UNIVERSITY OF PENNSYLVANIA - AFRICAN STUDIES CENTER
Nigeria: Oil, Poverty, and Rights, 2 Date distributed (ymd): 020709 Document reposted by Africa Action
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Region: West Africa Issue Areas: +political/rights+
This posting contains several articles from the UN's Integrated Regional Information Network (IRIN), with background on oil production in Nigeria and recent disputes over the distribution of revenues between states and the federal government. Another posting sent out today reports on the May 2002 ruling of the official African Commission on Human and People's Rights in favor of compensation from the Nigerian government to the Ogoni people in the Niger Delta for abuses against economic and social rights.
NIGERIA: IRIN Focus on shift towards offshore oil production
UN Office for the Coordination of Humanitarian Affairs (OCHA) Integrated Regional Information Network (IRIN)
IRIN-WA Tel: +225 22-40-4440 Fax: +225 22-41-9339 Email: IRIN-WA@irin.ci This Item is Delivered to the "Africa-English" Service of the UN's IRIN humanitarian information unit, but may not necessarily reflect the views of the United Nations. For further information, contact e-mail: Irin@ocha.unon.org or Web: http://www.irinnews.org . If you re-print, copy, archive or re-post this item, please retain this credit and disclaimer.
LAGOS, 4 Jul 2002 (IRIN) - Most of the oil that has earned Nigeria close to US $340 billion since production began over four decades ago has come from onshore sites. From the initial exploration efforts by Royal/Dutch Shell in 1937 up until 1993, all oil activity in the country was restricted to land and shallow waters close to communities in the Niger Delta in the south.
As resentment built up among impoverished locals who felt neglected by the government and oil companies despite the huge wealth pumped from their backyards, oil facilities became easy targets for their anger. From the early 1990s, the south was hit by a spate of seizures of oil installations, abductions and other violent acts by militant youths demanding more access to the oil wealth for their people.
By the late 1990s, such violence had disrupted production to such an extent that it sometimes reduced Nigeria's daily crude oil output of about two million barrels by up to a third. For a government that depends on crude oil exports for more than 95 percent of its export income, it was a hard blow. For the oil multinationals, it meant increasing risk. Although onshore production costs in Nigeria are reputed to be the lowest in the world at under two dollars a barrel, this particular attraction was steadily diminished by the increasing risk of operating in the Niger Delta.
One major consequence of these developments has been a shift to offshore oil production. The shift was initially slow, but it recently became faster.
New oilfield spurs offshore drive
"A major spur for offshore oil exploration in Nigeria was the huge discovery made by Shell in its deep offshore Bonga Field," an oil industry expert, Emmanuel Effiong-Duke, told IRIN. "There were also important discoveries by TotalFinaElf and Chevron-Texaco."
Effiong-Duke said Shell's Bonga Field alone was estimated to have total oil reserves of up to two billion barrels and the belief in the oil industry was that there were other, equally prodigious, fields in Nigeria's deep offshore waters. Exxon-Mobil, Effion-Duke said, always had the bulk all of its operations offshore, "and the fact that it was the least affected by communal disturbances in the oil region was a salutary lesson for all".
When President Olusegun Obasanjo announced a fresh round of oil exploration licences early in 2000, barely one year after his election, 11 of the 22 oil blocks on offer were in deep offshore waters, seven were in shallow waters and only four were onshore. While oil multinationals scrambled for the deep offshore licences, there were no bids for the shallow-water and onshore concessions located near the Niger Delta's restive communities.
Although the cost of offshore production, at over US $4 a barrel, is double that of producing onshore, the oil multinationals appear undeterred. With the help of latest oil exploration and production technology, they appear to get more value in the deep waters than in or near the Delta.
Closely tied to the 2000 oil-licensing round is an aggressive programme by the government to increase Nigeria's oil reserves from 20 billion to 30 billion barrels by 2003, and to 50 billion barrels by 2010. Nigeria also hopes to raise its production capacity, now two million barrels per day (bd), to three million bd by 2003 and five million bd by 2010.
