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Russia’s Gazprom ,Barroso,,The Iraqi Kurds and the Moscow Corruption – The Gazprom Cables

BAGHDAD (AP) — A Middle East subsidiary of Russia’s Gazprom Neft has inked two oil deals with Iraq’s self-ruled northern Kurdish region, becoming the fourth major oil company to enter into agreements with Iraqi Kurds that bypass the central government in Baghdad.

The Kurds and the central government are at loggerheads over rights to develop resources. Baghdad wants to manage its energy resources nationwide, but Kurds insist the constitution doesn’t require them to go through Baghdad.

Since the 2003 U.S.-led invasion, the Kurds have signed scores of oil deals with small and mid-sized oil companies. But the entry of the oil majors may be a game changer that could lead to de facto policies the Kurds have long sought.

In a statement issued on Wednesday, the St. Petersburg-based company said it has acquired a 40 percent share in the 1,780-square-kilometer (687-square-mile) Garmian block. The Canada-based WesternZagros company will also hold a 40 percent share.

In the second deal, the company will hold an 80 percent share in the 474-square-kilometer (183-square-mile) Shakal block. The Kurdish Regional Government will hold a 20 percent share in each contract.

Both blocks are located in the southeastern part of the region and are expected to hold about 3.6 billion barrels of oil reserves. Gazprom’s up-front payment is to be around $260 million.

“Gazprom Neft considers the territory of the Kurdistan Region of Iraq promising for further geological study and consequent production at the fields,” First Deputy CEO, Vadim Yakovlev said.

With its latest deals, Gazprom has joined France’s Total S.A., U.S. oil majors Chevron Corp. and Exxon Mobil Corp. who have already made their own forays into the region.

Iraq’s post-invasion governments have until recently blacklisted energy companies that signed contracts with the Kurdish government to prevent them from working elsewhere in the country or purchase crude oil.

But in the case of Exxon Mobil, the Iraqi government has had a light hand. Baghdad prevented the U.S. company from taking part in Iraq’s fourth energy bidding round in May but has not touched its deal to develop the 8.6 billion West Qurna field near the southern city of Basra along with Royal Dutch Shell PLC.

No moves have been made against Total, which has a share in a consortium led by China’s National Petroleum Corporation to develop the 4.945 billion barrel Halfaya field in the south. Gazprom is developing the 100 million barrel Badra field in central Iraq.

Baghdad has so far only blacklisted Chevron, which has no deals with the government.

There is considerable incentive to work directly with the Kurds — unlike the flat fee the central government pays for each of barrel of oil extracted, the Kurds offer lucrative contracts allowing the developers to claim a share in reserves and the oil produced.

Also Wednesday, the Iraqi Kurds announced that they will resume crude oil exports from their region in the first week of August after they were halted in April over a payment row with Baghdad.

In 2011, the two administrations struck a tentative deal by which the Kurds send oil to Baghdad, which then sells it and each side then takes 50 percent of the revenues. But exports were halted in April by the Kurds who claimed that Baghdad failed to send them the money. In return, Baghdad accused the Kurds of keeping billions of dollars that ought to go to government coffers and also of smuggling oil.

The Kurdish statement said the exports will start at 100,000 barrels a day for a month as a “confidence-building” measure and if payments were forthcoming, they could move swiftly up to 200,000 bpd. If not, the exports will be halted again.

Since 2008, Iraq has awarded 15 oil and gas deals to international energy companies, the first major investments in the country’s energy industry in more than three decades.

The original goal was to boost daily production from about 3 million barrels now to 12 million barrels by 2017. That may be revised downward to fewer than 10 million barrels however, given infrastructure bottlenecks and a possible falloff in demand on international markets [source]

BARROSO AND PUTIN LOCK HORNS ON GAZPROM

Putin has signed a decree giving the government the right to protect natural gas
giant Gazprom from a stupid antitrust probe of Barroso. Galileo muttered the
phrase Eppur si muove, And yet it moves, after being forced
to recant in 1633, before the Inquisition, his belief that the Earth moves
around the Sun. Similarly the new inquisition of regulators forces executives
to admit something they did not do, in order to get smaller penalties. Eppur si
muove!

There is an Antitrust Armageddon in Europe between tiptop companies and Fourth
Reich(EU). Eurokleptocrats are willing to do anything in order to get kickbacks
from industry leaders. The European antitrust laws have the unfortunate
consequence of harming Europeans by chilling innovation and discouraging
competition. Instead of protecting competition, EU laws protect competitors who
give kickbacks to kleptocrats! Kickback is the lubricant that allows a European
industry to run smoothly! No European machinery can run without lubricant! Eppur
si muove!

The new Russian law prohibits companies deemed strategic from disclosing
information, disposing of assets or amending agreements without Russian
authorities’ ratification in the case that the claims are initiated by foreign
states or entities.

European antitrust law is wielded most often by favor-seeking businessmen and
their kleptocrat allies. Instead of focusing on new and better products,
disgruntled rivals try to exploit the law by consorting with kleptocrats. EU
officials routinely direct antitrust regulators to bend the rules in pursuit of
political ends. In reality, the threat of abusive EC power is far larger than
the threat of oligopoly. Eppur si muove!

Gazprom declares it is incorporated beyond EU jurisdiction, and is a company
which under Russian law exercises functions of public importance and has the
status of a strategic organization controlled by the state.

When a company is forward-thinking, proactive, innovative, and productive, it
will produce good products that customers want to buy. As a result, it will win a
large market share. If the company is much better than its competitors, it might
win most, or almost all, of the market. This is the case with Microsoft. It has
earned its market share by producing good products that customers want to buy.

Barroso is investigating whether Gazprom, the world’s largest gas exporter,
resorted to unfair competition and price-fixing in Central and Eastern Europe’s
natural gas markets. The EU, which gets 25% of its gas from Russia, wrongfully
claims that Gazprom has hindered the free flow of gas across its member states,
preventing supply diversification and limiting customer choice in delivery
points. Barroso also suspects Gazprom of imposing unfair costs on its customers
by linking the prices of gas and oil.

A company that wins a large market through its own productive efforts deserves
accolades. This is because justice, morally, tells us that we must reward the
good. However, to the government, a large market share is taken as evidence of
anti-competitive behavior, which makes the company a target for antitrust
action. This seems to be the motive behind the antitrust suits against Microsoft
and Google.

Barroso notes Gazprom’s long-term supply contracts linking gas prices to oil
prices are no longer justified because of the appearance of a spot market for
gas and increased supplies of shale gas. Gazprom may face a
fourteen-billion-euro penalty, according to estimates based on the fact that
companies found to breach EU competition rules can be fined as much as 10% of
annual revenue.

European antitrust laws lead to huge corruption, because government officials
ask for kickbacks in order to erase the alleged violation. The standard kickback
in EU is 10% of the erased penalty! Many Greek officials were caught on tape
asking for the corrupt tithe! Many European political parties make up their
election expenses from kickbacks on antitrust cases! This is the worst possible
blackmail, where tiptop ethical companies are held hostage by European
kleptocrats. Eppur si muove!

Putin warns Barroso that there would be losses on both sides if the thorny issue
isn’t tackled. Putin accuses Barroso of trying to burden Russia with the
subsidizing of formerly communist EU states by forcing Gazprom to reduce prices
for customers in Eastern and Central Europe. Gazprom says the Barroso
investigation is an attempt to reduce gas prices, and it won’t give discounts to
Barroso without the Russian government’s go-ahead. [source]

The Gazprom Cables ‘Not a Competitive Global Company’

Gas giant Gazprom was meant to catapult Russia back into its role as a global superpower. Executives dreamed of the “most valuable company in the world.” But secret cables from the US Embassy in Moscow provide a different picture: The Americans consider the mega firm to be chaotically organized and corrupt.

June 10, 2009, Moscow: “Too many political constraints”
XXXXXX: Redacted by the editors. Important note on the dispatches…

<>

10.06.2009 11:02

09MOSCOW2528

Embassy Moscow

CONFIDENTIAL

09MOSCOW367|09MOSCOW403|09MOSCOW971

VZCZCXYZ0000

PP RUEHWEB

DE RUEHMO #2528/01 2791102

ZNY CCCCC ZZH

P 061102Z OCT 09

FM AMEMBASSY MOSCOW

TO RUEHC/SECSTATE WASHDC PRIORITY 4993

INFO RUCNCIS/CIS COLLECTIVE PRIORITY

RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY

RHEHNSC/NSC WASHDC PRIORITY

RHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITY

RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

TAGS: EPET, ENRG, ECON, PREL, RS

SUBJECT: GAZPROM’S REVERSAL OF FORTUNE, PART ONE

REF: A. MOSCOW 971

C o n f i d e n t i a l moscow 002528

Sipdis

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E.o. 12958: decl: 10/05/2019

Tags: epet, enrg, econ, prel, rs

Subject: gazprom’s reversal of fortune, part one

Ref: a. Moscow 971

b. Moscow 403

c. Moscow 367

Classified By: Econ MC Matthias J. Mitman for Reasons 1.4 (b/d)

1. (U) This is the first of a two-part report on the new

economic realities facing Gazprom, Russia’s state-owned gas

sector giant.

——-

summary

——-

2. (SBU) Far from reaching its ambitions of becoming “the

most valuable company in the world,” Gazprom’s fortunes have

reversed dramatically in the past year. The company’s market

value, production, and sales have all plummeted since the

onset of the economic crisis. With dramatically reduced

cash-flow, the company has been forced to cut back on capital

expenditures and its ambitions, despite political rhetoric to

the contrary. However, as we will examine in part two of

this report, Gazprom’s problems are likely longer term. End

summary.

————————————

massive reversal in major indicators

————————————

3. (U) Major indicators of Gazprom’s performance have all

reversed course dramatically in the past year. (Note:

Figures in this report are taken from Gazprom reports,

statements, and presentations, unless otherwise indicated.

End note.)

Market capitalization —

4. (U) At its peak in May 2008, Gazprom’s market valuation,

based on the small percentage of its shares that trade

publicly, was over $350 billion, and company president Alexey

Miller declared Gazprom would become “the most valuable

company in the world.” Miller suggested Gazprom’s market

capitalization would reach $1 trillion in the near future.

By May 2009, in the midst of the global economic and

financial crisis, the company’s market capitalization had

dropped to its recent low of approximately $75 billion, but

has since rebounded to approximately $120 billion.

Production —

5. (U) Gazprom’s gas production peaked in 2006, at 556

billion cubic meters (bcm). In 2008, it was 550 bcm. In the

first seven months of 2009, however, Gazprom’s production was

down almost 25% over the same period in 2008. As of

September 2009, Gazprom expects 2009 production to reach just

474 bcm, and many analysts believe that figure to be overly

optimistic. In a September note on Gazprom, investment bank

Troika Dialog predicted Gazprom would have difficulty even

reaching 460 bcm. On the low end, some analysts estimate

Gazprom could produce just 450 bcm or less in 2009 — a 100

bcm or more decline from its peak production. Even this

massive drop in production is masked to some degree by the

halt in gas imports from Turkmenistan since April (ref A).

In 2008, Gazprom imported 42 bcm from Turkmenistan, nearly

all of which was re-exported to Ukraine. Having halted these

imports, Gazprom itself is supplying the Ukrainian market out

of Russian production.

Revenues —

6. (U) The Russian Customs Service reports that Russian gas

export revenues were down 50% in the first 7 months of 2009,

compared to the same period in 2008, a decline of almost $20

billion. While Gazprom’s official results for 2009 will not

be published until well into 2010, a back-of-the-envelope

calculation using Gazprom’s own projections for average price

and volumes of exports to Europe in 2009 (ref C) indicates

the company might receive about $30 billion less from exports

to Europe in 2009 than in 2008. This represents a loss of

about 2% of Russian GDP and is in line with estimates from

various analysts. (Note: Given the relative significance of

export sales to Europe (excluding FSU), the relative

reliability of the figures, and to avoid exchange rate

complications, we focus only on export revenues here.

According to its recent bond prospectus, Gazprom’s exports

are divided into sales to the FSU, and to Europe. Sales to

the FSU and Europe represent 16% and 63%, respectively, of

its sales by revenue — meaning exports represent 79% of

Gazprom’s revenues. End note.)

Domestic sales —

7. (U) Gazprom’s domestic sales are not down as dramatically

as one would expect given the economic crisis, due primarily

to artificially low domestic prices, which prop up demand.

While Gazprom has not yet reported official results for the

first half of 2009 (1H09), various analysts predict a drop of

about 10% in gas volumes to the domestic market.

Export volumes —

8. (U) Gazprom’s overall exports peaked in 2008 at 281 bcm.

Gazprom’s sales to the FSU peaked in 2007, at 101 bcm,

dropping slightly to 97 bcm in 2008. Sales to the rest of

Europe peaked in 2008, at 184 bcm. (Note: Interim

statements regarding 2009 sales often do not coincide in

definition with audited annual reports. Thus 1H09 sales

estimates only give an indication of the trend and are not an

exact comparison with 2008 figures. Gazprom has not yet

released official results for 1H09 and only released first

quarter (1Q09) results on August 26. End note.) Through

1H09, Gazprom has said it shipped about 33% less gas to

European customers than in 1H08. In a recent statement, the

company said its exports to the FSU in 1H09 dropped 54%

compared to 1H08. A weighted average of those estimates

indicates overall exports shrunk by about 40% 1H09.

9. (U) As Gazprom and many analysts point out, however, 2H09

should be much better for Gazprom exports as many European

customers restrained purchases in 1H09, knowing that prices

— which are tied to oil prices with a six to nine month lag

— would drop dramatically in 3Q09. Furthermore, export

volumes in 2H08 were already dropping rapidly due to the

economic crisis and high gas prices that were reaching their

peak in 4Q08. Results for 1H09 were also significantly

affected by the 21 day gas cutoff to Ukraine and 10 day

cutoff to Europe in January. That said, 2009 will still be a

dismal year for Gazprom export volumes.

—————

forced cutbacks

—————

10. (C) Facing financial realities, Gazprom recently cut its

capital expenditure budget by $7.5 billion, or about 25%,

including cuts to Shtokman and Yamal development. However,

Gazprom and GOR leadership continue to take the tack that

“everything is fine” (ref B). One attendee at the recent

gathering of the “Valdai” group of international Russia

experts told us that Gazprom CEO Alexey Miller told the group

that the company’s plans for the Nord Stream and South Stream

gas pipelines, and for the development of the Shtokman and

Yamal gas fields are “all on track.”

11. (C)xxxxxxxxxxxx told us recently that

Miller’s and other GOR leaders’ public statements on Gazprom

should be ignored. xxxxxxxxxxxx said these leaders understand well

that Gazprom is in trouble but they just don’t know what to

do about it.

12. (C) According to xxxxxxxxxxxx, Gazprom simply doesn’t have the

money to move forward on all its so-called “priorities,” and

it will need to choose which are most important, while facing

insatiable political demands on its revenue streams. xxxxxxxxxxxx, told us

recently that he believes Gazprom has “a heck of a lot of

cost-cutting capacity” still available, but that the company

has too many political constraints preventing it from taking

the most necessary and painful measures. Furthermore, he

figures the company needs to spend about $5 to $8 billion a

year just to maintain its aging system and that these costs

will rise in the future. xxxxxxxxxxxx is thus also very

skeptical of Gazprom’s other major commitments such as South

Stream and Shtokman.

