Hurdles Before Proposed Oil Licensing Round

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Chineme Okafor writes about a new legal action by community leaders in Niger Delta who want their environmental challenges addressed before fresh licences can be handed out for the 57 marginal oil blocks up for grabs in a new licensing round

A number of community leaders in the oil-bearing Niger Delta region have expressed worries over the damages irresponsible oil mining has done on their lives and environment over the years, and now want these addressed before new licenses would be issued in Nigeria’s ongoing marginal oil fields bid round.

They stated this in a lawsuit they filed at the Federal High Court (FHC) in Yenagoa, capital of Bayelsa state.
The community leaders led by Chief Brown Agu from Opu Agu chieftaincy house of Ekemburu Obonoma in the Akuku-toru area of Rivers state, sought to stop the Department of Petroleum Resources (DPR) from going ahead with its plan to select and award oil blocks to new operators in the region.

According to them, this should only happen when a comprehensive baseline environmental evaluation of oil fields allocated to operators from 1956 is conducted by independent assessors and published to determine how well they have observance standard environmental practices in oil production.

They also noted that the move was aimed at protecting the livelihoods and environment of their communities and inferred that the absence of corporate ethical and governance practices in the operations of oil companies in the region has ruined their environment.

Similarly, they contended that handing out fresh licenses without fixing existing environmental issues will worsen their condition. Thus, they want their environment factored into the new oil licensing round.

Existing condition
Combining spatial data from the Nigerian Oil Spill Monitor, a team of researchers from the Swiss Institute for International Economics (SIAW-HSG) at the University of St. Gallen, found in 2019 that Nigeria’s oil-rich Niger Delta is still stewed in huge environmental ruin.

From their study of the oil spill monitor – an online tracking platform which gives public access to official data on oil spills collected by the National Oil Spill Detection and Response Agency (NOSDRA), the team led by Anna Bruederle and Roland Hodler revealed the extent of health damages oil spill exacts on people in Niger Delta.

They used data from the spill monitor, demographic and health surveys to establish that while oil spills in the Delta can lead to irreversible environmental degradation, they are also a potential hazard to human health; showing thus how onshore oil spills affect neonatal and infant mortality.

To detect a causal effect, the Swiss team compared siblings born to the same mother, conceived before and after a nearby oil spill and found that nearby oil spills that occur before conception increased neonatal mortality by 38.3 deaths per 1,000 live births. This, they explained corresponded to an increase of around 100 per cent on their sample mean.

Furthermore, they found that such effect remained fairly uniform across girls and boys, socio-economic backgrounds and locations, and that this is this is not actually driven by events related to oil production or violent conflict, rather by exposure to hydrocarbons which pose risks to foetal development.

They equally provided clear-cut evidence suggesting that the effects of oil spills on neonatal mortality persists for several years after the occurrence of an oil spill; indicating therefore that for years, families in the Delta live with the health impacts of oil spill – mostly death of their babies.

Oil has been severally described as both a blessing and curse to Nigeria which is Africa’s largest producer. But failing to adopt practical governance of her oil industry means that Nigeria gets to record frequent oil spills from pipeline vandalism, theft, and poor maintenance.

According to the Swiss team, “when crude oil or other petroleum products leak into the environment, the different compounds (depending on their physical properties) evaporate into the air, are absorbed by the soil, or enter ground and surface water,” and they also lead to fires which release respirable particulate matter (PM) into the air. This, they hinted lead to health hazards for humans in addition to damages of livelihood resources.

Records of oil spill
Historically, oil spillage in Nigeria is relatively old; from July 1979 where Adati Kadafa, a researcher from the Universiti Putra Malaysia, recorded that a total of 570,000 barrels of oil were spilled into the into the Forcados estuary from the Forcados tank-six terminal incidence in Delta state, to the January 1980 Funiwa well-five blew out at the Funiwa oil field spilling an estimated 421,000 barrels of oil into the ocean, data show that an estimated 13 million barrels of oil has been spilled into the ecosystem of the Niger Delta over the past 50 years.

Similarly, Kadafa recorded that in May of 1980, another 30,000 barrels of oil from the Ebocha-Brass pipeline flooded the lake and swamp forest, just as 5,000 barrels were spilled in Oshika village in River state in August 1983. Another one, the Ogada-Brass pipeline spill was recorded near Etiama Nembe in February 1995 with approximately 24,000 barrels of oil.

