[Peace-discuss] Fwd: Nigeria: Oil, Poverty, and Rights, 2

[Alfred Kagan]

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>Date: Tue, 9 Jul 2002 08:01:29 -0500
>Subject: Nigeria: Oil, Poverty, and Rights, 2
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>Nigeria: Oil, Poverty, and Rights, 2
>Date distributed (ymd): 020709
>Document reposted by Africa Action
>
>Africa Policy Electronic Distribution List: an information  service
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>+++++++++++++++++++++Document Profile+++++++++++++++++++++
>
>Region: West Africa
>Issue Areas: +political/rights+ +economy/development+
>  +security/peace+
>
>SUMMARY CONTENTS:
>       
>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.
>
>+++++++++++++++++end profile++++++++++++++++++++++++++++++
>
>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 at 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 at 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."
>
>************************************************************ 
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-- 


Al Kagan
African Studies Bibliographer and Professor of Library Administration
Africana Unit, Room 328
University of Illinois Library
1408 W. Gregory Drive
Urbana, IL 61801, USA

tel. 217-333-6519
fax. 217-333-2214
e-mail. akagan at uiuc.edu