——-

comment

——-

13. (C) Gazprom’s capital expenditure cuts reflect an

understanding that, public rhetoric aside, the company can’t

spend money it doesn’t have. However, Gazprom’s longer-run

problems are largely beyond its control and require

fundamental reforms that will be difficult to achieve. In

part two of this report, we examine the constraints to

Gazprom’s return to dominance.

Beyrle

Gazprom headquarters in Moscow: “Private bank accounts and dirty deals”

Gas giant Gazprom was meant to catapult Russia back into its role as a global superpower. Executives dreamed of the “most valuable company in the world.” But secret cables from the US Embassy in Moscow provide a different picture: The Americans consider the mega firm to be chaotically organized and corrupt.
Info

High-ranking representatives of Russian gas giant Gazprom are hard to pin down for appointments. So when American diplomats finally got the chance, they cut right to the chase: What are the giant energy company’s actual business aims?

The Gazprom man was candid. The first priority, he said according to US diplomatic cables obtained by WikiLeaks and shared with SPIEGEL and other partners, is to provide reliable and affordable gas to the domestic population. The second, he said is to “fulfill its social obligations,” including charitable projects all across Russia.

The American envoys persisted in their questioning. Was it not also the goal of the company to maximize its shareholder value and its market share? Yes, of course. The cable cites the official also adding a third priority to his company’s goal: to maximize “control over global energy resources.”

A “Gazprom official describes the company as a socialist rent-seeking monopolist,” the US envoys reported after a September 2008 meeting in a dispatch cabled to Washington.

‘Huge Wealth, but Inefficient’

That’s the tenor of a number of secret US Embassy reports about the model Russian company, cables that are filled with critical American assessments about a bureaucracy that has gone overboard and a mafia-like political system in Russia.

But the assessments are particularly pointed when it comes to Gazprom, the company the Russians themselves most like to celebrate and to deploy in their battle to regain lost power in the world. Even as recently as May 2008, Chairman Alexei Miller was pledging that Gazprom would soon be “the most valuable company in the world,” with market capitalization that would reach $1 trillion in the near future. But around one year later, in the midst of the global economic and financial crisis, the company’s market capitalization had dropped to $75 billion.

“Gazprom is,” the Americans summed up in one cable, “what one would expect of a state-owned monopoly sitting atop huge wealth — inefficient, politically driven, and corrupt.” The American diplomats also painstakingly detailed the sectors in which the energy giant is engaged in and in which falling gas prices are creating problems for it.

Falling Demand for Gas

Their results are sobering. One 2009 cable states: “Far from reaching its ambitions of becoming ‘the most valuable company in the world,’ Gazprom’s fortunes have reversed dramatically this year. The company’s market value, production, and sales have all plummeted since the onset of the economic crisis.” With dramatically reduced cash-flow, the cable reads, the company has been forced to cut back on capital expenditures and its ambitions, despite political rhetoric to the contrary.

The US diplomats described Gazprom’s problems as likely being “longer term,” and not just a by-product of the crisis. That’s because demand for gas in Germany and Europe is in decline because industrial production there and across Europe has become more efficient.

At the same time, a cable noted, few new markets are opening up in the former Soviet states. Ukraine, for example, indicated it was considering halving its gas purchases. Gazprom Chairman Miller has for some time now been longing to establish a new market in the US but, as a cable states, the country is “looking more and more saturated every day with ever larger estimates for domestic production.”

According to the assessment by the US diplomats, Gazprom’s greatest problem is the company’s own Byzantine structures. “Gazprom is not a competitive global company,” the assessment reads, despite sitting on the world’s largest gas reserves. “Gazprom is the legacy of the old Soviet Ministry of Gas and still operates much the same way.”

A Top Executive with a Love for Hockey

There were many indications that this was the case. The Americans learned from an informant that a senior partner in an international accountancy firm needed two years just to unravel Gazprom’s holdings. The empire included one of Russia’s largest banks, an important Russian media company and a major construction firm.

Originals: Key Gazprom Cables

July 10, 2009, Moscow: “Huge wealth … corrupt’
XXXXXX: Redacted by the editors. Important note on the dispatches…

<>

10.07.2009 13:42

09MOSCOW2541

Embassy Moscow

CONFIDENTIAL

09MOSCOW2528|09MOSCOW854|09VLADIVOSTOK110

VZCZCXRO4339

PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSR

DE RUEHMO #2541/01 2801342

ZNY CCCCC ZZH

P 071342Z OCT 09

FM AMEMBASSY MOSCOW

TO RUEHC/SECSTATE WASHDC PRIORITY 5023

INFO RUCNCIS/CIS COLLECTIVE PRIORITY

RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY

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RHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITY

RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

TAGS: EPET, ENRG, ECON, PREL, RS

SUBJECT: GAZPROM’S REVERSAL OF FORTUNE, PART TWO; COMEBACK

REF: A. MOSCOW 2528

C o n f i d e n t i a l section 01 of 04 moscow 002541

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E.o. 12958: decl: 10/06/2019

Tags: epet, enrg, econ, prel, rs

Subject: gazprom’s reversal of fortune, part two; comeback

unlikely

Ref: a. Moscow 2528

b. Vladivostok 110

c. Moscow 854

Classified By: Ambassador John R. Beyrle for Reasons 1.4 (b/d)

1. (U) This is part two of a two-part cable on the new

economic realities facing Gazprom, Russia’s state-owned gas

sector giant.

——-

Summary

——-

2. (C) Gazprom faces many external and internal constraints

to renewed growth, following a dismal year in which all main

indicators of its performance deteriorated dramatically. The

globalizing gas market, a gas glut that shows no signs of

reversal, and politicized management likely mean that Gazprom

will not reach the heights of revenues and power achieved at

its peak in 2008. Unfortunately, the types of reforms (e.g.

privatization) that would result in a more valuable and

productive gas industry are stymied by the GOR’s seemingly

firm belief in a state-controlled sector. While Gazprom will

remain a major economic force, its influence on GOR policy

and its relative role in the Russian economy likely will

diminish in the short- and medium-term. End summary.

———————————

external constraints to a rebound

———————————

3. (SBU) Gazprom’s current problems (ref A) are not solely

the result of one-off contractions in demand due to the

economic crisis. Gazprom faces a fundamental shift in the

gas demand picture at a time of increasing competition.

Demand stabilization and decline —

4. (SBU) xxxxxxxxxxxx told us recently that Gazprom was simply unprepared

for the inevitable leveling off and current decline in

European gas demand. He explained that Gazprom’s management

has only known rapidly rising European demand for Russian gas

as most European countries “gassified” their economies over

the past two decades. He noted that anyone looking at the

trend could have been excused for thinking it would continue

perpetually; but now the period of gassification is over.

According to xxxxxxxxxxxx demand for gas in Germany is

actually in decline, as industrial production in Germany (and

across Europe) has become more efficient and as much of it

has been outsourced.

Competition —

5. (SBU) Gazprom not only faces a demand problem, but also

competition from an increasingly globalized gas market —

“for the next 5 to 10 years, gas will clearly be a buyers

market,” said xxxxxxxxxxxx has calculated (using data

from the BP Statistical Review of World Energy) that

Gazprom’s share of EU 27 gas imports has dropped steadily

from about 50% in the mid-90s (when gassification increased

demand) to just 34% in 2009. xxxxxxxxxxxx expects Gazprom’s share to

decline to about 30% and stabilize at that level. xxxxxxxxxxxx also

calculated that LNG’s contribution to EU imports over the

last decade has increased from about 10% to about 20%, a

figure he projected to continue to grow. In addition,

Gazprom will have to cope with massive new volumes of LNG on

the global market from projects already underway in Qatar and

elsewhere (ref C).

No help from other markets —

6. (C) Gazprom is unlikely to get any relief from its former

Soviet Union(FSU) customers either. Despite the likely rise

to “market prices” for gas sales to the FSU, lower demand

will continue to hurt Gazprom. Ukraine, Gazprom’s major

export market outside of non-FSU Europe, earlier signed a

take-or-pay contract which outlines a minimum amount of gas

which Ukraine is obliged to purchase from Russia. Ukraine

Moscow 00002541 002 of 004

has recently indicated it might take as little as 50% of the

52 bcm of gas it had earlier agreed to buy in 2010. Russian

government officials remain concerned over Ukraine’s ability

to pay for gas this winter and are already signaling they are

prepared to shut off exports to Ukraine in the event of

non-payment.

7. (SBU) Global markets will also offer little hope for

Gazprom, at least in the medium-term. Gazprom executives

have often expressed the expectation that the company would

become a global gas supplier, perhaps through newly expanded

LNG capacity. However, their preferred future export

destination, the U.S., is looking more and more saturated

every day with ever larger estimates for domestic production.

In a recent meeting with Embassy officials in Sakhalin,

Shell oil representatives stated that no LNG had been shipped

from the Sakhalin II facility to the U.S. due to soft prices

in that market. Much of this LNG has been shipped to Japan

instead.

Domestic market —

8. (SBU) Gazprom often touts future revenue gains from

domestic market price liberalization. However, it neglects

to account for demand elasticity in the wake of sharp

proposed increases in prices. With one of the most energy

intensive economies in the world, future hikes in domestic

gas prices would likely cut domestic demand substantially, as

evidenced in other countries that have implemented rational

pricing. Thus Gazprom’s revenue gains from higher domestic

prices would be at least partly offset by lower sales volumes.

External politics —

9. (SBU) In addition to the headwinds from market forces,

Gazprom faces the political and PR difficulties in external

markets that it has largely brought on itself through the gas

cutoffs of 2009 and 2006. Despite some pain in certain

Central and Eastern European countries, Ovchinnikov

explained, the 2009 gas cutoff showed that Europe could get

by without Russian gas. This should bolster EU determination

to minimize its dependence on Russian gas, and to explore new

options to diversify energy supplies.

——————————

internal constraints to growth

——————————

The Ministry of Gas —

10. (SBU) A Gazprom that behaved more like a competitive

global company would probably find a new path to growth more

quickly. But Gazprom is not a competitive global company,

despite sitting on the world’s largest gas reserves. Gazprom

is a legacy of the old Soviet Ministry of Gas and it still

operates much the same way. As a Gazprom executive himself

admitted to us, the company’s first two priorities are to

provide reliable and affordable gas to the domestic

population, to “fulfill its social obligations.” One contact

with direct information told us it took a senior partner from

a major accounting firm two years of full-time investigation

just to unravel Gazprom’s holdings, which include one of

Russia’s largest banks, one of Russia’s major media

companies, and a major construction company.

Technologically backward —

11. (SBU) Gazprom’s legacy and the government’s ownership of

the company also mean that it must act in the interests of

its political masters, even at the expense of sound economic

decision-making. From building unneeded pipelines (ref B) to

maintaining employment at some unneeded facilities, Gazprom

declines to solely act on financial and economic grounds. As

a state-controlled monopoly during the flush times of the

past decade, Gazprom had little incentive to develop new

technologies and capabilities long enjoyed by other global

oil and gas companies. Despite management’s interest in

expanding Gazprom’s LNG capacity, the company has only one

LNG export terminal, which it took over by forcibly becoming

the majority owner in a Shell-led consortium. Rapid

Moscow 00002541 003 of 004

expansion of LNG export capacity is unlikely without the help

of international oil companies (IOCs), who are still trying

to find an acceptable future working model in Russia.

Inability to adapt —

12. (SBU) Gazprom’s inability to meet competitive pressures

is apparent in the current European gas market. According to

xxxxxxxxxxxx Gazprom is the only major European supplier that

has had to cut production. xxxxxxxxxxxx blames Gazprom’s “self

inflicting wound” of tying gas prices to oil prices. He said

this convention dates back to when gas was a substitute for

fuel oil for heating. xxxxxxxxxxxx explained that this oil

price link has made Gazprom the high-price supplier in

Europe, a situation that is likely to continue into the near

future. xxxxxxxxxxxx said that with European gas demand unlikely to

recover to pre-crisis levels until 2013 and Europe facing

“excess supply” for at least the next decade, Gazprom will

have a very tough time just maintaining market share. A

major oil company senior executive echoed this analysis in a

recent meeting with us, noting “if you are a European

consumer, the last molecule of gas you want to buy is from

Gazprom.”

—————————————

possible tensions, but reforms unlikely

—————————————

13. (SBU) The tough times may be creating (or exacerbating)

tensions within Gazprom and the GOR over the company’s

future. Several contacts have told us they have heard of

such tensions. One Russian company executive said he has

heard that xxxxxxxxxxxx has been pushing for dismantling

Gazprom, to at least take away its control over the domestic

gas pipeline system. An executive at a Western company told

us recently that there are two camps within the upper levels

of the GOR on the issue of Gazprom’s direction. One camp

favors the current “one national company” approach, while the

other favors competition to spur a more efficient and modern

gas sector. Unfortunately, this executive explained, “the

number one factor” in managing Gazprom from the GOR

perspective is “how to increase government revenues from the

company.”

14. (C) xxxxxxxxxxxx, brushed off rumors of infighting

at Gazprom as nothing new. xxxxxxxxxxxx said there has always been

infighting at the company because it is such a bureaucratic

behemoth. “Everyone is always looking to make others look

bad in order to move ahead themselves,” xxxxxxxxxxxx said. While

xxxxxxxxxxxx acknowledged Gazprom’s substantial problems, xxxxxxxxxxxx did

not think any major reforms would be forthcoming.

15. (SBU) Rumors aside, nobody with whom we have talked

believes Gazprom is in any danger of losing its monopoly on

exports or its preferred status within the Russian economy.

Nor is the government likely to give up control of the

company anytime soon. Without such fundamental reforms, it

is difficult to see how Gazprom can transform itself into a

modern corporation in the current environment.

——-

comment

——-

16. (C) Gazprom is what one would expect of a state-owned

monopoly sitting atop huge wealth — inefficient, politically

driven, and corrupt. For years, with its exports and export

prices rising rapidly, it could easily pretend that all was

well and that the future was bright. That pretense may now

be giving way to the new reality of declining sales, lost

market share, and an inability to maneuver adeptly in the

face of global competition. Although Gazprom will likely

muddle along as a major corporation and major contributor of

jobs and budget funds, its economic contribution will likely

be diminished. While Gazprom can still shut off gas to

Ukraine or to other parts of Europe, each such threat further

undermines the company’s credibility as a reliable energy

supplier, and underscores the fact that Gazprom is

Moscow 00002541 004 of 004

politically subordinate to the Kremlin. Gazprom’s influence,

both domestic and international, has been directly tied to

its cash flow — money that funds employment, suppliers,

budgets, charities, foreign ventures, and, surely, many

private bank accounts and dirty deals. Unfortunately for

Gazprom and for the GOR, the massive revenues and profits

that the company produced in 2008 are unlikely to return

anytime soon. End comment.

Beyrle

Experts estimated that the company had to also spend between $5 billion and $8 billion on keeping its aging infrastructure in good working order — costs that will only increase in the future. A prominent Western oil executive told the US diplomats that while drilling a borehole in Canada only took 10 days in Russia it took twice as long.

A meeting with top Gazprom executives, such as Deputy CEO Alexander Medvedev, were also sobering. In a discussion with US diplomats, the hockey fan complained that there was still no cooperation between the Russian and American hockey leagues — and fulminated against Ukraine, which he claimed had orchestrated the gas dispute with Russia.

