Making Oil & Gas Projects Viable in Niger Delta

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Investing in multi-million dollar oil and gas projects in the Niger Delta is highly risky and harrowing, especially with the militating factors, associated with operating in the terrain. Besides, investors are usually caught unawares of ancillary factors that are remarkable in frustrating many laudable projects. Adopting Macro-Level Conflict Risk and Impact Assessment (M-CRIA), a conflict sensitive business practices tool, has proved to be a measure to forestall crisis in planning, implementation and delivery of such projects, writes Kunle Aderinokun

That Nigeria is blessed with enormous oil and gas resources is over-emphasised. But the unfortunate reality is that the abundant natural resources are being squandered as rent seekers and warlords, otherwise described as conflict entrepreneurs, have a field day. And sadly also, oil and gas projects that would have catapulted Nigeria to an industrialised nation or enviable position in the comity of nations are being frustrated by these conflict entrepreneurs. That is the big issue now confronting the country and this issue has assumed a dangerous dimension, and is now becoming very worrisome.

Since the first discovery of crude oil in Oloibiri, Bayelsa State, there have been several but different levels of investment in oil and gas projects in the Niger Delta, expected to give fillip to the economy and better the lots of the communities where the black gold is mined, but the sad realities are better imagined. While many of these projects are well-intentioned, one could not rule out impact of untoward activities of conflict entrepreneurs, some corrupt government officials and their cohorts on the implementation and delivery of the projects.

Besides, in the region, there has been misdirected focus by investors on how investments impact the host communities. This has led to many lost investments and probably a dearth to investments in that section of the country.

Often times, disagreements in the Niger Delta have led to conflicts with many people- the conflict entrepreneurs- benefiting from or becoming rich off these crises. But this can be avoided when investors are able to do their homework better and more importantly make investments work by making the community the heart of the issue.

According to the Managing Director/CEO, Trajan Energy Ltd and adviser to the federal government on Gas-based Industrialisation, Mr. Charles Majomi, there is a very disturbing recurrence of host community agitations, specifically where brownfield projects are being attempted, which leads one to believe the ugly face of conflict enterprise is actually happening here in Nigeria.

“That is when you have the government or private sector contemplating a large investment in a particular area, you will find that the conflict is driven as much by genuine grievances as by opportunists within the sector, who see it as an opportunity for state and benefits capture.

“For example, if you have made considerable investment and feasibility studies and you have cleared the ground, and about to start your operation, after having substantially invested. We find out that at that point, these so-called conflict entrepreneurs emerge and exacerbate existing conflict in a community in order to stop the project and extort money from the project or the government backers, thereby embarrassing the government politically and extorting money from the investors, who have already gone far. There are varieties of issues,” added Majomi, who granted THISDAY an interview recently.

With this being the trend over the years and the vicious cycle prevails, especially with connivance and veiled blessing of unscrupulous government officials, the conflict entrepreneurs get richer at the expense of the citizens.

Definitely, huge risks are associated with investing in the host community in the Niger Delta given the illicit activities of conflict entrepreneurs. It is, however, unfortunate that awareness of the host community risks to bankability has been difficult to capture with the current traditional political and financial risk assessments and management processes for companies.

These frameworks have often been inadequate in analysing and assessing the full range of issues that might cause, trigger, or exacerbate violent conflict because they often look at how external factors may impact the investment and less on how the investment might impact the wider conflict dynamics. Governments and companies evaluate the impact of the conflict on their project, not the conflict itself. This becomes even more imperative where investments are being considered in sites where existing projects are already planned or underway.

That is why adoption of Conflict Sensitive Business Practices (CSBP) is necessary to help companies improve bankability of their projects.

A researcher and lecturer at Niger Delta University, Bayelsa, Dr. Tubodenyefa Zibima, who has worked extensively on conflict resolution in the oil-rich region, says the CSBP consists of several tools, one of which is Macro-Level Conflict Risk and Impact Assessment (M-CRIA). All of the tools could be used in different stages: pre-feasibility, tendering or implementation.

Zibima notes that CSBP, which supports extractive industries to anticipate conflicts, was first used in 2005 and has been working ever since in Angola, Burma, Colombia and Indonesia.