Regarded as the premier international oil company in Nigeria. Shell Petroleum Development Company (SPDC) is recorded by Kadafa to have reported an average of 221 spills per year in its operational area since 1989.
While most of the spills recorded occur on land, swamp and offshore environment, the Nigerian National Petroleum Corporation (NNPC) equally estimated that between 1976 and 1996, approximately 2,300 cubic meters of oil had been spilled in 300 separate incidences annually.

An estimated 836 acres of mangrove forest six miles off the shore of the region has been destroyed. Between 2018 and November 2020, data from the NOSDRA’s spill monitor indicated that 1,043 cases of oil leakage were recorded by oil companies in Nigeria with the most number – 384 – recorded by Shell.

Oil firms founded by indigenous operators – Aiteo, Eroton, First Hydrocarbon, ND Western, NNPC’s subsidiaries, Nigerian Petroleum Development Company (NPDC) and Pipeline and Product Marketing Company (PPMC) – were equally found in the NOSDRA platform to have recorded significant leakages in their operations.

A new push
Worried thus by the failures of governance to fix the ruin on their environment and life, the community leaders consider the lawsuit initiated as a fresh means save their environment and livelihoods.

With the lawsuit, they hope to stop the Nigerian government from ceding out new oil blocks to operators in an ongoing marginal field bids round until their environmental challenges are addressed.

The DPR however stated that it is unaware of the suit. It said this in an official exchange with THISDAY.
Fifty seven marginal fields in the region are to be given out by the DPR which is statutorily responsible for the process. Documents detailing its plan for the bid rounds have also been published.

In the documents, the DPR stated its expectations that successful bidders for the blocks would be judged on their technical and financial capacities beyond being registered in Nigeria with 100 per cent indigenous shareholding.

It also specified its expectation that participating companies in the process should be active and technically competent in the country’s exploration and production (E&P) sector.

Other requests the DPR made in the document included evidence of bidders’ relationship with competent technical partners with experience in E&P operations, in addition to financial competence.

But the department did not ask for preferred bidders to show their capacities or commitment to operate the oil blocks with minimal or no environmental abuses such as oil spillages.

“Field development economics for this marginal field bid round is based on the Marginal Field Operations (Fiscal Regime) Regulations, 2005 and the Petroleum Profits Tax Act (PPTA), 1958, as amended,” the DPR said.
Further on conditions that could result to license withdrawals, the department indicated that the inability of awardees to progress with work on their blocks would result to license withdrawal but not environmental ruins from such operations.

On the back of this, the community leaders explained that without, “a comprehensive baseline environmental evaluation of oil fields allocated to operators from 1956,” conducted by independent assessors, they would legally stop the government from awarding oil blocks to new operators in their communities.

In a note exchanged with THISDAY shortly after a scheduled court sitting on their suit in Yenagoa could not hold last week, Agu stated the commitment of the communities to their request.

He said: “We were in court as earlier scheduled for the matter which was for hearing of the motion for injunction. We have however, just been advised that court would not sit today.

“No reason was given why the court did not sit. In any event, as Ijaw people who have suffered as a result of the rape of our resources and degradation of our environment, we are ready to pursue the case to a logical conclusion.”

“This is to draw attention to the fact that we will be taking every legal step to seek justice for ourselves and our people including generations yet unborn. Enough of the violation of our fundamental human rights and back door practices in the oil sector.

“Everyone including any Ijaw sons, daughters and officials doing things against the interest of Ijaw nation and people should take note that we are discerning enough to know their antics and they will have their day in the law courts and the courts of public opinion,” he added.

Recently, experts familiar with the Petroleum Industry Bill (PIB) – a bill expected to change the way the business of oil and gas production is done in Nigeria – stated that the bill if it becomes law, could address concerns about environmental abuses in oil production in the region.
Similarly, the government in this regard stated in 2019 that it was unlikely to award new oil blocks without passing the PIB.

The Minister of State Petroleum Resources, Mr. Timipre Sylva in a meeting with journalists in Abuja, had disclosed that the government would hold bid rounds for marginal oil fields in Nigeria only after the PIB is passed into law because according to him, “new gridding, acreage management and bidding process are thoroughly elucidated in the upcoming Petroleum Industry Bills.”

Sylva further noted that, “it is therefore highly desirable that the bills are passed before any bid round. This is one of the reason we implore Nigerians to support us in our quest to pass the bills in earnest.”