The Americans’ conclusion is devastating: “Gazprom’s legacy and the government’s ownership of the company … mean that it must act in the interests of its political masters, even at the expense of sound economic decision-making.” The company had made funds available for many “private bank accounts and dirty deals,” one cable wrote, though it lacked any concrete proof for this claim. Gazprom itself has consistently defended itself against accusations of corruption.

In any case, the Gazprom money was not flowing as much as previously, the US diplomats wrote. “Unfortunately for Gazprom and for the Russian government, the massive revenues and profits that the company produced in 2008 are unlikely to return anytime soon,” one cable reported. Although Gazprom would remain a major company, its economic contribution was likely to be diminished, the US diplomats concluded.
[read the full article]

 


Depopulation via Oil Spills: Uninsk,Russia 1994

 

Oct 14, 2006

Russia’s government, keen to show it is not only targeting foreigners for environmental breaches, said yesterday it might strip up to 19 licences from domestic giant Lukoil.

Russia’s outspoken environmental watchdog Oleg Mitvol led the criticism of the nation’s top oil firm while on a trip to the Arctic north of the Komi republic in western Russia, where Lukoil is active.

After listening to villagers’ complaints about pollution, he prodded a frozen pond with a stick to reveal oily-looking water underneath. “In the rest of the world, companies work according to environmental regulations. But here in Russia for the past 15 years people have been doing whatever they wanted,” he said.

Markets were sceptical that Russian environmental authorities, who have waged a fierce campaign against Royal Dutch Shell’s giant Sakhalin-2 project, would actually remove licences from a Russian oil giant.

Lukoil’s shares were up almost 3 per cent at 2,085 roubles 61.71) by lunchtime yesterday, despite Mr Mitvol’s threats.


Oil and gas pipelines social and environment impact assessment from daydev

Mr Mitvol, who works under the Natural Resources Ministry, has also been vociferous in his attacks on foreign companies working on Sakhalin. “Everywhere I’ve been in Russia, I’ve never seen anything as bad as Sakhalin,” Mr Mitvol said.

But he added that foreign firms were more cooperative than Russian firms, which needed to put their house in order too.

In 1994, the republic of Komi, where Usinsk lies 60 kilometers (40 miles) south of the Arctic Circle, became the scene of Russia’s largest oil spill when an estimated 100,000 tons splashed from an aging pipeline.
It killed plants and animals, and polluted up to 40 kilometers (25 miles) of two local rivers, killing thousands of fish. In villages most affected, respiratory diseases rose by some 28 percent in the year following the leak.
Seen from a helicopter, the oil production area is dotted with pitch-black ponds. Fresh leaks are easy to find once you step into the tundra north of Usinsk. To spot a leak, find a dying tree. Fir trees with drooping gray, dry branches look as though scorched by a wildfire. They are growing insoil polluted by oil.
Usinsk spokeswoman Tatyana Khimichuk said the city administration had no powers to influence oil company operations.
“Everything that happens at the oil fields is Lukoil’s responsibility,” she said, referring to Russia’s second largest oil company, which owns a network of pipelines in the region.
Komi’s environmental protection officials also blamed oil companies. The local prosecutor’s office said in a report this year that the main problem is “that companies that extract hydrocarbons focus on making profits rather than how to use the resources rationally.”
Valery Bratenkov works as a foreman at oil fields outside Usinsk.
After hours, he is with a local environmental group. Bratenkov used to point out to his Lukoil bosses that oil spills routinely happen under their noses and asked them to repair the pipelines. “They were offended and said that costs too much money,” he said.
Activists like Bratenkov find it hard if not impossible to hold authorities to account in the area since some 90 percent of the local population comprises oil workers and their families who have moved from other regions of Russia, and depend on the industry for their livelihood.
Representatives of Lukoil denied claims that they try to conceal spills and leaks, and said that no more than 2.7 tons leaked last year from its production areas in Komi.
Ivan Blokov, campaign director at Greenpeace Russia, who studies oil spills, said the situation in Komi is replicated across Russia’s oil-producing regions, which stretch from the Black Sea in the southwest to the Chinese border in Russia’s Far East.
“It is happening everywhere,” Blokov said. “It’s typical of any oil field in Russia. The system is old and it is not being replaced in time by any oil company in the country.”
What also worries scientists and environmentalists is that oil spills are not confined to abandoned or aging fields. Alarmingly, accidents happen at brand new pipelines, said Barenboim.

Other oil sites in the Komi area, close to the town of Usinsk, include Total’s Kharyaga PSA, although it was not in Mr Mitvol’s sights yesterday.

The Natural Resources Ministry in Moscow said eight Lukoil deposits in Khanty-Mansiisk in western Siberia and 11 in Komi could lose licences due to alleged breaches of licensing terms.

“The inspections are a part of a state campaign to strengthen control over the oil and gas sector,” said Valery Nesterov, an energy analyst at Troika Dialog brokerage. But he downplayed the risk that Lukoil might be deprived of valuable licences. “The list of the companies which have been threatened with having their licence revoked is very long but no licences have actually been withdrawn so far,” he said.

[read more]

Russia’s Population Meltdown
Declining birth rates and soaring rates of disease now threaten Russia’s very survival as a nation.

Last July, in his first annual presidential address to the Russian people, President Vladimir Putin listed the 16 Amost acute problems facing our country. Number one on the list, topping even the country’s dire economic condition and the diminishing effectiveness of its political institutions, was the declining size of Russia’s population. Putin put the matter plainly. The Russian population is shrinking by 750,000 every year, and (thanks to a large excess of deaths over births) looks likely to continue dropping for years to come. If the trend is not altered, he warned, the very survival of the nation will be endangered.

Unfortunately, even Putin’s grim reckoning of the numbers may understate the dimensions of the calamity confronting his country. Its birthrate has reached extraordinarily low levels, while the death rate is high and rising. The incidence of HIV/AIDS, syphilis, tuberculosis, hepatitis C, and other infectious diseases is soaring, even as the Russian health care system staggers. Perhaps 40 percent of the nation’s hospitals and clinics do not have hot water or sewage. Seventy-five percent or more of pregnant women suffer a serious pathology during their pregnancy, such as sepsis, toxemia, or anemia. Only about 25 percent of Russian children are born healthy. (The rate of infant mortality, however, has declined, at least according to official statistics.) The leading Russian pediatrician Aleksandr Baranov estimates that only five to 10 percent of all Russian children are healthy.

As if these challenges were not enough, Russia bears the burden of decades of environmentally destructive practices that have a direct, harmful impact on public health. Their legacy includes not just conventional pollution of the air and water but serious contamination around many nuclear and chemical sites throughout the country. In Dzerzhinsk and Chapayevsk, two of the 160 military chemical cities that produce chemicals for the military-industrial complex, the rate of spontaneous abortions or miscarriages is above 15 percent of conceptions a strong indication of chromosomal aberrations produced by the environment. Yet a weakened Russia lacks the means to contain ongoing pollution or to begin the monumental task of environmental cleanup. The decline in the size of the Russian population, and in Russians’ general health, vastly increases the difficulty of creating the economic health upon which such a cleanup and so much else depends.

It is not only compassion that should arouse the concern of the West. While some may cheer the weakening of this less-than-friendly power, still armed with large numbers of nuclear, biological, and chemical weapons, Russia’s sickening decline raises the twin prospects of political disintegration and subsequent consolidation under an authoritarian leader hostile to Western interests. The nation’s problems, in any event, can no longer be thought of as somehow only its own. Last year, an unclassified U.S. National Intelligence Estimate warned that the global rise of new and re-emergent infectious diseases will not only contribute to social and political instability in other countries but endanger U.S. citizens at home and abroad. Deaths from infectious diseases (including HIV/AIDS) in the United States have nearly doubled, to some 170,000 annually, since 1980. And Russia’s deteriorating weapons stockpiles pose a threat of unknown dimensions, particularly to the nearby Scandinavian countries.

The broad outlines of Russia’s looming catastrophe can be sketched in stark terms. Russians are dying at a significantly faster rate than they are being born. Gloomy as it was, President Putin’s speech was based on the relatively rosy projections of the Russian State Statistical Agency, or Goskomstat. This scenario assumes an increase in the total fertility rate beginning in 2006, a decline in the mortality rate, and an increase in net in-migration. But only the latter projection is remotely plausible. By 2050, I believe, Russia’s population will shrink by one-third. In other words, it will drop from roughly 145 million today to about 100 million, a blow that even a stable, prosperous country would have difficulty sustaining.

My projections, based on a model developed for West Germany by the Population Reference Bureau, are less apocalyptic than those of some other Russian officials, Duma members, and demographers. A new study produced under the auspices of the Institute of Social and Political Research of the Russian Academy of Sciences, for example, predicts that population will decline to between 70 and 90 million by 2045. If one takes the annual 750,000 decrease noted by Putin and multiplies it by 50 years, the result is a drop in population of 37.5 million persons, to a net total of 108 million not far from my estimate of 100 million. The U.S. population, meanwhile, is projected by the U.S. Bureau of the Census to grow by 2050 from today’s 275 million to 396 million, a level almost four times the projected Russian population.

In broad demographic terms, one can say that Russia’s population is being squeezed by two pincers. On one side is the fertility rate, which has been falling since the early 1980s. Russian women now bear little more than half the number of children needed to sustain the population at current levels. In absolute terms, the number of annual births has dropped by half since reaching a high of 2.5 million in 1983. Due to Russia’s rising mortality rates, fertility would need to reach 2.15 births per woman just to reach the so-called simple population replacement level. As of 1999, however, the total fertility rate stood at 1.17 births per woman. That is to say, Russian women bear an average of 1.17 children over their entire fertile life, from ages 15 to 49. Fertility would need to rise by some two-thirds to reach the replacement level.

The Goskomstat projection points to an increase in fertility to 1.7 births per woman by 2006. But this prediction seems to be based on a simple extrapolation of existing trends that does not take into account the deterioration of Russians’ health. The harsh reality is that the number of women in the prime childbearing ages of 20 to 29 is falling, while the rates of sexually transmitted diseases among men and women (which affect fertility) and gynecological illnesses are both rising. The ranks of eligible parents, especially fathers, are being thinned by tuberculosis, HIV/AIDS, alcoholism, drug abuse, and other causes. Fifteen to 20 percent of all Russian families experience infertility, with males accounting for 40 to 60 percent of the cases. Even as mortality and disease take more and more young people out of the pool of potential parents, attitudes toward childbearing have changed for the worse. An estimated two-thirds of all pregnancies now end in abortions. It is hard to see how the hoped-for fertility gains will occur. A steeper decline in Russia’s population seems unavoidable.

Mortality rates are also assumed to rise in the official calculation, but much less markedly than I anticipate. Some perspective on the Russian situation is provided by a comparison with the United States, which projects an average life expectancy at birth and survival rates for specific age groups that are far from the best in the world especially among 15- to 19-year-old males, who kill themselves with drugs, alcohol, and motorcycles. But in the United States, a boy who lives to age 16 has an 88 to 90 percent chance of living to age 60. His Russian counterpart has only a 58-60 percent chance. And those chances are shrinking.

Tuberculosis is only one of the maladies whose surging incidence is not reflected in current Goskomstat projections. The disease flourishes among people weakened by HIV/AIDS, alcoholism, and poverty. Findings by the research institute of the Russian Federal Security Service project enormous numbers of deaths from tuberculosis. Whereas only 7.7 of every 100 new Russian tuberculosis victims died in 1985, the death rate is now 25.5 per 100. According to official reports, the number of tuberculosis deaths soared by 30 percent in the 1998-99 period. The 1999 death toll of 29,000 was about 15 times the toll in the United States, or nearly 30 times greater when measured as deaths per 100,000 population in both countries.

The Russian authorities also underestimate the future impact of HIV/AIDS, spread chiefly by sexual contact and intravenous drug use. Vadim Pokrovskiy of the Federal Center for AIDS Prevention, Russia’s leading HIV/AIDS epidemiologist, estimates there will be five to 10 million deaths in the years after 2015 (deaths that, I believe, aren’t reflected in the projections). Most of the victims will be 15 to 29 years old, and most will be males further diminishing the pool of potential fathers.

Moscow reported 2.5 new cases of HIV nationally per 100,000 population in 1998, but the actual rate may be five, 20, or even 50 to 100 times greater, according to Russian epidemiologists and health officials. (The U.S. HIV incidence rate was 16.7 new cases per 100,000 population in 1998.) The Baltic port city of Kaliningrad and its surrounding oblast hold the unhappy distinction of recording the highest official rate of HIV increase, at 76.9 new cases per 100,000. Moscow, however, is currently overtaking it.

Some Russian demographers take comfort from the fact that their country is not entirely alone, since deaths exceed births in a number of European countries. But in countries such as Germany and Italy, the net ratio is close to 1.1 deaths to every birth. In Russia, deaths exceeded births by 929,600 in 1999, a ratio of 1.8:1 . If health trends and environmental conditions are not dramatically changed for the better, Russia could see two or more deaths for every birth in the not-too-distant future.

None of this is to say that there are not some signs of improvement. Childhood vaccination rates for tuberculosis, diphtheria, whooping cough, and other diseases have risen since 1995. Vaccination for rubella (German measles), which causes birth defects when contracted by pregnant women in the first trimester, was added to Russia’s prescribed immunization calendar in 1999. (How­ever, no vaccines are produced in the country and none are yet imported; almost 600,000 cases were reported in 1999.) But the larger trends support the vision of looming demographic catastrophe. And a number of other developments also offer dark portents for the country’s future rates of fertility and mortality, and for the general health of its people, especially its children.

Sexually transmitted diseases have seen incredible rates of increase during the past decade. These diseases cripple and kill, damage reproductive health, and are associated with the spread of HIV/AIDS. The causes can be traced to the explosion of pornography and promiscuity; to the growth of prostitution, notably among 10- to 14-year-old girls; and, especially, to drug abuse involving shared needles and syringes. In 1997, the Ministry of Internal Affairs estimated that the market for illegal drugs was around $7 billion, 600 times greater than in 1991.

The Russian Ministry of Health reported 450,000 new cases of syphilis in 1997, and Goskomstat published a figure of close to 405,000. These are the last reasonably accurate statistics we are likely to have, thanks to a 1998 law that imposes prison terms on syphilitics who contract the disease through drug abuse.

Just as one would predict, the number of registered new cases of syphilis declined in 1998 and 1999. However, the explosion in new cases of HIV, and a concomitant increase in the estimated number of drug addicts, belie the latest figures on syphilis. The epidemiological synergy between HIV/AIDS and other sexually transmitted diseases (including gonorrhea, which is vastly under-reported) suggests not only that syphilis is more widespread than reported but that further increases in the incidence of HIV/AIDS can be expected.

The 1998 law that classified drug addicts as criminals ensured that few addicts a group at high risk for HIV will seek treatment. A specialist cited in Komsomol’skaya Pravda in 1998 made this grim prediction: We will see increased risk of complications and overdoses, the death rate among drug addicts will rise, incidence of HIV/AIDS will rise; and…the illegal market of drug-related services will begin to develop quite intensively.

Smoking is a habit among an estimated 70 percent of Russian males and one-third of females, and multinational tobacco companies aim to increase their sales in the country. The World Health Organization estimates that some 14 percent of all deaths in 1990 in the Soviet Union and Eastern Europe were traceable to smoking-related illnesses; it expects that number to rise to 22 percent by 2020.

