Does Kachikwu have a plan for Niger Delta?
The evolving peaceful stance of both government and some militant agitators that torment the petroleum industry amplifies the need for a new rule of engagement in restoring lasting peace to the region and building a new bridge of trust that would reposition the Niger Delta, and indeed Nigeria, as the prime destination for petroleum business investment.
The shift in position comes after attempts by the government failed to stifle the militants with massive military campaigns that showed early signs of high handedness. However, that angered community leaders and earned the militants greater local support and more volunteers. With reports of human right abuses coming with troop movement, continued attacks on petroleum industry installations began to gain justification.
Besides, the deployment of government troops in the region did not offer any relief to the industry but rather worsened the fate of operators as proportionate defiance from the underground groups rose against military deployment, leading to intensified sabotage on key industry facilities.
Thus, despite the enhanced military presence in the area attacks on pipelines and key production facilities worsened, leading to acute fall in oil and gas output and associated revenue to the government.
Chevron reported multiple attacks on its platform while Shell and Agip lost key pipelines including the strategic 48 inch Forcados export pipeline. Following the pipeline outages, many producing fields operated by different companies have been shut in while gross national oil and gas production has reportedly gone down by some 800,000 barrels per day from available capacity of 2.4 million barrels per day (2.4 mbd) to about 1.6 mbd.
The move to reach peace with the militants also scores some political points for the ruling party which has been branded in some quarters as divisive, sectional and repressive to dissenting political cleavages. These political sentiments have stoked strong demand for greater petroleum industry dividends which is expressed in forms of peaceful and militant agitations.
Whereas the past administrations of the federal government had provided packages of incentives to persuade the militants allow peaceful petroleum industry operations, the new government is yet to unfold any new plans for the youths who were obviously laid off from security companies whose contracts were terminated by the new government.
Thus, resurgence of militancy at the onset of petroleum industry reforms by the new government is not totally unexpected following myriad of issues, fears and suspicions that trail shake ups in ministries, departments and parastatals that oversee activities in the petroleum industry.
Investors in the industry are distraught. Most of them have called for resolution of the security situation in the Niger Delta as basis for resumption of operations and further investments in facility repairs and environmental remediation, pointing at the futility of mopping the floor while the tap is still running.
But evolving an enduring solution to Niger Delta crisis is as complicated as the problem itself. From initial demands for environmental responsibility by operating companies in the country, consistent mishandling of the crisis has led to expanded list of demands to include accelerated development of the region, right to industry jobs and contracts, resource control and political self determination.
Executive Director of Hobark International Limited, Dr Emmanuel Okoroafor, stated in an article that: “One would not fail to notice that the demands of the people have since evolved. In the days of Ken Saro Wiwa, it was all about the environmental damages and its impact on the lives of the people in the region. The militant groups that followed led by Dokubo Asari, Ateke Tom, Henry Okah and others like Tompolo were all sorted with security contracts covering maritime and pipelines.
“The current group of militants plus those behind them are more interested in more financial stakes in the oil assets in their lands: local control of oil revenues. Without doubt, the people in the region will like such development.
“Thus, resolving the conflict which has built huge risk premium on the Nigerian petroleum industry environment, forced multinational players to divest vulnerable assets and imposed huge commercial losses on operations requires more sophisticated approach and engagement strategies that amplify inclusive orientation.
“Clearly, the old methods of resolving issues in the region, like awarding juicy security contracts to the militants will no longer work, not even with full military intervention involving warships, gunboats, fighter jets and boots on the ground.”
Erstwhile Chairman of the Nigerian Council of the Society of Petroleum Engineers (SPE), Mr. Emeka Ene, advocates evolution of the industry’s downstream clusters in the Niger Delta to achieve the multiple objectives of rapid infrastructural development, ancillary businesses that provide economic benefits to the host communities, creation of job opportunities as well as sundry benefits of localization of petroleum industry activities.
Traditionally, resolution of militant hostilities to the oil and gas industry operations in the Niger Delta is the toughest performance appraisal challenge that faces every in-coming Minister of Petroleum Resources; and it remains the biggest impediment to the reform process of the current minister, Dr Ibe Kachikwu, who is currently seen as stretching between the tough stance of the government on corruption and inevitable base-touching engagement with the angry agitators widely seen as enemies of government.
Managing this complicated situation tends to pitch the minister in conflict with other minsters that advance sledge hammer strategies in dealing with Niger Delta agitation.
However, the minister has articulated most of the industry proposals into policy programmes that will translate to comprehensive application of investible funds and operational budgets in sustainable and structured development of Niger Delta.
Part of the plans is the programme for rehabilitation of the nation’s existing refineries two of which are located in the Niger Delta. This is expected to reactivate local community participation in the operations of the refineries through the full supply chain effect. From supplies to support services and ancillary businesses, the reactivation of the refineries promises huge business and job opportunities for the local environment.
Next in plan is the rolling programme for clustered refinery investments that would continuously expand crude oil and petrochemical processing and manufacturing capacity, a measure that is envisaged to create industrial corridors along the refinery clusters.
According to the Managing Director of Port Harcourt Refining Company (PHRC) Limited, Dr Bafred Enjugu, the government’s plan to create crude oil refining and processing clusters in the Niger Delta would not only derive optimum resource values from petroleum but also create massive downstream business opportunities that would ultimately add fillip to realization of the aspiration for rapid industrial development of the region in particular and the nation in general.
Also commenting on the need to stabilise the host industry environment to attract international investment funds, Managing Director of Frazoil Limited, and Chairman of the Oilserv Group, Mr. Emeka Okwuosa, said the new government is currently taking the right steps to draw international investment funds into the Niger Delta environment.
“I believe really strongly that, like the Honorable Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has stated severally, they are working on it. They are looking at alternative means of funding. They are also looking at being able to draw some funds from Middle East, China and from other sources.”
Given the disposition of the minister towards accelerated development of the Niger Delta, a key demand of the stakeholders in the region, good conscience dictates that the militants embrace the federal government’s olive branch by sheathing their sword and allowing for peaceful negotiations. As things stand, to continue to pursue a hard line posture, with the single objective of financially castrating the federal government, is like shooting oneself in the hip. In the end, everybody suffers. Besides, the Niger Delta militants could end up playing into the hands of detractors of Kachikwu whose sin appears to be that he is treating the militants with kid gloves.
Author: Fred Ojiegbe, an energy analyst and a member of the Federal Insignia.