Beyond Above-Ground Risk: The Relationships That Decide Nigeria’s Oil
The barrels beneath the Niger Delta were never the problem. The problem has always been above the ground, in the relationships nobody thought to put a price on.
By Michael Kabi
The air-conditioning in the Port Harcourt hotel had been losing its argument with the afternoon for the better part of an hour, and still the men around the table kept their heavy suits on, shirts starched to the point of armour. Beyond the tinted glass the perimeter fence held back a familiar scene: young men on okadas, engines off, parked in whatever shade they could find, watching the gate with the patient, unhurried attention of people who have learned that every convoy leaving this city must eventually slow for a pothole. Inside, as it always is, the conversation was about barrels.
It is a very old conversation, and it runs on a very old grammar. When output falls, Abuja edits the tax code. When a pipeline opens under the hacksaws of a local syndicate, the state sends a battalion or repaints the national oil company and hangs a fresh acronym over the same corridors. The Petroleum Industry Act was sold as the last word, the generational fix. Yet the crude still bleeds into the creeks, the foreign money still slips quietly toward Guyana’s cleaner horizons, and the man who lives three hundred yards from a flare still watches the pipeline crossing his cassava plot as though it were an intruder’s plumbing. The error is not in the engineering. It is in the way the industry sees the challenge.
Listen to how the industry speaks about the Delta and you will catch a single, revealing phrase: above-ground risk. It is the folder into which executives file everything that is not rock and fluid; the restive village, the unpredictable regulator, the security levy, the social contract that will not hold. The language is informed by engineering, and so it does what engineering language does. It converts people into friction, a drag coefficient on an otherwise clean machine. But the men on the motorbikes are not weather. They are not a variable to be policed down to an acceptable tolerance. They are the display of a relationship that has failed, and no battalion in the history of the creeks has ever repaired a relationship.
This is the thing the plumbing never fixes. Nigeria’s petroleum problem stopped being geological a long time ago. It is not the tax rate, and it is not the reservoir. It is the quality of the connections sitting above the reservoir; between the state and the community, the company and the regulator, the bank and the security detail, the flare and the mangrove it is slowly poisoning. Call it resource relationship governance, as distinct from the resource governance we keep legislating. Where those relationships are aligned around institutions that people trust, oil flows and keeps flowing. Where they rot, everything downstream of them rots too, and no share of the profit, however cleverly formulated, buys the trust back after the fact.
We have been here so often we have built monuments to it. OMPADEC gave way to the NDDC, which gave way to an entire Ministry of Niger Delta Affairs, which sat alongside the Presidential Amnesty Programme, which has now been joined by the Host Community Development Trusts written into the PIA. Each arrived as the answer. Each turned out to be fresh paint on a beam that was rotten underneath. The money moved; it simply moved along political wiring rather than into anything a fisherman in Nembe would recognise as his. The agencies multiplied and overlapped and quietly cancelled one another out, and the villager kept his opinion of the pipeline.
The countries that turned mineral luck into durable wealth: Norway, Canada, Botswana, did not manage it because their rock was friendlier or their armies larger. Botswana is diamonds in a desert. Norway is oil beneath a punishing sea. What those places built was institutions their citizens believed, and a settlement in which the state, the investor and the person living beside the wellhead were at last pulling in one direction. It is the unglamorous part, the part that cannot be decreed into existence on a Thursday. It is also the only part that has ever worked.
This is the truth the gunboats keep missing. You cannot make a pipeline safe with a rifle. The surest protection a pipe in the swamp will ever have is a community that loses money the day the oil stops flowing. That is not sentiment; it is incentive design, and it is a great deal cheaper than the alternative. It means host communities can no longer be managed with a borehole, a bag of rice at Christmas and another cleanup promised for next year. It means they hold a stake: real, non-dilutable equity, a certificate, a dividend that lands only if the plant keeps running as enterprises standing on their land. And it means treating the Delta’s ruined mangroves not as a liability to be buried in a remediation line item but as an asset: standing carbon, the blue carbon the global climate market will now pay serious money to protect, if Nigeria is organised enough to sell it.
It means, finally, the state admitting that the soldier in the creek is an expensive stand-in for a thing it has refused to build. Lasting order will not come from more gunboats. It will come from the ledger. Trace the money from stolen crude out of the swamp to the accounts where it always lands, in Lagos or London, and freeze it there. And build courts near enough and fast enough that honest trade becomes the safer bet, and the bunkering barge the risky one. Make the legitimate business pay better than the theft and you will not need to outgun the theft. You will have outcompeted it.
Here is the part nobody at the table wanted to say aloud, and the part the committee now redrawing the sector in Abuja should sit with longest. The numbers are good again. Production has climbed to a five-year high, the national company is posting profits and holding earnings calls, the terminals are running at rates they had not touched in years. This looks like the reform working, and in part it genuinely is. But look at where the barrels are coming from. The majors are selling down their onshore and shallow-water blocks and steaming out past the horizon into deep water, five thousand feet down, where there is no village to consult and no fence line to guard, only the quiet physics of the deep. Some of the recovery is real repair. Some of it is simply the industry succeeding in leaving the people behind. Those are not the same achievement, and a plan that mistakes the second for the first will congratulate itself right up until the next convoy slows for the next pothole.
The oil majors may believe they have finally solved above-ground risk. They have not. They have only outrun it, and only for themselves. A rig can move to five thousand feet. The land cannot move at all. The flares stay, the mangroves stay, the young men on the okadas stay, and the state stays with them, unable to sell its territory or swim away from its own coast, left holding the one problem it could never file under geology. So whatever the committee in Abuja decides the barrels are worth, that is the bill that comes due. Nigeria’s oil was never really about the crude beneath the soil. It has always been about the relationships above it.
*Dr. Michael Kabi is a chartered accountant and energy strategist. His career spans Coopers & Lybrand/PwC, Allstates Trust Bank, eighteen years at Chevron Nigeria and a General Manager role at Dangote Group. He is Managing Partner and CEO of Mike Kabi Associates (MKA) Limited, a Lagos-based advisory firm serving private-sector leaders, oil and gas companies and development finance institutions across Africa. He holds a PhD in ESG Management and an MSc in Sustainable Development from the University of London.
