IOC members noted that the A/S spoke mainly of issues in Northern Nigeria and did not dwell on Southern issues.

The Petroleum Industry Bill is discouraging future investment mostly in deep-water fields where most of the remaining oil in Nigeria lies. If Nigeria raised the price of gas to two-thirds of the world price, the IOC’s would be at each others throats trying to cut the price by a penny or two. Nigeria has the possibility of becoming the next Pakistan within 25 years. A/S Carson allayed the IOCs concerns of the United States’ relationship with China. END SUMMARY.

¶2. (C) Assistant Secretary Carson met with members of the international oil community in Lagos on February 7. In attendance were the following: Shell Senior Vice President’s Ann Pickard and Ian Craig; Shell Vice President Peter Robinson; Chevron Managing Director Andrew Fawthrop; Chevron Public Affairs Manager Femi Odumabo; Exxon Mobil Managing Director Mark Ward; Hercules Manager Coleman McDonough; Schlumberger Manager Supply Chain Service Demi Adenusi; American Business Council (ABC) President Dick Kramer; Special Assistant to the Assistant Secretary; Economic Officer; Maritime Affairs Officer; Marine AttachC) and, Consul General Lagos.

NIGERIA: MOST IMPORTANT COUNTRY IN AFRICA

¶3. (C) Fawthrop asked the A/S whether he was in Nigeria to deliver a message or was it more of a fact-finding trip? A/S Carson stated that he was in Nigeria for both reasons in that he wanted to listen and engage with Nigeria. Nigeria is the most important country in Africa for the United States due to: the size of its population; presence of hydro-carbons; peace keeping role in ECOWAS, especially in Sierra Leone and Liberia; its seat on the United Nations Security Council; along with the strength and size of its financial markets the A/S continued.

Nigeria has enormous potential and is the seventh largest Muslim country in the world with an Islamic population that will eclipse Egypt by 2015 according to A/S Carson. Having no United States presence in Northern Nigeria is akin to having no presence in Egypt and is why the United States is considering opening a Consulate in Kano.

¶4. (C) The United States is concerned about the power vacuum in Nigeria and the state of health of President Yar A’dua, per A/S Carson. The president is “very, very, very, very ill” and Nigerians are under illusions regarding the state of their president. “Nigeria cannot afford to implode or run aground.”

30 years of military government was not good. The United States expects a stable, legal, democratic, constitutionally-based government with no “military involvement, full stop” A/S Carson stated. It is important for the GON to do a better job this time around in regards to elections. Only ten percent of Nigerians saw a ballot ticket in the 2007 elections. If Nigeria brings credibility to its democratic processes, its economic processes will improve.

UNITED STATES PRESENCE IN SOUTHERN NIGERIA NEEDS ATTENTION

¶5. (C) Some places are more important than others within the Federal system of Nigeria and Lagos is one of the more important places, according to A/S Carson. Consulate General Lagos is bigger and more important than Embassies Benin and Togo together. Lagos is significantly more important than Cape Town even though the latter is 100 times better in terms of livability. The United States must be in Lagos in a significant way, A/S Carson declared.

¶6. (C) The statements of the A/S sounded wonderful from a Hausa viewpoint, but nothing was mentioned about Southern and Eastern Nigeria, Fawthrop pointed out. The A/S agreed that Fawthrop was correct. The United States is underrepresented diplomatically, economically, commercially, militarily and from a security standpoint.

When the A/S served in Nigeria from 1969-1971, the United States had the Embassy in Lagos with Consulates in Ibadan, Kaduna, and briefly in Port Harcourt, before the Civil war, and also a USIS post in Kano. With the Nigerian population at 50 million the United States was better and more broadly represented in a Nigeria that produced almost no oil.

With an Embassy in Abuja and a Consulate in Lagos, the United States has experienced a “huge loss” in Nigeria today, per A/S Carson. The United States must get back into Enugu and Port Harcourt. “No presence means no access, which leads to no influence. Without influence you have nothing.”

¶7. (C) Akwa Ibom governor Godswill Akpabio was singled out as an impressive governor by Mark Ward. Akpabio has built up infrastructure and industrial development. He is “one to watch” per Ward. Other Southern governors that were highlighted included were Rivers State governor Chibulke Amaechi and Edo State governor Oshiomhole. Fawthrop suggested that USAID has a lot to offer in the South in that if USAID makes a mistake it is OK.

