Page 5 - AfrOil Week 33 2019

AfrOil COMMENTARY AfrOil
As a result, OML 11 will remain in limbo for  the time being – just as it has been since 1993, when SPDC suspended upstream production and focused on keeping its midstream infra- structure running. It took this step a er Nigeria’s government sent troops to the area to suppress protests led by the Movement for the Survival of the Ogoni People (MOSOP), a group headed by
environmental activist Ken Saro-Wiwa.
Even a er the court reaches a verdict, though, the block is likely to remain a thorn in the gov- ernment’s side – no matter which side wins the case.
Stumbling block
In the event that SPDC prevails, it is certain to run into di culties.
For one thing, it is likely to find itself at odds with Nigerian National Petroleum Corp. (NNPC), its ostensible partner in OML 11. As a state-owned company, NNPC represents the federal government’s interests. It also holds a majority 55% stake in the block, even though it has not served as operator until very recently.
For another, it will continue to face a public relations problem. Many residents of the lands that lie within the boundaries of the block have a low opinion of Shell and its partners. ey have blamed SPDC for the oil spills and environmen- tal destruction that have followed exploration and development work at OML 11, and they have campaigned vigorously for a larger share of the oil and gas revenues that the group pays to the Nigerian government.
Moreover, these grievances have made many people sympathetic to protest groups such as MOSOP, separatist factions such as the Move- ment for the Emancipation of the Niger Delta (MEND) and armed militias, all of which have vented their ire on foreign oil companies. It was these sympathies that sparked the protests that ledSPDCtoshutdownproductionin1993.
In short, the Nigerian government’s concerns
about the security risks it faces in the Niger River Delta are not misplaced. Federal authorities have good reasons to avoid tread lightly there – and to fear that SPDC’s return might generate more unrest.
Knock-on effects
On the other hand, if federal authorities convince the court to dismiss the suit or to rule in their favour, OML 11 will still be a source of trouble.
Even if NNPC assumes full control of OML 11, local residents are likely to remain con- cerned about the environmental risks of oil and gas operations – and willing to protest against new development. Likewise, local activists will be probably be willing to sabotage NNPC facil- ities in the same way they did when SPDC was in charge.
is outcome might also poison relations with Shell, which has been one of the biggest investors in Nigeria’s oil and gas sector. e mul- ti-national company has been active in the West African country since 1937 and has built many of the crucial pipelines and terminals needed to move Nigerian production to market. It has also pledged to build more infrastructure facilities in order to support new upstream development work.
Indeed, the court case may a ect the fate of a major new upstream project. According to Nigeria’s New Telegraph, Shell may reconsider its plan to spend $10bn at Bonga South West, an o shore oil eld. A source inside the company told the newspaper that the federal govern- ment’s stance was worrisome for investors.
“The government is leaving behind a bad precedent to investors with its action on OML 11 ... What an action like this does is to discourage investors, and as we speak, the nal investment decision [FID] on Bonga South West is under freshthreat,”saidthesource,whospokeoncon- dition of anonymity.™
“ after the
PIPELINES & TRANSPORT
Kenya seeks funds
to make LAPSSET progress
Even
court reaches
a verdict, OML 11 is likely to remain a thorn in the Nigerian government’s side
KENYA is seeking investors for its Lamu Port, South Sudan, Ethiopia Transport (LAPSSET) corridor project as it seeks to make up a shortfall in funding of around KES2.5tn ($24bn).
e broad infrastructure project comprises a re ned fuel pipeline, a crude oil pipeline, a sea port, roads, airports, a railway and resort cities, but progress has been slowed by civil issues and a lack of buy-in from the governments involved.
Execution has been somewhat inevitably slow, not least because of civil war in South Sudan, but the Kenyan elements are the most advanced. A road between Isiolo and Moyale
on the Ethiopian border was completed in July 2017 and the LAPSSET Corridor Development Authority (LCDA) announced the completion of the rst of the port’s 22 planned berths earlier this month.
Under the LAPSSET masterplan, the fuel pipeline would eventually extend from Moyale to Hawassa and then to Addis Ababa. Ethiopia’s rapprochement with Eritrea has been seen as weakening its commitment to the project.
Lacking funding, the Kenyan government has turned to the African Union (AU) and other regional investment groups.
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Week 33 20•August•2019 w w w . N E W S B A S E . c o m
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