Confirmed offshore oil deposits has increased from about 30 percent of the country's total reserves in 1997 to about 50 percent today. As Nigeria moves closer to the reserves and production targets set by Obasanjo, this percentage is likely to increase to more than 70.
More for the federal government, less for the states
These developments are bound to benefit Nigeria's federal government. In April, the Supreme Court ruled (in a suit brought by the Obasanjo administration against states in the oil region) that the federal government had exclusive control over all revenue from offshore oil and gas operations. This was in the face of agitation by states in the oil region for more control of revenue from resources derived in their area.
Activists in the Niger Delta are alarmed by the current trend. Their fear is that after decades of environmental degradation and impoverishment due to oil activities, the federal government and oil multinationals are now preparing not only to deny their states potential revenue, but also to abandon them to their fate.
In a joint statement last week, two leading activist groups in the volatile Niger Delta, the Ijaw National Congress (INC) and the Movement for the Survival of Ogoni People (MOSOP), accused Obasanjo's government of aggressively developing offshore oilfields in order to abdicate its responsibilities to the poverty-stricken region.
"The INC and MOSOP naturally view the proposed response to rely on offshore oil as ill-conceived, unjust and at odds with the interest of the Nigerian nation," INC and MOSOP said a joint statement.
"Apart from being an ignoble retreat from its responsibilities to the people of the Niger Delta, we also see this as a proposal for the economic strangulation of the Niger Delta until we are ready to submit to the government and oil companies on their own terms," they added.
The two groups claimed that a presidential committee on security in the oil region, comprising top military and security chiefs and representatives of oil companies, had advised the government to concentrate on offshore oil production as an effective way of containing the disruptive effects of unrest in the region. They argued that lasting solutions were likely to be found only by addressing the "development and environmental problems" of the Niger Delta.
Many analysts agree that the shift to offshore production will be effective in curtailing the disruption of oil production by militants that had become a regular occurrence in the last decade. But most believe it will deepen the anger of the people in the region and leave its longstanding political problems festering.
"In the short run it will strengthen the hand of the federal government and give it access to more oil revenue," analyst Tunde Balogun told IRIN. "But then, there is the danger that even state governments in the region will join activist groups in pulling Nigeria at the seams, further undermining the multiethnic country's fragile unity."
NIGERIA: Focus on the scourge of poverty
[excerpts only, for full text of article visit http://www.irinnews.org/report.asp?ReportID=28258]
LAGOS, 11 Jun 2002 (IRIN) - Nigeria is potentially Africa's richest country. As the world's sixth largest producer of crude oil, with huge reserves of mineral and agricultural riches and manpower, it should be enjoying some of the highest global living standards.
But available indicators point, ironically, to some of the lowest living standards in Africa, for a large majority of Nigeria's 120 million people. And the latest signs are that the situation may be getting worse.
Surveys conducted by Nigeria's Federal Office of Statistics show that in a 16 year period that began in 1980 (the year the oil boom years of the 1970s began to go burst), the percentage of Nigerians living in poverty rose from 28 percent to 66 percent. Numerically, while 17.7 million people lived in poverty in 1980, the population living on less than US $1.40 a day, rose to 67.1 million by 1996. ...
Equally telling was the geographical distribution of poverty within the country. While the percentage of the poor ranged between 55-60 percent in the south, in the north they ranged between 70-78 percent of the population. ...
Nigeria's pervasive poverty occurred in spite of the fact that between 1970 and 1999, the country earned an estimated US $320 billion from the export of crude oil.
"Despite its oil wealth, Nigeria has performed worse, in terms of basic social indicators, than sub-Saharan Africa as a whole and much worse than other regions of the developing world, such as Asia and Latin America," says a Situation Assessment Analysis published in 2001 by Nigeria's National Planning Commission and the United Nations Children's Fund (UNICEF).
"At the heart of the problem," the assessment adds, "has been a crisis of governance and public management, which has its roots in the competition among rival elites and their ethno-regional constituencies for control of the huge rents that accrue to the state from the operations of the petroleum industry."
With a population comprising more than 250 ethnic groups, of mainly Christian and Islamic persuasions, Nigeria was beset with ethno-religious rivalry right from the early days of independence from Britain in 1960. This degenerated into three years of civil war when the southeast attempted to secede as Biafra. The end of the civil war in 1970 coincided with the oil boom years and the country's emergence as a major oil exporter.