Alcohol consumption reflects an epidemic of alcoholism. Russian vodka produced for the domestic market (usually in half-liter bottles) comes with a tear-off top rather than a replaceable cork or screw top because it’s assumed that the bottle, once opened, will not be returned to the refrigerator. An estimated 20 million Russians roughly one-seventh of the population are alcoholics. Russia’s annual death toll from alcohol poisoning alone may have risen to 35,000 in 2000, as compared with 300 in the United States in the late 1990s.

Hepatitis B has sharply increased in incidence, but the sole producer of vaccines for the disease told me in Moscow that only 1.3 million doses are produced annually to meet a total demand of 13 to 14 million doses. Perhaps even more alarming in the long run are increases in the incidence of hepatitis C, an illness that chiefly attacks the liver and requires a very costly treatment protocol. The disease is often fatal.

Micronutrients are in short supply, especially iodine. No iodized salt has been produced in Russia since 1991, and little or none has been imported. In young children, iodine deficiency causes mental retardation.

Avitaminosis is common. A longitudinal study by the Institute of Nutrition of the Russian Academy of Medical Sciences finds shortages of folic acid as well as vitamins A, B complex, D, and E among 30 percent of the population.

Heart disease exacts a toll, in age-standardized death rates, more than twice that in the United States and Western Europe. The death rate from such disease per 100,000 population is currently 736.1 in Russia, 267.7 in Belgium, 317.2 in the United Kingdom, and 307.2 in the United States.

Cancer is becoming more common. New cases increased from 191.8 per 100,000 population in 1990 to 200.7 in 1998. The incidence is likely to rise as a consequence of long-term exposure to low doses of radiation from decades of nuclear testing, as well as to benzo(a)pyrene, dioxin, and other industrial carcinogens. As in so many other cases, official statistics understate the problem. There is significant under-reporting of breast cancer, for example, especially among women of Muslim origin, who are reluctant to seek treatment from male doctors.


To all the foregoing challenges to the Russian future we must add a daunting collection of environmental ills. Russia will have to cope with a legacy of industrial development undertaken virtually without heed of the consequences for human health and the environment, just as it will have to contend with the consequences of decades of testing and stockpiling of nuclear, chemical, and biological weapons.

The crises that temporarily focus worldwide attention on these problems, such as the 1986 Chernobyl nuclear power plant accident, only begin to hint at their severity. The news media beamed shocking reports of the 1994 Usinsk oil spill around the world, but it was only one of 700 major accidents and spills (defined as those involving 25,000 barrels of oil or more) that occur every year in Russia, spreading phenols, polyaromatic hydrocarbons, and a variety of other toxic chemicals. As Victor Ivanovich Danilov-Danilyan, the former head of the State Committee on Environment, notes, these losses are equivalent to about 25 Exxon Valdez spills per month!

Radioactivity remains a continuing concern. After the 1963 Test Ban Treaty barred open-air atomic weapons testing, the nuclear powers continued to conduct underground tests. But there was an important difference in the Soviet Union. There, many of the nation’s more than 100 nuclear explosions occurred in densely populated regions such as the Volga, as well as in the Urals and Yakutiya (Sakha) regions. After first denying that any of those explosions had been vented into the atmosphere, then Minister of Atomic Industry Viktor Mikhaylov later admitted that venting had occurred in 30 percent of the underground blasts.

What goes on today within the 10 formerly secret nuclear cities devoted to the development and production of nuclear weapons in Russia remains largely a mystery. Around the city of Chelyabinsk, a thousand miles east of Moscow in the Urals, some 450,000 Russians face unknown risks from a series of spills and accidents that occurred from the late 1940s to the 1960s. And area rivers may have been tainted by seepage from nuclear waste directly injected deep underground at the Krasnoyarsk, Dmitrovgrad, and Tomsk sites. Near the Tomsk-7 facility, the site of a serious nuclear accident in 1993, Russian and American environmentalists recently found evidence of phosphorous-32, a radionuclide with a half-life of only about two months. The discovery strongly suggests that radioactive wastewater used in cooling Tomsk-7’s two remaining plutonium-producing plants was illegally dumped.

Chemical pollution is widespread. Even in Moscow, which is home to much heavy industry, there is evidence that pollution has caused genetic deformities in the young [see photo, facing page]. In a study of the impact of chemical, petrochemical, and machine-building industries on human health, the Russian Ministry of Health found that newborns suffered congenital anomalies at a much higher rate (108 to 152 per 10,000 births) in industrial cities than in rural localities (39 to 54 per 10,000).

Alarming cases of mercury pollution, which causes illness and birth defects, have been reported (though aggregate official data have never been published). Three years ago, 16 tons of mercury was released upriver from the major northern city of Arkhangel’sk. In Krasnoural’sk, a city in the Urals that produces car batteries, Russian and American researchers have found that 76.5 percent of the children are mentally retarded. Lead is the cause. Cadmium and arsenic are prevalent in the air and land throughout much of Russia. In the Arctic north, wind-blown heavy metal salts and other pollutants from the city of Norilsk’s nonferrous metal plants have left the land barren and treeless for 75 kilometers to the southeast. Lakes and rivers everywhere are badly polluted by heavy metals dumped by industry and allowed to run off farmland. Estimates by the Yeltsin-era Ministry of Ecology and other observers suggest that only 25 to 50 percent of Russia’s fresh water is potable.

The world has not been blind to Russia’s plight. By late 1998, the United States and other donors had sent more than $66 billion in aid, according to a U.S. government estimate. The list of donors includes even South Korea, and recently officials of the European Union and the World Health Organization have recognized the need to act aggressively. But the aid has been inadequate and piecemeal, and its delivery has been hampered by corruption and inept administration. The frightening reality is that it may already be too late to help. Andrey Iliaronov, an economic adviser to President Putin, has pointed to 2003 as the year of reckoning, when the demographic crisis, the crumbling infrastructure, and the burden of massive foreign debt may combine to deal a crippling blow to Russia’s remaining productive capacity and thus, to its ability to help itself.

Where will the money come from for all the myriad improvements needed in reproductive and child health, for tuberculosis prevention and treatment, for HIV/AIDS cocktails of protease inhibitors? Who will supply the $400 billion needed to clean up the water supply over the next 20 years, or the $6 billion to clean up chemical weapons storage sites, or the hundreds of billions to clean up nuclear waste? The list of needs is depressingly long, and the Russian government has not always taken the right steps to address them. Last year, for example, President Putin abolished Russia’s main environmental agency, the State Committee on Environment, and transferred its responsibilities to the Ministry of Natural Resources, which is in the business of developing the country’s oil and mineral reserves. And yet, despite how daunting the task may seem, and how long the odds of success, we cannot simply ignore the ruin in Russia. The United States and other nations of the world have a profound interest in helping to avert an economic and demographic Chernobyl that would give a fearful new meaning to the word meltdown.
[read more]


Bush’s Department of Interior: Sex, Drugs, and Oil?

“Simply stated, short of a crime, anything goes at the highest levels of the Department of the Interior”
-Earl Davaney, Interior Department Inspector General, 9/14/06

From oil lobbyists buying million-dollar homes with DOI officials to a high level administrator being sentenced to prison time amid the Jack Abramoff lobbying scandal, the agency that is tasked with protecting America’s natural resources was wrought with flagrant ethical failures during the Bush administration. Here’s the background on the biggest scandals and the key figures in the DOI under the Bush administration (Timeline, Dossiers):

Timeline

• 1983-1989: J. Steven Griles lobbying for energy lobbying firm National Environmental Strategies, Inc.

• January 2001: Gale Norton is sworn in as Department of the Interior
Secretary, J. Steven Grilels appointed as Deputy Secretary. Griles required to sign statement saying he will recuse himself from “any particular matter involving specific parties in which any of [his] former clients is or represents a party.”

• September 2003: Jack Abramoff offers a job to Griles. Emails reveal Griles was seriously considering leaving DOI at the time.

• February 2004: DOI’s Sue Ellen Wooldridge writes letter to Inspector General in support of Griles without disclosing her romantic relationship with her superior.

• January 2005: Griles joins lobbying firm run by ex-Cheney energy adviser.

• November 2005: Jack Abramoff revealed to have directed at least $250,000 to CREA, Italia Ferici and Gale Norton’s Republican environmentalism group.

• March 2006: Gale Norton resigns from DOI, saying ethics scandals did not influence her decision.

• March 2006: Gov. Dirk Kempthorne named as new Interior secretary.

• September 2006: Interior Department inspector general Earl Davaney issues scathing report uncovering “widespread ethical failures” and Griles a “train wreck waiting to happen.” Allegations included “financial self-dealing, accepting gifts from energy companies, cocaine use and sexual misconduct.”

• December 2006: Gale Norton joins Royal Dutch Shell.

• March 2007: Disgraced DOI appointee Julie MacDonald revealed to have received cash award of $9,628.

• February 2007: Griles revealed to have purchased $1m home with former DOI insubordinate Sue Ellen Wooldridge and a ConocoPhillips lobbyist. Months after the purchase, Wooldridge issued an agreement delaying $500m in ConocoPhillips pollution cleanups.

• March 2007: Griles admits to lying about his ties to Jack Abramoff and his girlfriend who acted as the go-between, DOI aide Italia Federici.

• May 2007: Report indicates MacDonald leaked internal DOI documents to Chevron employees and the father of an online RPG friend.

• May 2007: MacDonald revealed to have received a $9,628 award prior to leaving DOI, a “Special Thanks for Achieving Results award.” The figure is just under the $10,000 mark that would have triggered an investigation by OPM. The bonus was approved by DOI Deputy Sec. Lynn Scarlett.

• June 2007: Griles sentenced to 10 months prison time.

• December 2007: Italia Federici sentenced to 60 days in a halfway house and four years of probations for tax evasion and obstruction.

• May 2008: NOIA issues statement urging lawmakers not to raise liability caps on oil companies following the BP spill.

• August 2008: Sightings of polar bears in open arctic ice on the increase.

• August 2008: DOI Sec. Kempthorne proposes new regulations that cripple Endangered Species Act.

• October 2009: Gale Norton becomes focus of corruption probe regarding possible discussions of her future employment at Royal Dutch Shell as she served as DOI Secretary.

• March 2010: Cheney associate and former MMS head Randall Luthi becomes president of offshore drilling industry group weeks before BP oil spill.

Bush’s DOI Insiders

norton
Gale Norton
Secretary of the Department of Interior (2001-2006)
• Closely linked to Abramoff.
• Joined Shell Oil immediately after leaving DOI.
• Currently under federal investigation for discussing employment with Shell Oil while she was still DOI Secretary.

Gale Norton served as the Secretary of the Department of Interior from 2001 to 2006, at the height of Jack Abramoff’s influence. At the beginning of his administration, President Bush suspended many of Clinton’s late-term executive orders regarding the environment. One environmentalist called Gale Norton “James Watt in a skirt.” Abramoff clients contributed about $500,000 to Council of Republicans for Environmental Advocacy (CREA), an organization that she created with Grover Norquist and Italia Federici. After taking office, Norton would make a succession of decisions in favor of Abramoff’s Indian casino clients. After resigning from DOI in 2006, Norton joined Royal Dutch Shell – a company that she regularly dealt with in her position as DOI secretary. Under the Obama administration, Norton was subpoenaed by a grand jury for holding discussions with Shell about employment while in the role of DOI Secretary. Under her watch, DOI granted Shell three oil shale releases on federal land, worth as much as hundred of billions.

scarlett
Lynn Scarlett
Deputy Secretary of the Interior (2005-2009)
• Former head of Libertarian Reason Foundation.
• Leading proponent of “new environmentalism.”

Lynn Scarlett served as acting Secretary of the Interior in between the Norton and Kempthorne appointments, and Deputy Secretary from 2005 to 2009. Formerly head of the Libertarian Reason Foundation, Scarlett was a leading proponent of “new environmentalism,” the strategy employed by conservatives to scale back regulation and to entrust accountability to the private sector. Scarlett was responsible for approving a $9,628 bonus to Julie MacDonald in spite of the controversy over her tenure at DOI. This figure was just under the $10,000 amount that would have triggered a review by the Office of Personnel Management.

kempthorne
Dirk Kempthorne
Secretary of the Department of Interior (2006-2009)
• Selected by Bush for his willingness to push increased oil & gas drilling.
• Policies had a crippling effect on the Endangered Species Act.

Dirk Kempthorne served as Norton’s successor as DOI Secretary from 2006 to 2009. Kempthorne was chosen by President Bush to replace Gale Norton as DOI Secretary specifically with the intention of pushing for increased oil and gas drilling in 2006. Under the Kempthorne-managed DOI, federal agencies were no longer required to submit plans to the Fish and Wildlife Service or the National Marine Fisheries Service. This, wrote The New York Times, led to dangerous “self-consultation” for agencies with very different priorities. According to Kempthorne, the Endangered Species Act “was never intended to be a back door opportunity for climate change policy.” Asked to defend such a change weeks before President Obama was to be sworn in, Kempthorne responded, “we have 39 days of work left.” In the months leading up to the decision, record numbers of polar bears were seen swimming in open water off of the coast of Alaska. Prior to joining the Bush administration, Kempthorne’s political career was largely funded by timber, mining and energy contributions: $86,000 in total, or 8% of his entire campaign war chest.

griles
J. Steven Griles
Deputy Secretary of the Department of Interior (2001-2004)
• Former coal lobbyist.
• Highest ranking member of the Bush administration to be sent to prison during Abramoff scandal.
• Romantically linked to two women in DOI, both involved in scandals.

J. Steven Griles served as Deputy Secretary of the Interior from 2001 until resigning in 2004. In 2004, the DOI’s own inspector general called Griles a “train wreck waiting to happen.” Prior to joining the Bush administration, Griles was a coal industry lobbyist. Griles was the highest ranking member of the Bush administration to be sent to prison during the Abramoff scandal. He was sentenced to a ten months imprisonment after pleading guilty to obstruction of justice. Days after his guilty plea, he would marry his DOI subordinate Sue Ellen Wooldridge, who was part of an ethics scandal involving the purchase of a home with ConocoPhillips lobbyist. Prior to joining the Bush administration, Griles served in the Reagan administration’s DOI then became a coal industry lobbyist with National Environmental Strategies, Inc. Griles continued receiving payment of $284,000 a year from the coal lobbying firm as he served as DOI Deputy Secretary. While at the DOI, he arranged multiple meetings with former oil and gas industry clients and even awarded $2 million in federal contracts to a former client. Griles advised Jack Abramoff on using members of Congress to pressure the DOI and gave him information on internal decision making within the agency. Before his conviction, Griles left the White House to become a lobbyist for ConocoPhillips.

wooldridge
Sue Ellen Wooldridge
Deputy Chief of Staff for Sec. Gale Norton
• Purchased $980,000 home with J. Steven Griles and a ConocoPhillips lobbyist.
• Delayed $500 million pollution cleanup for ConocoPhillips.