If a private company engages in a similar project and makes a mistake you have a FCPA investigation. The Consul General (CG) added that it might be possible to team up with security assets of the IOCs to arrange diplomatic trips to the Niger Delta. This arrangement would not happen “100 percent of the time,” but more often than not, per the CG.

STATUS OF THE PETROLEUM INDUSTRY BILL

¶8. (C) The PIB is more about taking control and not a real solution, per Mark Ward. XXXXXXXXXXXX There are currently three versions between the Senate, House, and Interagency committee and it is unclear when and what will materialize, according to Ward. Fawthrop added that the PIB amounts to resource nationalization and stated that it costs more than 40 percent to develop the oil as opposed to leaving it in the ground. The current fiscals of the PIB estimate that is costs 25 percent to develop the oil, thereby creating a disincentive.

If the oil stays in the ground then billions of development money will go away and the resulting slowdown will be a massive problem. The IOCs received a lecture from a team made up of various GON agencies (the interagency team) in Abuja In a recent meeting in an example of the current level of communication per Fawthrop. The whole group then went to the office of the Vice President where the interagency team stated that there was very good communication between them and the IOCs.

¶9. (C) The large fields, elephants, have all been developed in Nigeria per Fawthrop. What remains are fields one-quarter to one-third the size. The same costs are involved in producing the oil but the revenue will be less because there is less oil.

The IOCs need more incentive, not less, in order to develop these fields profitably. What the PIB accomplishes is a disincentive. The downstream sector is very simple in Nigeria in that the refined gas is moved from one tanker to another, to a smaller tanker and then sold. The refining sector, exploration and production sectors are very complex. It is unrealistic for the PIB to try to change all of these areas in one tome of legislation, asserted Fawthrop.

¶10. (C) The gas side of the PIB tries to legislate the delivery of gas rather than incentivize it. “The donkey is tired and beaten. It will not go no matter what you tell it” stated Fawthrop. If the gas price went to two thirds of the world price the IOCs would “cut each others throat” to cut the price by one or two cents.

The rest of the IOC members nodded in agreement to this statement by Fawthrop. European gas competition has gas developed on a cost plus basis adding about eight percent to the cost. The model should be based on rate of return and not forced upon operators by legislative decree.

¶11. (C) Whenever gas doubles the cost of electricity goes up by one quarter. Stable electricity will allow industry to flourish in Nigeria but this will not happen 15 months before the elections. Amateur technocrats run the oil and gas sector according to Shell’s Peter Robinson.

They believe that they can control the industry via spreadsheets and pushing through the PIB. There are many emotional issues in the PIB with Nigerian politicians believing that they make no money on deep-water projects. Potential banker and businessmen partners do not understand the industry. The GON has made USD 2.5 billion with no investment in the past two years according to Robinson.

¶12. (C) A large problem will be the ten percent of equity that is to go to the communities argued Fawthrop. Equity going into the communities will make them explode. The recipients of the monies will be highly disappointed when they see the amount they will receive, a much larger sum will be expected. Kramer referred to the community equity as the “lawyer relief act” and wondered how one defines an actual community.

¶13. (C) Peter Robinson stated after the meeting that Pedro Van Meurs, the oil consultant hired by the GON to help negotiate with the IOCs, is considering leaving. Van Meurs has been trying to show the GON officials that their fiscal math does not work with the PIB.

Van Meurs does not agree with the IOC position completely but sees areas for improvement. One example given to Lagos Econoff by Exxon Mobil Project Manager Anh Tran concerned the levels of cost involved with deep-water projects. Exxon, and other IOCs, maintain that their capital costs are at least 40 percent of deep-water projects while the GON allows for 25 percent capital costs under the PIB. Van Meurs agreed that 25 percent was not adequate.

WHERE DOES NIGERIA GO FROM HERE?

¶14. (C) It is possible that Nigeria could be a future Pakistan according to A/S Carson. In 25 years, there could be impoverished masses, a wealthy elite and radicalism in the North. The question is whether the oil wells will be dry as well and could Nigeria be on “sustainable and irreversible glide path to a new economic base” per the A/S.