But in the following years dominated by military and civilian rulers from the mainly Muslim north, the oil wealth was largely mismanaged. Most of it was dispensed as political patronage through fraudulent contracts awarded by those in government to cronies. ...
Faced with severe balance of payments problems in the mid 1980s, the then military ruler, General Ibrahim Babangida, adopted International Monetary Fund- and World Bank- advised structural adjustment programs (SAP). The key objective of SAP was to ensure Nigeria serviced its external debt of US $28 billion and maintained macro-economic stability, while cutting back on social spending. ...
Starved of funds, social service institutions began to decay and service delivery in schools and hospitals sharply declined. (The World Bank estimates that public spending per capita on health is less than $5 and as low as $2 in some parts of Nigeria, contrary to $34 recommended for low-income countries by the World Health Organization.) Infrastructure and utilities, under the weight of mismanagement for years, also began to collapse. ...
"The vicious circle set in motion by widespread poverty accounts for the bourgeoning rate of crime in Nigeria," said Alao. "Crime was not only domiciled in the country, it was also exported as thousands of desperate young Nigerians moved abroad, becoming involved in various criminals rings engaged in fraud, drug and human trafficking."
Among the economic migrants, he said, are also thousands of professionals who left Nigeria to work in different parts of the world. "Many of them were trained at government expense, but they have been lost to other countries where some have distinguished themselves in their professions," Alao added.
On his election to end more than 15 years of military rule in 1999, President Olusegun Obasanjo acknowledged that fighting poverty was one of the most daunting tasks facing his government. Nevertheless, he set a goal to reduce the population of Nigerians in poverty by half by 2015.
Achieving such a target would require an economic growth rate of 7-8 percent a year for 15 years. In his first three years in office, he has recorded an average growth rate of 2.8 percent yearly. Perhaps, realising that no dent has been made on poverty, Obasanjo's government has developed an Interim Poverty Reduction Strategy.
Under this plan, he is seeking the assistance of donors to work on four key areas, identified as youth empowerment, development of rural infrastructure, social welfare services, as well as natural resource development and conservation. Overseen by the National Poverty Eradication Programme, chaired by the president himself, it has set a target of ending absolute poverty in 10 years.
NIGERIA: Focus on dispute over offshore oil resources
LAGOS, 9 May 2002 (IRIN) - When Nigeria's Supreme Court ruled last month that all of the country's offshore oil and gas resources belonged to the federal government, it was an apparent triumph for President Olusegun Obasanjo. Not quite, analysts warn.
"While Obasanjo has won a significant legal battle at the Supreme Court, an enormous political battle lies ahead of him," Ike Onyekwere, a political analyst, told IRIN. "And how he goes about it bodes a lot for Nigeria's political stability."
While Nigeria's 1999 Constitution provides that 13 percent of the country's oil revenue be allocated to oil-bearing states, Obasanjo on taking office limited the allocation to oil revenue from onshore oil resources. This provoked strident protest from the littoral oil-producing states.
As the controversy deepened, the federal government in 2001 filed a suit against the country's 36 states, seeking the interpretation of the highest court as to what constituted the seaward boundaries of the states. On 5 April 2002, the Supreme Court ruled that the seaward boundary of the country's eight littoral states terminated at their low-water mark, effectively giving the federal government control over the offshore oil and gas resources.
While the ruling represented a key legal victory for Obasanjo, it opened a political can of worms for him in the restive southern oil region called the Niger Delta. During four decades of oil activities, the region, populated by mainly ethnic minorities, suffered severe neglect and environmental degradation, area residents claim.
Over time the popular thinking that evolved in the oil region was that successive governments dominated by the majority ethnic groups, particularly Hausa-speaking Muslims from the north and Yorubas from Obasanjo's southwest home region, were only interested in evacuating the oil wealth to develop their areas. The indignation borne of this perception fuelled the unrest that has manifested in violent protests and disruption of oil activities through sabotage and hostage-taking, in the Niger Delta over the past decade .