Sue Ellen Wooldridge was the Deputy Chief of Staff for DOI Secretary Gale Norton. During her time at DOI where she provided the agency with ethics advice, Wooldridge became romantically involved with J. Steven Griles. Wooldridge went on to the Department of Justice as an attorney in charge of environmental and natural resources. Wooldridge and her romantic partner and once-superior Griles purchased a $980,000 home in March 2006 in South Carolina along with a third buyer: Don R. Duncan, a lobbyist for ConoPhillips. Less than a year after the three purchased the home, Wooldridge delayed $500 million pollution cleanup of a superfund site run by ConocoPhillips. Three days after Griles plead guilty, Wooldridge and he were married.

federici
Italia Federici
Political Aide to Gale Norton
• Abramoff directed $500,000 to a Federici-founded group in exchange for political favors.
• Introduced Abramoff to J. Steven Griles, with whom she was romantically involved.
• Convicted of tax evasion, obstruction of justice.

Italia Federici founded the Council of Republican for Environmental Advocacy with Interior Secretary Gale Norton. Norton brought Federici into DOI as a political aide. Federici was also romantically linked to J. Steven Griles, who she introduced to Jack Abramoff, a college friend. Abramoff directed about $500,000 to CREA in exchange for political favors from Federici, stating in an email that Federici’s group was “our access to Norton.” Federici was eventually charged with tax evasion and obstruction during Senate investigations of the Abramoff scandal. In 2007, she was sentenced to two months in a half way house and four years of probation.

luthi
Randall Luthi
Deputy Director, U.S. Fish and Wildlife Service (2007)
Director, DOI Mineral Management Service (2007-2009)
• Career goes back 30 years with Dick Cheney.
• Oversaw MMS while it was mired in drug and sex scandals.
• Now runs NOIA, an offshore drilling industry group.

Randall Luthi served as Deputy Director of the U.S. Fish and Wildlife Service until being moved to the DOI’s Mineral Management Service (MMS) , where he worked from 2007 to the end of the Bush administration. While Luthi headed MMS, the department was involved in a deep ethics scandal that “[included] allegations of financial self-dealing, accepting gifts from energy companies, cocaine use and sexual misconduct.” Luthi is a close ally of Dick Cheney – his career goes back 30 years to when he interned for the former Vice President in 1982. Luthi is currently president of the National Ocean Industries Association, an oil industry group whose goal is to “secure reliable access and a favorable regulatory and economic environment.” Following the BP oil spill, the former MMS director’s organization stood in opposition of raising liability caps on the offshore industry.

Julie MacDonald
Deputy Assistant Secretary, Fish and Wildlife and Parks (2004-2007)
• Tampered with findings in scientific studies to favor industry interests.
• Disseminated internal DOI documents to oil lobbyists, her own child, and an online videogame friend.

Julie MacDonald worked in DOI under Fish and Wildlife and Parks until resigning amid controversy. According to Mother Jones, MacDonald bullied, insulted, and harassed Fish and Wildlife employees to alter scientific findings regarding the endangered species programs, despite having no background in biology. The Washington Post described MacDonald’s actions as “political medling.” If scientists made one recommendation, MacDonald would alter ther recommendation or ignore it if it “threatened industry or landowners in any way.” One Fish and Wildlife officer said that MacDonald’s influence was so prevalent that “it became a verb for us — getting MacDonalded.” During investigations of her actions, MacDonald was revealed to have disseminated internal DOI documents “to two people with e-mail addresses at Chevron; and to the father of an online role-playing game partner, who had no legitimate reason for access to internal Interior Department records.” Asked about why she sent internal DOI documents to a friend from an online RPG, MacDonald simply responded that she wanted another set of eyes on them, negative comments included. Upon leaving DOI, MacDonald received a $9,628 bonus from Lynn Scarlett, was just under the $10,000 amount that would have triggered a review by the Office of Personnel Management. Source


The black gold and its curse

In recent years, gas and oil discoveries have been made on the African continent in countries such as Mozambique,(2) Ghana, Tanzania and Uganda and on prospected fields in Kenya, Mali and Sierra Leone. Today, 19 African countries are important oil and/or gas producers, with six of these, namely Nigeria, Libya, Algeria, Angola (oil), Sudan (oil) and Egypt (gas), accounting for the majority of the production.(3) However, for many countries the resource discoveries have been a curse rather than a blessing.

On the African continent there are numerous cases of the infamous resource curse and the so-called Dutch disease. Companies getting involved in resource-rich areas of Africa, many of which are ravaged by conflicts and poverty, face a series of obstacles. Some of these obstacles are connected to companies’ responsibilities under the Universal Declaration of Human Rights, which states that all individuals and organs of society, including companies and business enterprises, must protect and promote human rights.(4) Oil companies are often accused of hampering developing countries’ progress and violating human rights. Such accusations beg the questions: what can be expected from oil companies and what problems are they facing?

This paper discusses the human cost of oil by grouping human rights into two categories: direct and indirect human rights atrocities. The direct human rights atrocities are defined in this paper as those caused by oil companies because of their presence and activities in a country. The indirect human rights abuses are the ones in which revenues from oil and gas do not reach the people to whom the natural resources belong. Instead, the revenues encourage authoritarian Governments, or simply reach a small elite, hampering development and thus, indirectly violating peoples’ rights.
The black gold and its curse

A high number of human rights abuses related to fossil fuel operations have been perpetrated by Governments and corporations around the world. These include, for example, forced relocation and deadly suppression of critics.(5) In addition to human rights violations, the relationship among corruption, authoritarian governments, governance, conflicts and extractive industries tends to have a ‘repression effect’ in which resource wealth hinders democratisation by making it possible for governments to fund tools of repression.

Furthermore, World Bank analyst, Paul Collier, has declared that countries relying on revenues from resource exports run a 40 times higher risk of civil war, thus demonstrating a link between dependency on oil and serious armed conflict.(6) The two most recent African examples where tensions have increased and may continue to escalate due to disagreements surrounding oil are the border conflict between South Sudan and Sudan and the recent dispute between Kenya and Somalia. The latter is a result of newly identified oil exploration blocks in an area of the Indian Ocean being claimed by both countries.(7)

Simultaneously clashes between the global oil industry and a transnational human rights advocacy network are becoming increasingly evident.(8) So, what is it that makes natural resources, the oil business in particular, so prone to human rights abuses?
The direct effects of hydrocarbon industries on human rights

Direct effects, as defined above, include the mistreatment and forced relocation of indigenous peoples and unfair treatment of company employees.

As indicated in an ‘Economies of Violence’ report by Michael Watts,(9) the most common human rights violation by oil companies is connected to the fact that their activities are often located within the areas where indigenous peoples live or work. The governments in most petro-states have set up constitutional monopolies over national resources such as oil, while the indigenous or ethnic minorities in many countries have incorporated, within constitutions or customary law, essential rights to their land. Thus controversy is frequently caused by claims over access to and control over oil revenues and access to the oil companies as stakeholders. The companies often simply pay lip-service to local communities and submit unequal and minimal payments for use of their land and the resources removed from this land. Frequently, there is no rigorous and accountable set of governance structures that connect capital and community.(10) The displacement of indigenous people’s also constitutes a violation of the rights of people in oil-rich regions. Former Sudan is one example where the Government, since 1999, has been involved in human rights violations by moving people from the oil producing areas, causing displacement of 175,000 people.(11)

Direct implications on human rights also include the unequal treatment of locally employed people and international employees. Other issues evolve in the areas of the oil compounds where boomtowns have grown and with them prostitution and sex trade. The oil industry has made no efforts to regulate these developments.(12)

One of the most notorious and high profile examples of gross human rights abuses comes from Nigeria where Ken Saro-Wiwa and eight other men experienced the price of oil in 1995. The men were hanged in Nigeria’s Port Harcourt prison after launching a non-violent movement for social and ecological justice for the Ogoni people in the Niger Delta, challenging the conduct of the oil companies and the Nigerian Government.(13) The oil company, Royal Dutch Shell, had their reputation severely damaged. Global campaigns of disinvestment were launched by many different organisations.(14) In the end Shell was forced to pay US$ 15.5 million in a court settlement due to their atrocities against the Ogoni people in the 1990s.(15) The event triggered the social investment movement and led to Shell’s launch of the Statement of General Business Principles, which included the company actively seeking out non-governmental organisations (NGOs) for policy “dialogue”, as well as BP’s “What we stand for…” statement in 1998.(16)

By the late 1990s most of the oil companies had implemented codes of conduct, as an emerging movement on cooperate social responsibility led to a number of voluntary codes of conduct, including their approach towards community development, labour and payment and environmental accountability. However, these codes of conduct are most often weak on the important issues, such as monitoring, disclosure and enforcement.(17)

Welcomed by many advocacy groups, the United Nations (UN) Draft Norms, launched in 2003, address the importance of protecting civilians, worker rights, non-discrimination, security and war laws, social and economic cultural rights and indigenous people’s rights. They also include enforcement and compliance instruments.(18) The framework was released due to the assumption that self-regulation or civic regulation cannot provide a sufficient framework for regulating global businesses.(19) Mandatory regulation is necessary where states are key players. The regulatory effort also includes the transparency and monitoring efforts of multilateral agencies such as the International Bank for Reconstruction and Development (IBRD) and the International Monetary Fund (IMF), such as the IMF’s oil diagnostics programme in Angola. The Norms also imply that the World Bank will take a more critical approach towards the market of oil and gas.(20)

In addition to the steps taken by bodies such as the UN, there are society groups, watchdog agencies and NGOs which engage in monitoring corporate activities. New forms of global regulations are thus, continuously being developed.(21)
The indirect effects of hydrocarbon industries on human rights

The indirect human rights abuses include the encouragement of the development of Dutch disease, as well as patronage and rent seeking and keeping oppressive African leaders in government.

The Dutch disease is the most well known economic mechanism for anti-developmental outcomes. Dutch disease is a macroeconomic dynamic where a boom in the resource sector harms the non-resource sectors of the economy.(22) Countries tend to become dependent on their resource sector and do not diversify their economies. While oil prices remain high, Governments spend money through credit expansion and augmentation of the public sector. Thereafter, when the prices fall as a result of the volatility of the international oil market, these economies fall into debt.(23) The resource curse has therefore become widely used to describe the risk petro-states face. The oil industry is also, to a large extent, a closed society with limited employment effects, which creates few non-state multiplier effects.(24)

Oil has a tendency to encourage patronage and rent seeking instead of statecraft, transparency and state-institutional capacity. However, it is the level of corruption, fraud and total pillage of the public cashier that represent the core of the rights violations perpetrated by both companies and governments.(25)

It must be noted that as these effects are indirect, oil companies cannot be held directly responsible for them. Indeed, the presence of oil companies may also have beneficial outcomes for the countries in which they operate. China’s involvement in the oil business in African countries has been widely criticised from a human rights perspective. However, on the other hand, China is simultaneously investing in Africa’s governmental sectors, particularly infrastructure sectors in many countries, evident in China’s investment in Angola.(26)

Despite the investments in countries made by oil companies, if citizen’s rights are to be respected, it remains essential to address the economic and political issues described. In this effort, the World Bank, for example, started a Chad-Cameroon Oil Pipeline project, which finished in September 2008 after a fourteen-year engagement with the Government of Chad. The effort was aimed at setting a new standard for engagement of international donors in resource-rich but democracy-poor nations. The ambition was to establish institutions that would keep Chad from facing the typical political and economic issues related to oil booms in poor nations. The institutions were to direct oil revenues towards reducing poverty and certify fiscally sound and transparent Government spending. However, according to ‘Betting on oil: the World Bank’s attempt to promote accountability in Chad produced results that were far from positive. Moreover, the oil revenues might even have fuelled the consolidation of authoritarian power by, for example, arming rebellions.(27)

Oil revenues have also contributed to keeping oppressive African leaders in government, which makes transparency in oil deals of significant importance. Increasing transparency has been identified as the main factor in the struggle against the resource curse, for example, through the Extractive Industries Transparency Initiative (EITI), which is a global organisation of governments, companies, civil society groups and investors. Its aim is to strengthen governance by improving transparency in the sector of natural resources. The promotion of public reporting of revenue flows is reinforced through legislation such as Section 1504 of the United States Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which requires companies to report on tax payments from each country. Similar sets of rules have also been proposed by the European Commission. This development is one step towards breaking the pattern of the resource curse and exploitation as oil, gas and mining companies pay what they should and governments manage revenues in a socially beneficial way.(28)

However, whether these control measures will be observed and have their desired effect, remains to be seen. Kenya recently discovered the country’s first oil deposit in its northwest territory of Turkana. Kenya’s oil findings are being compared to the ones made in Uganda in 2006. The oil is considered high-quality. Tullow oil, an oil exploration company in the territory, declared the site Ngamia-1 in Kenya’s Turkana County.(29) However, the discovery raises both hope, due to the investment that may enter the impoverished region, but also fear for the exploitation and abuse of Turkana province’s indigenous peoples.(30) Kenya has relatively stable democratic institutions, but struggles with corrupt elite. With this said, the oil discovery in Kenya is yet to be determined as a curse or a blessing.(31)
Concluding remarks

This paper concludes that it is only the direct human rights atrocities for which an oil company can be solely accountable. It also shows that the increasing global social movements of society groups, NGOs and watchdog agencies, as well as legislation and the monitoring efforts of multilateral agencies, play an essential role in preventing these atrocities. Their presence increases the price for human rights violations, which in turn increases the company’s incentives to remain lawful.

The issue of the indirect human rights abuses are more complex. These atrocities are usually a result of corruption, lack of transparency and authoritarian governments. The oil companies can not be given full blame for these situations which may incite a blame game between the companies and the state. However, with a legal framework of transparency these abuses could be regulated more efficiently. This would be beneficial for the oil companies operating in countries with a weak democratic apparatus since that would keep them from bad publicity. This paper encourages this development as an increasing number of African countries are being subject to natural resources discoveries and international attention.

NOTES:

(1) Contact Christine Petré through Consultancy Africa Intelligence’s Rights in Focus unit ( rights.focus@consultancyafrica.com).
(2) ‘Statoil says finds partner for Mozambican blocks’, Reuters, 25 April 2012, http://www.reuters.com.
(3) ‘Africa oil and gas: a continent on the move’. Ernst & Young Oil and Gas Center report, 2011, http://www.ey.com.
(4) ‘The Universal Declaration of Human Rights’, United Nations, http://www.un.org.
(5) ‘Human Rights’ Oil Change International website, http://priceofoil.org.
(6) Ibid.
(7) Gillblom, K., ‘Kenya, Somalia border row threatens oil exploration’, Reuters, 20 April 2012, http://www.reuters.com.
(8) Watts, M., ‘Human rights violence and the oil complex’, Niger Delta: Economies of violence, working paper no. 2, 2004, http://oldweb.geog.berkeley.edu.
(9) Ibid.
(10) Ibid.
(11) Ibid.
(12) Ibid.
(13) Wheeler, D., Fabig, H. and Boele, R., 2002. Paradoxes and dilemmas for stakeholder responsive firms in the extractive sector: lessons from the case of Shell and the Ogoni. Journal of Business Ethics, 39(3), pp. 297-318.
(14) Ibid.
(15) ‘Human Rights’ Oil Change International website, http://priceofoil.org.
(16) Watts, M., ‘Human rights violence and the oil complex’, Niger Delta: Economies of violence, working paper no. 2, 2004, http://oldweb.geog.berkeley.edu.
(17) Human rights & oil in Nigeria’ Amnesty International, August 2004, http://www.amnesty.org.
(18) Watts, M., ‘Human rights violence and the oil complex’, Niger Delta: Economies of violence, working paper no. 2, 2004, http://oldweb.geog.berkeley.edu.
(19) Ibid.
(20) Ibid.
(21) Ibid.
(22) Gould, A. and Winters, M., 2011. Betting on oil: the World Bank’s attempt to promote accountability in Chad. Global Governance 17(2), pp. 229-245.
(23) Bantekas, I., 2005. Natural resource revenue sharing schemes (trust funds) in international law. Netherlands International Law Review, 52, pp. 31-56.
(24) Ross, M., 2001. Does oil hinder democracy?’ World Politics, 53, pp. 325-61.
(25) Watts, M., ‘Human rights violence and the oil complex’, Niger Delta: Economies of violence, working paper no. 2, 2004, http://oldweb.geog.berkeley.edu.
(26) Taylor, I., 2006. China’s oil diplomacy in Africa. International Affairs, 82, p. 937-959.
(27) Gould, A. and Winters, M., Betting on oil: the World Bank’s attempt to promote accountability in Chad. Global Governance, 17, pp. 229-245.
(28) ‘Rigged? The scramble for Africa’s oil, gas and minerals,’ Global Witness report, January 2012, http://www.globalwitness.org.
(29) ‘Kenya discovers first ‘major’ oil deposit’ Al Jazeera, 26 March 2012, http://www.aljazeera.com.
(30) Alpert, E., ‘Newly discovered oil fuels hope and fear in Kenya’. Los Angeles Times, 27 March 2012 http://latimesblogs.latimes.com.
(31) Wanyonyi, T., ‘Will it be a curse or blessing for Kenya?’ Daily Nation, 26 March 2012, http://www.nation.co.ke.