A report titled, Conflict-sensitive business practice: Guidance for extractive industries, produced in March 2005, consists of guidance on doing business in societies at risk of conflict for field managers working across a range of business activities, as well as headquarters staff in political risk, security, external relations and social performance departments. This is like the case of the Niger Delta.

This guidance provides information on understanding conflict risk through a series of practical documents, including: introduction to conflict-sensitive business practice, including an overview of the regulatory; environment for doing business in conflict-risk states; screening tool for early identification of conflict risk; macro-level conflict risk and impact assessment tool; project-level conflict risk and impact assessment tool; special guidance on key flashpoint issues where conflict could arise at any point during a company’s operation.

The M-CRIA is an analytical tool that has been adapted for companies, governments, and communities to support understanding host community conflict dynamics.

According to Zibima, by adapting the M-CRIA for the entities and communities, they make more informed decisions on projects (investments) by facilitating a deeper understanding of causes (root causes, proximate causes, triggers, etc.) and consequences. It also enable them to understand the roles, interests, and capacities of major conflict stakeholders as well as the issues that may shift or change their decision-making as well as help in designing mitigation strategies based on up-to-date information gathered.

Reeling out the advantages of M-CRIA, the don states that planning ahead should enable companies to identify better local partners. He adds that with the assessment, many of the initiatives identified will be long-term in that they seek to transform structural conflict issues, such as underdevelopment or unemployment. Besides, he also says there are reputational gains at the local and international levels from implementing strategies early, and pre-empting negative impacts. “It helps to manage expectations if companies communicate with stakeholders about their plans as early as possible. Companies interact with host societies through three basic categories of business activity: core business, social investment and policy dialogue,”

Zibima reckons that from the outcome of a recent research, it is evident that the explanation of the dynamic of conflict is a manipulation of the interaction amongst three main actors – host community, state government, and potential investors – by shadow actors external to these three seemingly separate groups of actors.

One of the key findings of the study, the expert points out, shows that “the three clusters of actors cannot be viewed as mutually exclusive collectivities, but one where members now share overlapping affiliations that increase the potentials for instrumentalising conflict for corrupt extraction of rent, which in turn threatens the take-off of planned investments.”

As a strategy for increasing influence and access to rent, community leaders and key influencers are increasingly expanding linkages by acquiring political power either via appoinments or elective positions. The report establishes that issues such as community leadership crises and community engagement practices are processes which support the methodologies employed and instrumented by conflict entrepreneurs.

Zibima believes using the M-CRIA methodology to understand conflict and corruption across locations in the Niger Delta is essential in order to prevent its recurrence as well as deepen government understanding of the nuances of conflict that are relevant to investments made in impacted communities.

He identifies three major locations where violence have been instigated by conflict entrepreneurs, all because of their selfish and pecuniary interests, thereby frustrating laudable projects of national and international magnitudes in those host communities. The selected locations, used as studies were: Ogidigben in Delta state, Gelegele, Edo state and Odukpani, Cross River state.

Ogidigben in Delta state is host to the planned $20 billion Gas Revolution Industrial Park (GRIP). It comprises a 2400 MMSCF/D Central processing facility (CPF); a 1.3 Million tons per annum Polyethylene plant, 0.4 Million tons per annum Polypropylene plant, 2.3 Million tons per annum Urea plant; 150 MW independent Power Plant (IPP), and a port, with a 14-meter berthing draft. ; Gelegele, Edo state, which is host to a proposed sea port connecting to the Benin River. The sea port is to function as an export processing zone with an independent power station; and Odukpani, Cross River state, which is the location of one of the National Independent Power Projects (NIPP). The Odukpani NIIP project is a 630.5MW gas fired power generating plant.

“Given the analysis of conflict dynamics that currently surround the aforementioned three sites, we find that it becomes imperative for any potential investment to conduct the M-CRIA assessment framework. This enables the future investors on each of the sites to understand the ways in which these conflict dynamics may impact the bankability of the investment. It becomes imperative for the M-CRIA assessment to be integrated into the on-going analytical structures used by the original investment project such as the Environment Impact and Social Impact Assessments,” Zibima submitted.