For the oil region states the Supreme Court ruling implied a sharp drop in revenue. Worst hit among them was Akwa Ibom State, whose share of oil revenues derived from only offshore production. Not only would it lose the revenue, it would now be obliged to return to the treasury huge sums already allocated to it.
Nigerian law professor, Itse Sagay, believes the ruling "is bound to exacerbate the conflict" between the federal government and the oil states. "Apart from the fact that the judgment is a clear negation of the rules of international law, under which the continental shelf is an inalienable and inherent part of the coastal state, the domestic Nigerian laws applied are those constituting a blatant expropriation of the natural resources of the southern minorities," he wrote in the independent 'Thisday' daily.
Signs have already emerged of deteriorating personal relations on account of the ruling between Obasanjo and Akwa Ibom State Governor Victor Attah, in spite of both men being members of the same ruling People's Democratic Party.
On 2 May, Attah convened a meeting of what he called "the general assembly of Akwa Ibom people" where he accused Obasanjo of personally introducing the onshore/offshore distinction and of dispensing the 13 percent of oil revenue set aside for the oil-producing states.
He referred to Nigeria's constitution at independence in 1960 which specified that the continental shelf belonged to the littoral regions, and pointed out that it was the 1979 constitution overseen by Obasanjo as military ruler that deliberately omitted the provision and upheld the distinction. After the onshore/offshore dichotomy was abolished in 1992 by then military ruler, General Ibrahim Babangida, Attah said, it was Obasanjo who restored it once more after he took office in 1999 and went to the Supreme Court in the face of protests.
Attah's speech was followed the same day by widespread demonstrations in the state capital, Uyo, during which angry youths denounced both Obasanjo and the Supreme Court and threatened to resist what they regarded as expropriation of their resources.
Indeed, since the ruling, incidents of violent protests and disruption of oil activities by militant youths, which had declined over the past year, appeared to be on the rise again. Late last month militant youths boarded a rig working offshore for oil giant ChevronTexaco and held hostage nearly 90 foreign and Nigerian workers to back their demands for jobs and amenities. The youths released them three days later.
ChevronTexaco has also been forced over the past month to shut down several oil wells in Imo and Delta states, where a number of communities have laid stringent conditions (including provision of jobs and amenities), before they would allow the company to operate in their area.
Youths of the Ijaw ethnic group, the most populous nationality in the Niger Delta, on 3 May held a peaceful demonstration at the premises of Italian Agip oil company against what they considered the unfavourable employment policies of the company. They were undeterred by the presence of armed policemen who fired shots in the air as they approached.
"They saw that we would not be moved, stopped shooting at us and invited the managers to speak with us," Kingsley Kuku, a spokesman for the Ijaw Youths Council, which organised the protest, told journalists. He said similar meetings had been held with officials of Royal/Dutch Shell and German construction company, Julius Berger, the previous week.
Popular opinion in the oil region goes back to the early years of independence, when groundnuts produced in the north, cocoa produced in the southwest and palm oil from the southeast, were the main foreign exchange earners for the country. Produced respectively in the lands of the Hausa, the Yoruba and Igbo, the three biggest ethnic groups in the country, their regions had absolute control over these resources. Regional control over resources was reduced after the military took over government in 1966, first to 50 percent in 1970, and a few years later further down to 45 percent. In 1977, Obasanjo as military ruler further cut back regional control of resources to 25 percent. Under subsequent military governments it dropped eventually to one percent. With the agitation of minorities from the oil region, it had since risen to three percent, and then 13 percent approved by the 1999 constitution.
According to governor Attah: "There must be those who are upset by our current efforts to improve our fortunes and change our roles. There are those who want us to remain perpetually as house boys and maids. There are those who cannot accept the fact that now we are making bricks to build our own mansions, so they must take away the straw. We say, give us back our straw."
Message-Id: <200207091117.HAA18795@server.africapolicy.org> From: "Africa Action" <firstname.lastname@example.org> Date: Tue, 9 Jul 2002 08:01:29 -0500 Subject: Nigeria: Oil, Poverty, and Rights, 2
Editor: Ali B. Ali-Dinar
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