The Mossadegh Case (Iran) & the Kashagan Case(Kazakhstan)


Bilderberg 2012 Official Participant List- awe the Elites

Chantilly, Virginia, USA, 31 May-3 June 2012

Final List of Participants

Chairman
FRA Castries, Henri de Chairman and CEO, AXA Group

DEU Ackermann, Josef Chairman of the Management Board and the Group Executive Committee, Deutsche Bank AG
GBR Agius, Marcus Chairman, Barclays plc
USA Ajami, Fouad Senior Fellow, The Hoover Institution, Stanford University
USA Alexander, Keith B. Commander, US Cyber Command; Director, National Security Agency
INT Almunia, Joaquín Vice-President – Commissioner for Competition, European Commission
USA Altman, Roger C. Chairman, Evercore Partners
PRT Amado, Luís Chairman, Banco Internacional do Funchal (BANIF)
NOR Andresen, Johan H. Owner and CEO, FERD
FIN Apunen, Matti Director, Finnish Business and Policy Forum EVA
TUR Babacan, Ali Deputy Prime Minister for Economic and Financial Affairs
PRT Balsemão, Francisco Pinto President and CEO, Impresa; Former Prime Minister
FRA Baverez, Nicolas Partner, Gibson, Dunn & Crutcher LLP
FRA Béchu, Christophe Senator, and Chairman, General Council of Maine-et-Loire
BEL Belgium, H.R.H. Prince Philippe of
TUR Berberoğlu, Enis Editor-in-Chief, Hürriyet Newspaper
ITA Bernabè, Franco Chairman and CEO, Telecom Italia
GBR Boles, Nick Member of Parliament
SWE Bonnier, Jonas President and CEO, Bonnier AB
NOR Brandtzæg, Svein Richard President and CEO, Norsk Hydro ASA
AUT Bronner, Oscar Publisher, Der Standard Medienwelt
SWE Carlsson, Gunilla Minister for International Development Cooperation
CAN Carney, Mark J. Governor, Bank of Canada
ESP Cebrián, Juan Luis CEO, PRISA; Chairman, El País
AUT Cernko, Willibald CEO, UniCredit Bank Austria AG
FRA Chalendar, Pierre André de Chairman and CEO, Saint-Gobain
DNK Christiansen, Jeppe CEO, Maj Invest
RUS Chubais, Anatoly B. CEO, OJSC RUSNANO
CAN Clark, W. Edmund Group President and CEO, TD Bank Group
GBR Clarke, Kenneth Member of Parliament, Lord Chancellor and Secretary of Justice
USA Collins, Timothy C. CEO and Senior Managing Director, Ripplewood Holdings, LLC
ITA Conti, Fulvio CEO and General Manager, Enel S.p.A.
USA Daniels, Jr., Mitchell E. Governor of Indiana
USA DeMuth, Christopher Distinguished Fellow, Hudson Institute
USA Donilon, Thomas E. National Security Advisor, The White House
GBR Dudley, Robert Group Chief Executive, BP plc
ITA Elkann, John Chairman, Fiat S.p.A.
DEU Enders, Thomas CEO, Airbus
USA Evans, J. Michael Vice Chairman, Global Head of Growth Markets, Goldman Sachs & Co.
AUT Faymann, Werner Federal Chancellor
DNK Federspiel, Ulrik Executive Vice President, Haldor Topsøe A/S
USA Ferguson, Niall Laurence A. Tisch Professor of History, Harvard University
GBR Flint, Douglas J. Group Chairman, HSBC Holdings plc
CHN Fu, Ying Vice Minister of Foreign Affairs
IRL Gallagher, Paul Former Attorney General; Senior Counsel
USA Gephardt, Richard A. President and CEO, Gephardt Group
GRC Giannitsis, Anastasios Former Minister of Interior; Professor of Development and International Economics, University of Athens
USA Goolsbee, Austan D. Professor of Economics, University of Chicago Booth School of Business
USA Graham, Donald E. Chairman and CEO, The Washington Post Company
ITA Gruber, Lilli Journalist – Anchorwoman, La 7 TV
INT Gucht, Karel de Commissioner for Trade, European Commission
NLD Halberstadt, Victor Professor of Economics, Leiden University; Former Honorary Secretary General of Bilderberg Meetings
USA Harris, Britt CIO, Teacher Retirement System of Texas
USA Hoffman, Reid Co-founder and Executive Chairman, LinkedIn
CHN Huang, Yiping Professor of Economics, China Center for Economic Research, Peking University
USA Huntsman, Jr., Jon M. Chairman, Huntsman Cancer Foundation
DEU Ischinger, Wolfgang Chairman, Munich Security Conference; Global Head Government Relations, Allianz SE
RUS Ivanov, Igor S. Associate member, Russian Academy of Science; President, Russian International Affairs Council
FRA Izraelewicz, Erik CEO, Le Monde
USA Jacobs, Kenneth M. Chairman and CEO, Lazard
USA Johnson, James A. Vice Chairman, Perseus, LLC
USA Jordan, Jr., Vernon E. Senior Managing Director, Lazard
USA Karp, Alexander CEO, Palantir Technologies
USA Karsner, Alexander Executive Chairman, Manifest Energy, Inc
FRA Karvar, Anousheh Inspector, Inter-ministerial Audit and Evaluation Office for Social, Health, Employment and Labor Policies
RUS Kasparov, Garry Chairman, United Civil Front (of Russia)
GBR Kerr, John Independent Member, House of Lords
USA Kerry, John Senator for Massachusetts
TUR Keyman, E. Fuat Director, Istanbul Policy Center and Professor of International Relations, Sabanci University
USA Kissinger, Henry A. Chairman, Kissinger Associates, Inc.
USA Kleinfeld, Klaus Chairman and CEO, Alcoa
TUR Koç, Mustafa Chairman, Koç Holding A.Ş.
DEU Koch, Roland CEO, Bilfinger Berger SE
INT Kodmani, Bassma Member of the Executive Bureau and Head of Foreign Affairs, Syrian National Council
USA Kravis, Henry R. Co-Chairman and Co-CEO, Kohlberg Kravis Roberts & Co.
USA Kravis, Marie-Josée Senior Fellow, Hudson Institute
INT Kroes, Neelie Vice President, European Commission; Commissioner for Digital Agenda
USA Krupp, Fred President, Environmental Defense Fund
INT Lamy, Pascal Director-General, World Trade Organization
ITA Letta, Enrico Deputy Leader, Democratic Party (PD)
ISR Levite, Ariel E. Nonresident Senior Associate, Carnegie Endowment for International Peace
USA Li, Cheng Director of Research and Senior Fellow, John L. Thornton China Center, Brookings Institution
USA Lipsky, John Distinguished Visiting Scholar, Johns Hopkins University
USA Liveris, Andrew N. President, Chairman and CEO, The Dow Chemical Company
DEU Löscher, Peter President and CEO, Siemens AG
USA Lynn, William J. Chairman and CEO, DRS Technologies, Inc.
GBR Mandelson, Peter Member, House of Lords; Chairman, Global Counsel
USA Mathews, Jessica T. President, Carnegie Endowment for International Peace
DEN Mchangama, Jacob Director of Legal Affairs, Center for Political Studies (CEPOS)
CAN McKenna, Frank Deputy Chair, TD Bank Group
USA Mehlman, Kenneth B. Partner, Kohlberg Kravis Roberts & Co.
GBR Micklethwait, John Editor-in-Chief, The Economist
FRA Montbrial, Thierry de President, French Institute for International Relations
PRT Moreira da Silva, Jorge First Vice-President, Partido Social Democrata (PSD)
USA Mundie, Craig J. Chief Research and Strategy Officer, Microsoft Corporation
DEU Nass, Matthias Chief International Correspondent, Die Zeit
NLD Netherlands, H.M. the Queen of the
ESP Nin Génova, Juan María Deputy Chairman and CEO, Caixabank
IRL Noonan, Michael Minister for Finance
USA Noonan, Peggy Author, Columnist, The Wall Street Journal
FIN Ollila, Jorma Chairman, Royal Dutch Shell, plc
USA Orszag, Peter R. Vice Chairman, Citigroup
GRC Papalexopoulos, Dimitri Managing Director, Titan Cement Co.
NLD Pechtold, Alexander Parliamentary Leader, Democrats ’66 (D66)
USA Perle, Richard N. Resident Fellow, American Enterprise Institute
NLD Polman, Paul CEO, Unilever PLC
CAN Prichard, J. Robert S. Chair, Torys LLP
ISR Rabinovich, Itamar Global Distinguished Professor, New York University
GBR Rachman, Gideon Chief Foreign Affairs Commentator, The Financial Times
USA Rattner, Steven Chairman, Willett Advisors LLC
CAN Redford, Alison M. Premier of Alberta
CAN Reisman, Heather M. CEO, Indigo Books & Music Inc.
DEU Reitzle, Wolfgang CEO & President, Linde AG
USA Rogoff, Kenneth S. Professor of Economics, Harvard University
USA Rose, Charlie Executive Editor and Anchor, Charlie Rose
USA Ross, Dennis B. Counselor, Washington Institute for Near East Policy
POL Rostowski, Jacek Minister of Finance
USA Rubin, Robert E. Co-Chair, Council on Foreign Relations; Former Secretary of the Treasury
NLD Rutte, Mark Prime Minister
ESP Sáenz de Santamaría Antón, Soraya Vice President and Minister for the Presidency
NLD Scheffer, Paul Professor of European Studies, Tilburg University
USA Schmidt, Eric E. Executive Chairman, Google Inc.
AUT Scholten, Rudolf Member of the Board of Executive Directors, Oesterreichische Kontrollbank AG
FRA Senard, Jean-Dominique CEO, Michelin Group
USA Shambaugh, David Director, China Policy Program, George Washington University
INT Sheeran, Josette Vice Chairman, World Economic Forum
FIN Siilasmaa, Risto Chairman of the Board of Directors, Nokia Corporation
USA Speyer, Jerry I. Chairman and Co-CEO, Tishman Speyer
CHE Supino, Pietro Chairman and Publisher, Tamedia AG
IRL Sutherland, Peter D. Chairman, Goldman Sachs International
USA Thiel, Peter A. President, Clarium Capital / Thiel Capital
TUR Timuray, Serpil CEO, Vodafone Turkey
DEU Trittin, Jürgen Parliamentary Leader, Alliance 90/The Greens
GRC Tsoukalis, Loukas President, Hellenic Foundation for European and Foreign Policy
FIN Urpilainen, Jutta Minister of Finance
CHE Vasella, Daniel L. Chairman, Novartis AG
INT Vimont, Pierre Executive Secretary General, European External Action Service
GBR Voser, Peter CEO, Royal Dutch Shell plc
SWE Wallenberg, Jacob Chairman, Investor AB
USA Warsh, Kevin Distinguished Visiting Fellow, The Hoover Institution, Stanford University
GBR Wolf, Martin H. Chief Economics Commentator, The Financial Times
USA Wolfensohn, James D. Chairman and CEO, Wolfensohn and Company
CAN Wright, Nigel S. Chief of Staff, Office of the Prime Minister
USA Yergin, Daniel Chairman, IHS Cambridge Energy Research Associates
INT Zoellick, Robert B. President, The World Bank Group

Rapporteurs
GBR Bredow, Vendeline von Business Correspondent, The Economist
GBR Wooldridge, Adrian D. Foreign Correspondent, The Economist


Shell,Chevron,the Nigerian Bribery and guess who…IMF!

The involvement of energy companies such as Shell and Chevron in oil-rich Nigeria has been a very contentious corporate social responsibility matter. Criticisms leveled against them include being complicit in environmental degradation and human rights violations. That the Ogoni people whose lands have created so much oil revenue continue to see little to no benefit from these proceeds has been a cause celebre for the longest time. Meanwhile, the state execution of Ogoni environmentalist Ken Saro-Wiwa in 1995 reinforced perceptions that energy companies were indifferent to environmental and human rights abuses in Nigeria. Have these companies learned to tread more carefully given the bad press they have gotten from Nigeria? Unfortunately, the Financial Times notes that Shell and Chevron have once again been implicated, this time with bribing a powerful Nigerian politician. Same old, same old…

Anti-corruption investigators are probing payments by ChevronTexaco and Royal Dutch Shell to a company owned by a powerful Nigerian politician they suspect has laundered tens of millions of dollars in British banks, property and cars.

James Ibori, who was governor of Delta State until last May, is being investigated by British and Nigerian authorities over sums he is alleged to have accumulated during his years in office.

A UK court affidavit seen by the Financial Times says there is reasonable cause to believe Mr Ibori bled money from his oil-rich state and bought assets including a $20m jet, houses in London and Dorset, and a €406,000 ($595,460) armour-plated Mercedes-Benz from a Mayfair dealership.

The affidavit was drawn up in July by British police investigating corruption by foreign officials in the UK as part of a successful legal effort to restrain Mr Ibori’s assets. On Thursday, the High Court threw out an attempt by Mr Ibori to have the freezing order quashed.

The affidavit highlights a number of British bank accounts, including some at Barclays and one at Abbey National, suspected of being used by Mr Ibori or associates involved in money laundering. Barclays and Abbey declined to comment.

The document says police are examining £2.3m ($4.7m) of payments made over the past three years by ChevronTexaco and the state-owned Nigerian National Petroleum Corporation into a dollar-denominated Barclays account in London held on behalf of MER Engineering, a company owned by Mr Ibori.

The affidavit says the “purportedly legitimate” payments were for the rental of two houseboats for oil workers, although it suspects the transfers were “corrupt payments rather than in exchange for legitimate services”.

Nuhu Ribadu, chairman of Nigeria’s Economic and Financial Crimes Commission, which has worked closely with the British investigators, told the FT he was “investigating huge payments made by Shell and Chevron to MER Engineering” over the hiring of the houseboats.

Chevron confirmed it had hired two houseboats from MER, but declined to give more details. It said it believed it had complied with anti-corruption laws.

