Nigeria’s President and Petroleum Minister Muhammadu Buhari has ordered the state oil company Nigerian National Petroleum Corporation (NNPC) to take over operatorship of the entire Oil Mining Lease (OML) 11 from Shell Petroleum Development Company (SPDC) not later than April 30, 2019 “and ensure smooth re-entry given the delicate situation in Ogoniland.”
OML 11, one of the most prolific blocks in Nigeria, is located in southeastern Niger Delta and contains 33 oil and gas fields of which eight are producing as per 2017.
SPDC started operations in Ogoni land in Rivers State in 1958, drilling a total of 96 wells to bring nine oil fields onstream. By the end of 1992, Ogoni production was some 28,000 barrels of oil a day, about 3 percent of SPDC’s total production. In the same year, the Movement for Survival of Ogoni People (MOSOP) demanded $6 billion in royalties from past oil production and $4 billion for alleged environmental damage, giving SPDC 30 days to accept or leave Ogoni land.
Hence, the company stopped production in the area, withdrawing in 1993 as violence festered. In 1994, four prominent Ogoni leaders were murdered. Ken Saro-Wiwa, who was President of MOSOP and eight others were accused of complicity in the murders and were tried by military tribunal in 1995. They were found guilty and executed. There were also cases of oil pollution which were not immediately addressed. From 1976 to 1991, there were reportedly 2,976 oil spills of about 2.1 million barrels of oil in Ogoniland.
In 2006, the Nigerian government commissioned the United Nations Environment Programme (UNEP) to carry out an environmental assessment of Ogoniland. The assessment happened over five years and ended with a report highlighting significant environmental impacts from oil pollution in parts of Ogoniland. In 2016, the Nigerian government flagged off the cleanup of the polluted area with much fanfare. However, almost three years later, cleanup is yet to begin.
The people of Ogoni had insisted that cleanup must be done before crude oil production commences in the area. In a statement, the current president of MOSOP Fegalo Nsuke noted that the resumption of oil exploration in Ogoniland in the face of current pollution was unacceptable.
Although Shell has been the operator of OML 11 through the SPDC Joint Venture (JV), the state oil company NNPC has 55 percent working interest in the block, while Shell has 30 percent, Total owns 10 percent and Eni, 5 percent.
The government’s order that NNPC takes over operatorship of OML 11 comes as the Nigerian Senate debate the country’s 2019 N8.83 trillion predicated on an oil benchmark price of $60 per barrel and daily production of 2.3 million barrels.
According to Shell’s official website, SPDC had in 2012 transferred operatorship of the JV’s assets in Ogoniland to the Nigerian Petroleum Development Company (NPDC), the production and exploration arm of the NNPC. Efforts to reach the Media Relations Manager, Shell Nigeria, Bamidele Odugbesan to clarify the information were not successful.
Bloomberg reported last year that Shell was in discussions to sell OML 11 and OML 17 to Heirs Holdings, run by billionaire Tony Elumelu, as it sought to reduce its exposure in the Niger Delta region of Nigeria where it has sold assets worth billions of dollars over the past decade. The company’s lease over OML 11 will expire in June 2019, local newspaper ThisDay reports, citing a top SPDC staff, who added that Shell was still talking to potential investors to take up its 30 percent stake in the oil block.