Nigerian government has been called on by environmental protection and human rights activists to refuse Shell’s proposal to divest its operations in the Niger Delta unless the company takes significant steps to address the pollution caused by its activities in the region. Foreign energy companies, including Shell, have been extracting hydrocarbons from the Niger Delta for many years, with Shell being the largest investor. The companies, along with the Nigerian government, have profited immensely from it, raking in billions of dollars. Meanwhile, the local community has been vocal about the extensive environmental harm caused.
Earlier in January, Shell Oil revealed its decision to exit onshore and shallow water operations in the area by selling its Nigerian subsidiary, Shell Petroleum Development Company of Nigeria Limited (SPDC), to Renaissance – a group of mainly local companies. This sale includes all current mining licenses and infrastructure. Shell cites this move as a strategic step towards shifting focus from fossil fuels. Shell’s exit will not be easy as civil society organizations are urging for more environmental clean-up efforts before their departure. SOMO, the Centre for Research on Multinationals, a Dutch research organization, has issued a cautionary report stating that the divestment plan poses a significant risk to the environment.
$12b would be needed to address the oil spills in the region.
According to the SOMO report, communities are concerned that without Shell’s presence, there will be no effort made to restore the environment or compensate for the economic losses they have suffered. The majority of Delta residents rely on farming and fishing for their livelihoods, but these activities become unfeasible in heavily polluted soil and waterways. In a statement to the press, Florence Kayemba from the Stakeholder Democracy Network, which has a part in the report, emphasized the importance of the Nigerian government thoroughly examining the sale. She raised serious worries about the ongoing environmental damage left by Shell and other oil companies as they plan to withdraw their investments from the region.
Environmental groups dispute claims by oil companies like Shell, who often attribute oil spills to theft and sabotage. Kayemba notes that locals engage in unauthorized small-scale refining, known as artisanal refining, in efforts to generate income. In a study carried out by Bayelsa State in May 2023, it was revealed that approximately $12 billion would be needed to address the historical oil spills scattered throughout the region over the course of 12 years. The report pointed fingers at Shell and the Italian oil company ENI as the primary culprits responsible for the majority of the environmental damage.
Shell is offloading its oil blocks and infrastructure to local firms.
As per the SOMO report, Shell is in the process of transferring its operations to local companies that may lack the expertise needed to address the challenges posed by outdated infrastructure and the history of oil exploration. The report also revealed that Shell is offloading its oil blocks and infrastructure to companies that seem to lack the financial resources and commitment needed to handle the aging and deteriorating infrastructure properly, including responsibly shutting down and decommissioning it when required. Shell’s departure would leave the communities in the Niger Delta vulnerable to continuous threats to their surroundings, well-being, and fundamental rights even after the oil sector comes to a halt, potentially affecting future generations, the statement further noted.
In a statement, Shell stated that the divestment of onshore assets by global energy firms is a key aspect of restructuring the oil and gas industry in Nigeria. Local companies, with their expertise developed over many years, are now taking on a more significant role in advancing the country’s goals for the sector. The Federal Government requires submissions for divestments to undergo thorough scrutiny before approval can be recommended, according to the statement. This process allows regulators to assess a variety of issues to ensure that all requirements are met.
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Furthermore, Shell mentioned that it plans to utilize its technical knowledge as part of the sale process to the new purchasers. In the meantime, the Nigerian government has signalled its support for Shell’s decision to sell its assets. Nigeria’s oil minister, Heineken Lokpobiri, mentioned at the World Economic Forum in Davos that the government is dedicated to creating a favourable business atmosphere in the industry. Lokpobiri stated in Davos on January 18 that as soon as the government receives the required documents, they will promptly review and approve them without delay.
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