Shell said MER was on its register of approved contractors. It declined to elaborate on the amount and type of work done by MER.

NNPC said it never paid bribes. Mr Ibori and his London lawyer could not be reached for ­comment.

As Nigeria spirals into instability, historian and economic researcher Frederick William Engdahl argues a recent government decision to lift subsidies on imported fuel in the oil-rich nation bears the mark of Washington Consensus shock therapy.

In the article below, Engdahl explains his view.

Nigeria, Africa’s most populous nation and its largest oil producer, is from all evidence being systematically thrown into chaos and a state of civil war. The recent surprise decision by the government of Goodluck Jonathan to abruptly lift subsidies on imported gasoline and other fuel has a far more sinister background than mere corruption, and the Washington-based International Monetary Fund (IMF) is playing a key role. China appears to be the likely loser along with Nigeria’s population.

The recent strikes protesting the government’s abrupt elimination of gasoline and other fuel subsidies, that brought Nigeria briefly to a standstill, came as a surprise to most in the country. Months earlier, President Jonathan had promised the major trade union organizations that he would conduct a gradual four-stage lifting of the subsidy to ease the economic burden. Instead, without warning he announced an immediate full removal of subsidies effective January 1, 2012. It was “shock therapy” to put it mildly.

Nigeria today is one of the world’s most important producers of light, sweet crude oil—the same high-quality crude oil that Libya and the British North Sea produce. The country is showing every indication of spiraling downward into deep disorder. Nigeria is the fifth largest supplier of oil to the United States and twelfth largest oil producer in the world on a par with Kuwait and just behind Venezuela with production exceeding two million barrels a day.
­The curious timing of IMF subsidy demand

Despite its oil riches, Nigeria remains one of Africa’s poorest countries. The known oilfields are concentrated around the vast Niger Delta roughly between Port Harcourt and extending in the direction of Lagos, with large new finds being developed all along the oil-rich Gulf of Guinea.Nigeria’s oil is exploited and largely exported by the Anglo-American giants—Shell, Mobil, Chevron, Texaco. Italy’s Agip also has a presence and most recently, to no one’s surprise, the Chinese state oil companies began seeking major exploration and oil infrastructure agreements with the Abuja government.

Ironically, despite the fact that Nigeria has abundant oil to earn dollar export revenue to build its domestic infrastructure, government policy has deliberately let its domestic oil refining capacity fall into ruin. The consequence has been that most of the gasoline and other refined petroleum products used to drive transportation and industry, has to be imported, despite the country’s abundant oil. In order to shield the population from the high import costs of gasoline and other refined fuels, the central government has subsidized prices.

Until January 1, 2012, that is. That was the day when, without advance warning President Goodluck Ebele Azikiwe Jonathan announced immediate removal of all fuel subsidies. Prices for gasoline shot up almost threefold in hours from 65 naira (35 cents of a dollar) a liter to 150 naira (93 cents). The impact rippled across the economy to everything including prices of grains and vegetables.

In justifying the move, Central Bank Governor Lamido Sanusi insisted that “The monies will be used in provision of social amenities and infrastructural development that will benefit Nigerians more and save the country from economic rift.”President Goodluck Jonathan says he is phasing out the subsidy as a part of a move to “clean up the Nigerian government.” If so, how he plans to proceed is anything but apparent.

The huge unexpected price hike for domestic fuel triggered nationwide protests that threatened to bring the economy to a halt by mid-January. The president deftly took the wind out of protester sails by announcing a partial rollback in prices, still leaving prices effectively double that of December. The trade union federation immediately called off the protests. Then, revealingly, Goodluck Jonathan’s government ordered the military to take to the streets to “keep order” and de facto prevent new protests. All that took place during one of the bloodiest waves of bombings and murder rampages by the terrorist Boko Haram sect creating a climate of extreme chaos.
­The smoking gun of the IMF

What has been buried from international accounts of the unrest is the explicit role the US-dominated International Monetary Fund (IMF) played in the situation. With suspicious timing IMF Managing Director Christine Lagarde was in Nigeria days before the abrupt subsidy decision of President Jonathan. By all accounts, the IMF and the Nigerian government have been careful this time not to be blatant about openly announcing demands to ends subsidies as they were in Tunisia before food protests became the trigger for that country’s Twitter putsch in 2011.

During her visit to Nigeria Lagarde said President Jonathan’s ‘Transformation Agenda’ for deregulation “is an agenda for Nigeria, driven by Nigerians. The IMF is here to support you and be a better partner for you.” Few Nigerians were convinced.On December 29 Reuters wrote, “The IMF has urged countries across West and Central Africa to cut fuel subsidies, which they say are not effective in directly aiding the poor, but do promote corruption and smuggling. The past months have seen governments in Nigeria, Guinea, Cameroon and Chad moving to cut state subsidies on fuel.”

Further confirming the role US and IMF pressure on the Nigerian government played, Jeffery Sachs, Special Adviser to the United Nations (UN) Secretary General, during a meeting with President Jonathan in Nigeria in early January days after the subsidy decision, declared Jonathan’s decision to withdraw petroleum subsidy “a bold and correct policy.”

Sachs, a former Harvard economics professor, became notorious during the early 1990s for prescribing IMF “shock therapy” for Poland, Russia, Ukraine and other former communist states, which opened invaluable state assets for de facto plundering by dollar-rich western multinationals.

Even more suspicious is the manner in which Washington and the IMF are putting pressure on only select countries to end subsidies. Nigeria, whose oil today sells for the equivalent of $1 a liter or roughly $3.78 a US gallon, is far from cheap. Brunei, Oman, Kuwait, Bahrain, Qatar, Saudi Arabia all offer their petrol very cheap to their people. The Saudis sell their oil at 17 cents, Kuwait at 22 cents. In the US gasoline averages 89 cents a liter.

That means the IMF and Washington have forced one of the poorest economies in Africa to impose a huge tax on its citizens on the implausible argument it will help eliminate corruption in the state petroleum sector. The IMF knows well that the elimination of subsidies will do nothing about corruption in high places.

Were the IMF and World Bank genuinely concerned with the health of the domestic Nigerian economy, they would have provided support for rebuilding and expanding a domestic oil refinery industry that has been allowed to rot, so that the country need no longer import refined fuels using precious state budget resources.The easiest way to do that would be to expedite a two-year-old deal between China and the Nigerian government to invest some $28 billion in massive expansion of the oil refinery sector, to eliminate need for importing foreign gasoline and other refined products.

Quite the opposite—the criminal cabal inside the Nigerian National Petroleum Company (NNPC) and the Government making huge profits on the old subsidy system are suddenly making double and potentially triple more to maintain the old corrupt import system, and, of course, to sabotage Chinese refinery construction that could put an end to their gravy train.
­Cutting their nose to spite the face…

Rather than benefit ordinary Nigerians as the IMF proclaims to want, the elimination of the subsidies has further pauperized the 90 per cent living on less than $2 a day, according to Mallam Sanusi Lamido Sanusi, the Nigerian Central Bank governor. An estimated 40 million Nigerians are unemployed in the country of 148 million.

Because transport costs are a significant factor in delivery of food to the cities, food price inflation has soared along with costs of public transportation for the majority of poorer Nigerians. According to the Nigerian Leadership Sunday, “prices of commodities which shot up as a fallout of the fuel pump price increase have refused to come down.” Everything from street vegetable sellers to carwashes to roadside photographers are feeling the shock of the rise in fuel prices. Unemployment is rising as small businesses fold.

The argument of the IMF and the Jonathan administration is that by freeing fuel prices, funds would be available to more social services and rebuilding Nigeria’s “infrastructure.” Both the IMF and the government know it would have been far more economically viable to replace the current corrupt system of importing refined gasoline and fuels with investing in rebuilding Nigeria’s domestic refining capacity.

Son Gyoh of the Nigerian Awareness for Development organization asks, “Would it not be more expedient to pressure government to service the refineries to full production capacity, given the implications on overhead and competitiveness for local industries?”

Gyoh pointed to the source of the problem: “Why have successive governments left the refineries in a state of disrepair while spending huge on subsidy? Is there any chance that the savings from subsidy withdrawal will go directly into rehabilitating the refineries? Does deregulation imply NNPC will no longer operate a monopoly in importation of refined petroleum product, or is this lobby a self-serving lifeline to continue its monopoly? ” He concludes, “In any case, there is good reason to doubt subsidy removal will solve the fuel scarcity problem as the cabal will only regroup to change tactics, a fact Nigerians are only too aware of.”

After Nigeria partly nationalized its oil sector in the late 1970s, it also took control of Shell Oil’s Port Harcourt I refinery. In 1989, Port Harcourt II refinery was built. Both refineries fell into serious disrepair after 1994, when the Abacha military dictatorship cut the “take” of the Nigerian National Petroleum Company NNPC from domestic sale of refined oil products such as gasoline from 84% to 22%. That caused a cash crisis for NNPC and a halt to refinery maintenance. Today only one of four refineries operates at all.

What developed since was a system of NNPC importing foreign gasoline and other refined products for Nigeria’s domestic needs, naturally at a far more expensive cost. The price subsidies were to relieve that higher import cost, hardly a sensible solution but a very lucrative one for those corrupt elements in the state and private sector making a killing, literally, off the import process.
­NNPC criminal enterprise

The IMF is well aware of the real cause of Nigeria’s fuel industry problems. A Nigerian legislative committee examining the sources of the industry’s problems recently released a report documenting that at least $4 billion annually is taken from taxpayers in fuel industry corruption with the state Nigerian National Petroleum Company (NNPC) at the center. According to the commission, “every day, fuel importers drop off 59 million liters of fuel. The country consumes 35 million liters daily. That leaves 24 million liters of oil available for smugglers to export, paid for by government fuel subsidies. This costs the Nigerian people roughly $4 billion yearly, according to Reuters.”

The Nigerian government has said that the 7.5 billion dollars spent yearly on fuel subsidies could be used to provide desperately needed infrastructure. But they omit any mention of the rampant siphoning off of $4 billion of oil by black market smugglers, reportedly with connivance of high NNPC government officials, to sell to neighboring countries at a hefty profit. The refined imported fuel is reportedly smuggled into neighboring countries like Cameroon, Chad and Niger where petrol prices are far higher, according to Abdullahi Umar Ganduje, Deputy Governor of Kano State.
­China as IMF target?

One major geopolitical factor that is generally ignored in recent discussion of Nigerian oil politics is the growing role of China in the country. In May 2010, only days after President Jonathan was sworn in, China signed an impressive $28.5 billion deal with his government to build three new refineries, something that in no way fits into the plans of either the IMF, or of Washington, or of the Anglo-American oil majors.

China State Construction Engineering Corporation Limited (CSCEC) signed the deal to build three oil refineries with Nigerian National Petroleum Corporation (NNPC), in the biggest deal China has made with Africa. Shehu Ladan, head of NNPC, said at the signing ceremony that the added refineries would reduce the $10 billion spent annually on imported refined products. As of January 2012, the three Chinese refinery projects were still in the planning stage, reportedly blocked by the powerful vested interests gaining from the existing corrupt import system.

A report in China Daily last November quoted Nigeria’s Olusegun Olutoyin Aganga, the minister of trade and investment, that Nigeria was seeking added Chinese investors for its energy, mining and agribusiness industries. Last September on a visit to Beijing, Nigeria central bank governor Lamido Sanusiannounced his country planned to invest 5 per cent to 10 per cent of its foreign exchange reserves in China’s currency, the renminbi (RMB) or yuan, noting that he sees the yuan becoming reserve currency. In 2010 China’s loans and exports to Nigeria exceeded $7 billion, while Nigeria exported $1 billion of crude oil, Sanusi stated.

Until now Nigeria has held some 79% of her foreign currency reserves in dollars, the rest in Euro or Sterling, all of which look dicey given their financial and debt problems. The move of a major oil producer away from dollars, added to similar moves recently by India, Japan, Russia, Iran and others, augurs bad news for the continued role of the dollar as dominant world reserve currency. Clearly some in Washington would not be happy with that.

The Chinese are also bidding to get a direct stake in Nigeria’s rich oil reserves, until now an Anglo-American domain. In July 2010, China’s CNPC (China National Petroleum Corporation) won four prospective oil blocks – two in the Niger Delta and two in the frontier Chad Basin, with plans to become core investor in the Kaduna refinery, and construction of a double track Lagos-Kano railway. China’s oil company, CNOOC Ltd also has a major offshore production area in Nigeria.

The IMF and Washington pressure to lift subsidies on imported fuels is at this point in question, as is the future of China in Nigeria’s energy industry. Clear is that lifting subsidies in no way will benefit Nigerians. More alarming in this context is the orchestration of a major new wave of terror killings and bombings by the mysterious and suspiciously well-armed Boko Haram. This we will look at next in the context of Nigeria’s recent transformation into a major narcotics hub.

Source


Nigeria: Royal Dutch Shell's victim

Shell funded police actions in Ogoniland that led to human rights abuses, according to court documents recently released. Confidential internal communications suggest that the company paid Nigeria’s military to stop protests against its presence.

One letter from Shell showed that it agreed in 1994 to pay for the army to retrieve a truck, an action which – according to the Guardian newspaper – left one Ogoni man dead and two others wounded. The letter described the payment as “a show of gratitude and motivation for a sustained favourable disposition in future assignments.”

The company has owned up to pollution in the area arising from oil spills. It has, however, always resisted suggestions that it was liable in any way for human rights abuses.

A suit brought against oil giant Shell by four Nigerian farmers can be heard in a Dutch court, it has been ruled. Shell had opposed the move, arguing that it court had no authority in the case.

The Nigerian farmers are looking for compensation for pollution on their land in the Niger Delta which they claim has been caused by a local subsidiary of Shell’s. Shell denies responsibility, saying that the oil spills were caused by sabotage by militant groups and the company could not be held responsible for such acts.

Shell has already paid compensation, whilst not admitting liability, for a separate case over alleged human rights abuses in the same region.

The case is the latest example of companies being tried in their home legal jurisdiction for actions that take place wholly elsewhere.

Seven companies have been fined $236m to settle charges that they paid bribes to foreign officials for favourable treatment. The companies include Royal Dutch Shell, as well as oil service companies and shipping firms.

The Securities and Exchange Commission has said that the cases were the first of a number of reviews of specific industry sectors aiming to raise the heat on firms paying bribes in different parts of the world. In this case, fines were held to have been paid in India, Gabon, Equatorial Guinea, Mexico and Venezuela.

Other companies concerned were Pride International, Noble Corp, Transocean, GlobalSantaFe and Tidewater Inc.

Royal Dutch Shell has agreed to pay $15.5m to conclude lawsuits over political executions in Nigeria, including the killing of the environmental protester Ken Saro–Wiwa by the Nigerian government. The plaintiffs had argued that the company was implicated in the killings.

The plaintiffs in the case have said that $5m from the settlement would go into a trust for the benefit of the Ogoni people, with the remainder going towards the families and lawyers fees.

Shell said that the settlement did not mean that the company was admitting involvement or liability, but it felt that it would be better to focus on providing a future for the Ogoni people and to promote peace and stability in the region. Unrest in the area has seen frequent damage to the company’s oil interests from attacks.

The Amsterdam court of appeal has resolved that compensation should be paid out by Royal Dutch Shell to non–US shareholders for the scandal five years ago when the company overstated its oil reserves. The affair saw the removal of Shell’s chairman at the time Phil Watts – who was also a leading light with the World Business Council for Sustainable Development.