When you look at the 2020/20 plan by the GON you see that Nigeria needs to grow by 14 percent a year to be at the current level of Indonesia Fawthrop asserted. That is using today’s figures, which does not take into account Indonesia’s growth Kramer added. Nigeria is growing at five percent now and would need 20 percent growth per annum in energy and USD 22 billion investment in power plants Fawthrop stated.

What would happen if Nigeria fell just short of their goals, would there be an alternative plan in place Fawthrop wondered? He cited the example of the 2009 6,000 Megawatt goal. It was apparent early on that the goal was not feasible and an alternative plan could have been devised. The GON insisted that they would reach their goal and did not develop alternatives. The same would hold true for 2020/20 Fawthrop assumed.

¶15. (C) The A/S offered that a forum could be organized in Nigeria with World Bank President Robert Zoellick speaking to a wide audience. Under Secretary for Economic, Energy, and Agricultural Affairs Bob Hormats would be invited as well to lend his knowledge of Africa. The forum would be shaped with the broader picture in mind, not just oil. This would not be sponsored by the IOCs. Members of the business community and individuals that were committed to making oil meaningful to Nigeria’s future would be asked to participate.

Talk would center on “over the horizon” issues, where Nigeria has gone right and where it has gone wrong. Two or three fora would be defined with key people to spark debate. Religious tensions, North-South issues, the lack of capacity in the GON, narco-trafficking, the growing irrelevance of Nigeria, as Princeton Lyman has suggested, could be potential subjects. Nigeria is at a critical financial and political threshold and the entire nation could possibly tip backwards permanently, per A/S Carson.

CHINESE - AMERICAN RELATIONS IN AFRICA

¶16. (C) What is the status of America’s influence in Africa and how does it compare to China, Fawthrop queried? The influence of the United States has increased in Africa, the A/S countered. The United States’ reputation is stable and its popularity is the highest in Africa compared to anywhere else in the world. Obama has helped to increase that influence. “We must manage the expectations of the Obama administration” offered the A/S.

The United States does not consider China a military, security or intelligence threat. China is a very aggressive and pernicious economic competitor with no morals. China is not in Africa for altruistic reasons. China is in Africa for China primarily. A secondary reason for China’s presence is to secure votes in the United Nations from African countries. A third reason is to prove that Taiwan is not an issue.

There are trip wires for the United States when it comes to China. Is China developing a blue water navy? Have they signed military base agreements? Are they training armies? Have they developed intelligence operations? Once these areas start developing then the United States will start worrying. The United States will continue to push democracy and capitalism while Chinese authoritarian capitalism is politically challenging. The Chinese are dealing with the Mugabe’s and Bashir’s of the world, which is a contrarian political model, A/S Carson stated.

COMMENT

¶17. (C) A/S Carson effectively provided the IOCs with a rationale for the United States’ interest in Nigeria and its commitment to the country. This commitment seems more substantial than the IOCs given the prospect of the PIB and the current state of play in Nigeria.

Providing the IOCs with statements of support through continuing if not increasing the USG presence in Nigeria will be important in determining the increasing, decreasing or non-existent role of the IOCs in the future in Nigeria. As the A/S stated, if we can have a substantial presence in Pakistan, why not Nigeria?

END COMMENT.

¶18. (U) A/S Carson did not have an opportunity to clear this cable before departing post. BLAIR

Nigeria: NaijaLeaks and Shell deep within our shell

Deep inside our shell

The third NaijaLeaks cable [1] 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 [2] 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.

Sources

[1] Viewing cable 09ABUJA1907, C) SHELL MD DISCUSSES THE STATUS OF THE PROPOSED PETROLEUM

[2] Shell in Australia Directors – Australia

Newswatch Magazine - The Draft Petroleum Industry Bill 2009

What’s the Fuss about the Nigerian Petroleum Industry Bill?

The Nigerian Petroleum Industry Bill - Part 2

The cable

Tuesday, 20 October 2009, 06:17

C O N F I D E N T I A L SECTION 01 OF 04 ABUJA 001907

NOFORN

SIPDIS

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

INDUSTRY BILL

Classified By: Deputy Chief of Mission Dundas McCullough for reasons 1.4. (b & d).

Ref: Abuja 1836

SUMMARY

¶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.

POTENTIAL BENEFITS

¶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.

Looking Ahead

¶14. (C) XXXXXXXXXXXX

COMMENT

¶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.

SANDERS