The settlement marked the conclusion of a long process of negotiation, which Shell had foreshadowed with its statement two years ago that it would offer compensation whilst not admitting to wrongdoing. The company had set aside 250m UK pounds for investors claiming compensation.

Shell’s original admission that reserves had been overstated saw the company fined for market abuse and breaches of the listings rules. The company’s reputation has arguably never fully recovered the episode.
Source


Drilling and Killing: Bush's CHEVRON slaughtering Nigeria & Niger in the name of oil bucks.

President Bush arrives in Nigeria today. As he wraps up his five-day Africa tour, he is accompanied by a large entourage of corporate executives. Front and center are the oil executives. Bush is set to meet with ChevronTexaco CEO and chairman Dave O’Reilly. Other transnational corporations attending include ExxonMobil and Shell Petroleum.

Bush is joined by his National Security Adviser, Condoleezza Rice. Rice is a former board member of Chevron. The company named an oil tanker after her, The Condoleezza Rice.

Nigeria is Africa’s largest oil producer, cranking out more than two million barrels a day. Nearly 750,000 barrels of Nigeria’s oil go to the United States every day. That is eight percent of total US crude oil imports.

A former US diplomat in Africa, Vincent Farley told Cox News Service, “If the US intervention in Iraq does not bring peace in the Middle East, then the US may have to look to other sources of oil.” He said, “And Africa is at the top of the list.”

Today, we spend the hour with the Democracy Now! documentary Drilling and Killing: Chevron and Nigeria’s Oil Dictatorship. [includes rush transcript]

On the ground in Nigeria, there is an oil war raging. Villagers in the oil-rich Niger Delta are rising up, demanding an end to a system that keeps them in poverty as their government pumps Nigeria’s natural resources to Western nations, enriching itself and oil executives. In unprecedented acts of resistance, villagers have seized oil rigs, barges and helicopters belonging to transnational oil corporations.

The oil companies are fighting back. Today, we’re going to take an in-depth look at one of these cases.

In 1998, Democracy Now! revealed for the first time that Chevron played a role in the killing of two Nigerian villagers. The San Francisco-based oil company helped facilitate an attack by the feared Nigerian navy and notorious Mobile Police (MOPOL).

In a interview with Democracy Now!, a Chevron official acknowledged that on May 28, 1998, the company transported Nigerian soldiers to their Parabe oil platform and barge in the Niger Delta, which dozens of community activists had occupied. The protesters were demanding that Chevron contribute more to the development of the impoverished oil region where they live. In the interview, Chevron spokesperson Sola Omole was asked:

Q: Who took them in, on Thursday morning, the Mobile Police, the Navy?

A: We did. We did. Chevron did. We took them there.

Q: By how? A: Helicopters, yes, we took them in.

Q: Who authorized the call for the military to come in?

A: That’s Chevron’s management.

Soon after landing in Chevron-leased helicopters, the Nigerian military shot to death two protesters, Jola Ogungbeje and Aroleka Irowaninu, and wounded several others. The eleven activists were detained for three weeks.

During their imprisonment, one activist said he was handcuffed and hung from a ceiling fan hook for hours for refusing to sign a statement written by Nigerian federal authorities.

Nigerian activists charge that Chevron’s oil operations pollute their land, severely hampering fishing and farming, their only means of livelihood. The US multinational ChevronTexaco is the third-largest oil producer in Nigeria. Oil money provides roughly 80 percent of the dictatorship’s revenue.

“It is very clear that Chevron, just like Shell, uses the military to protect its oil activities. They drill. And they kill,” Nigerian environmental attorney Oronto Douglas told Democracy Now!

In May 1999, family members of those killed in the attack, along with one of those injured, filed a landmark lawsuit against Chevron Texaco. The lawsuit was filed in a US court using the Alien Tort Claims Settlement Act. ChevronTexaco has repeatedly attempted to have the suit thrown out, without success.

Just two months ago, a court in San Francisco heard oral arguments to decide whether the victims can sue the parent company, ChevronTexaco, rather its Nigerian subsidiary, ChevronTexaco Nigeria Ltd. According to the Center for Constitutional Rights, if the court backs the victims, it will greatly aid several other human rights cases currently pending in US courts that seek to hold multinational corporations responsible for their involvement in human rights abuses abroad.

Today, as Bush arrives in Nigeria with oil at the top of his agenda, we play an excerpt of an interview with Ogoni activist Ken Saro-Wiwa and the Democracy Now! exposé Drilling and Killing: Chevron and Nigeria’s Oil Dictatorship.

Interview with Ogoni activist Ken Saro-Wiwa, who led the movement against Shell Oil in Ogoniland. This interview was conducted months before he was executed by the Nigerian military on November 10th, 1995.
Drilling and Killing: Chevron and Nigeria’s Oil Dictatorship, produced by Amy Goodman and Jeremy Scahill in 1998 and engineered by Dred-Scott Keyes.

Rush Transcript

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Transcript

AMY GOODMAN: President Bush arrived in Nigeria today, as he begins to wrap up his five-day, five-nation tour through Africa. The Nigerian government deployed 2,000 police ahead of Bush’s visit. Riot police, sniffer dog handlers, intelligence agents and bomb disposal teams swarm around the capital of Abuja.

Bush’s visit comes just four days after police fired rifle rounds and tear gas at strikers during protests in Abuja, Lagos and the southern oil city of Port Harcourt, killing at least ten people. Some estimate as many as sixteen. The Nigerian police report no lives were lost, drawing condemnation from Lagos residents.

The general strike was triggered when President Obasanjo announced an increase of more than 50 percent in gas prices. The protests shut Nigeria’s sea ports, banks, shops and industries, but oil terminals operated by ExxonMobil, ChevronTexaco, Agip and the Nigerian unit of Royal Dutch Shell stayed open. The strike was called off Tuesday after a deal was reached over fuel prices.

Though Nigeria is Africa’s largest oil producer, cranking out more than two million barrels a day, it suffers from massive fuel shortages for its own people. Perhaps the most powerful symbol of the Niger Delta is the gas flare, hundreds as high as buildings burning night and day. In some of these cases, these flares have roared continuously for forty years, since oil was discovered in Nigeria. Ogoni activist Ken Saro-Wiwa spoke often of the irony of children in the Delta growing up without electricity, but who have never known a dark night living in the shadow of the flame.

But a new fire is burning in the Delta. It’s the rage of millions of people kept in desperate poverty, providing power to the most powerful countries in the world while being kept powerless themselves. A decade after the hanging of Ken Saro-Wiwa and eight other minority rights activists, communities from the Delta have shut down a third of the country’s oil production through unprecedented acts of resistance, infuriating transnational oil corporations and their Nigerian military business partners. Helicopters, barges and oil-mining facilities belonging to corporations like Shell, Chevron and Texaco are being seized in protest of horrid living conditions and environmental devastation.

In an unprecedented protest in July of 2002, women peacefully occupied four ChevronTexaco oil pumping stations in the Niger Delta for ten days. They demanded Chevron build schools and hospitals in their villages, employ more of their people, and pay cash compensation for the pollution they say has destroyed their fishing industry. The women maintain control of the terminal by threatening to remove their clothes, a powerful traditional shaming method which would have humiliated Chevron in the eyes of the community.

The ties between Bush and Chevron are close. Bush’s National Security Adviser, Condoleezza Rice, is a former board member of Chevron for many years. The company even named an oil tanker after her, The Condoleezza Rice. Bush’s entourage to Africa includes scores of corporate executives hungry for Nigeria’s business. Tomorrow in Nigeria, Bush will meet with the chair and chief executive of ChevronTexaco, Dave O’Reilly, along with twelve African leaders and other corporate executives who have traveled with Bush to Africa. Other transnational corporations attending the summit include Archer Daniels Midland, ExxonMobil, Coca-Cola and Shell Petroleum.

Today we’ll take a look at one of the protests that took place in May of 1998 in the Niger Delta and the response of one of the transnational corporations, Chevron, the largest oil company — today we’ll take a look at one of the protests against Chevron that took place in the Niger Delta in May of 1998, and we’ll look at the response of Chevron, the third-largest oil company in Nigeria. But before we go to that documentary, Drilling and Killing: Chevron and Nigeria’s Oil Dictatorship, we wanted to play for you a brief excerpt of an interview I did on Pacifica station WBAI, along with WBAI’s Bernard White, with Ogoni activist Ken Saro-Wiwa. Ken came to the United States for the final time to let this country know what transnational corporations were doing in his country, Nigeria. This is Ken Saro-Wiwa in the United States just before he returned to Nigeria, was arrested and executed.

KEN SARO-WIWA: Shell does not want to negotiate with the Ogoni people. Each time they’ve come under pressure from local people, their want has always been to run to the Nigerian government and to say to the Nigerian government, “Oil is 90 percent of your foreign exchange earning. If anything happens to oil, your economy will be destroyed. Therefore, you must go and deal with these people, these troublemakers.” And most times, the government will oblige them and visits local communities of poor, dispossessed people with a lot of violence.

And when these communities then protested and said, “Look. Look at the amount of violence that is being used against us, even though we are only protesting peacefully,” then the oil companies will come and say, “Well, there is no way we can determine how much violence a government decides to use against its own people.” So, basically, the local communities have no leverage with the oil companies at all.

AMY GOODMAN: Who is the government now of Nigeria?

KEN SARO-WIWA: There is a military government in power at this time. And indeed, military people have been in power in the country for a long time.

AMY GOODMAN: Because they suspended the results of the elections?

KEN SARO-WIWA: Yes, indeed. But for a long time now, Nigeria has been under military dictatorships. And the oil companies like military dictatorships, because basically they can cheat with these dictatorships. The dictatorships are brutal to people, and they can deny the rights of — human rights of individuals and of communities quite easily, without compunction.

AMY GOODMAN: Ken Saro-Wiwa, how does the oil companies — how do Shell and Chevron deal with you as the president of the Movement for the Survival of the Ogoni People?

KEN SARO-WIWA: Well, recently, when the protests started, Shell, they had a meeting. And the operatives of Shell in Nigeria and of those at The Hague in the Netherlands, and in London, held a meeting, and they decided that they would have to keep an eye on me, watch wherever I go to, follow me constantly, to ensure that I do not embarrass Shell. So, as far as I’m concerned, I’m a marked man.

AMY GOODMAN: Ken Saro-Wiwa and eight other Ogoni rights activists were executed by the Nigerian military on November 10th, 1995. It was that interview that inspired me to one day go to Nigeria, the meeting of Ken Saro-Wiwa, as he explained what was happening in his country. Four years later, in August of 1998, I got a chance to go to Africa’s largest nation with Democracy Now! producer Jeremy Scahill. This is the documentary that comes from that trip.

OGONI MAN: Who killed Abiola?

CROWD: Soldier!

OGONI MAN: For oil money?

CROWD: Soldier!

OGONI MAN: Who killed Saro-Wiwa?

CROWD: Soldier!

OGONI MAN: For oil money?

CROWD: Soldier!

OGONI MAN: Who killed my nation?

CROWD: Soldier!

OGONI MAN: For oil money?

ORONTO DOUGLAS: Chevron, just like Shell, uses the military to protect its oil activities.

STEVE LAUTERBACH: The policy for all embassies overseas to support American companies and their operations abroad and to, as far as possible, promote American exports.

ORONTO DOUGLAS: Don’t pollute my water. Don’t destroy our mangrove forest. Don’t devastate our ecology.

They drill. And they kill.

AMY GOODMAN: Drilling and Killing: Chevron and Nigeria’s Oil Dictatorship.

JEREMY SCAHILL: An investigative report produced by Amy Goodman and Jeremy Scahill.

AMY GOODMAN: Nigeria, Africa’s most populous country, a nation that’s lived more than thirty years under a succession of military dictatorships, infamous for their corruption and ruthlessness.

JEREMY SCAHILL: Oil was discovered in Nigeria just before the country gained independence from the British in 1960. Since then there have been several coups and assassinations. But one thing has remained constant: the role of multinational oil companies in propping up the country’s military dictatorships.

CHIMA UBANI: They are simply continuing what theTransatlantic slave trade and British colonialism did to us in the past.

JEREMY SCAHILL: Chima Ubani is a member of Nigeria’s oldest human rights group, the Civil Liberties Organization. He has been imprisoned several times resisting military regimes.

CHIMA UBANI: And the struggles of our people today to rid ourselves of these agencies is merely an extension of our struggle for national independence. And our independence is not yet won, until we send these exploitative forces packing from our soil.

AMY GOODMAN: Oil is the lifeblood of the Nigerian regime, supplying the military with nearly 80 percent of its revenue, pumping more than $10 billion a year into the government, enriching corrupt generals and their cronies.

JEREMY SCAHILL: For nearly forty years, oil giants like Shell, Mobil and Chevron have worked in joint ventures with Nigeria’s dictatorships to exploit the country’s vast petroleum resources, often against the wishes of the local communities of the oil-rich Niger Delta. Protest against these oil giants has often resulted in a bloody response from their military business partners. Again, pro-democracy activist Chima Ubani.

CHIMA UBANI: Yes, it is the same kind of relationship that the slave masters had with those traditional rulers and local chiefs of that period who actually sold our people into slavery to the European and American slave masters. That is exactly what has happened all over. What we find is that the Nigerian military creates the conducive environment for these multinational companies to come and exploit our people. They impose laws that favor such an exploitation and disempower our people. And most importantly, when our people rise to fight against this exploitation, it is the Nigerian government that uses its own troops to suppress and kill our people for fighting against exploitation by foreign companies.

AMY GOODMAN: On November 10th, 1995, Nigerian dictator Sani Abacha hanged Ogoni activist and playwright Ken Saro-Wiwa and eight others. They were convicted by a kangaroo military court of murder. But their real crime was protesting the presence of Shell Oil on their land and the oil giant’s support for the military junta. Three years later, Ken Saro-Wiwa has become a martyr in the cause for justice in the Niger Delta.

And resistance to multinational oil companies is on the rise. Oronto Douglas is the founder of the Chicoco movement, named after the rich soil of the Delta.

ORONTO DOUGLAS: The Chicoco movement is a pan-Niger Delta resistance movement committed to reclaiming our humanity. We — over the years we have been dehumanized, our environment has been plundered, our people raped, some jailed, others hanged. And we feel the time has come that we should put our hands together to struggle together so that we can achieve justice together, because we live on the same ecosystem right across the Niger Delta.

OGONI MAN: Who killed Abiola?

CROWD: Soldier!

OGONI MAN: For oil money?

CROWD: Soldier!

OGONI MAN: Who killed Saro-Wiwa?

CROWD: Soldier!

OGONI MAN: For oil money?

CROWD: Soldier!

OGONI MAN: Who killed my nation?

CROWD: Soldier!

OGONI MAN: For oil money?

JEREMY SCAHILL: What follows is the story of a group of communities from the Niger Delta known as Ilajeland that plays host to a hungry guest: Chevron, the San Francisco-based multinational oil corporation. Last May, the company facilitated the killing of two indigenous activists who dared to demand compensation for the use of their oil-rich land.

AMY GOODMAN: Lagos is a city that reeks of fuel. Its busy streets are full of the commotion of motorcycles whizzing back and forth. Air-conditioned Mercedes Benzes and Peugeots crash through pothole-covered streets alongside decrepit buses stuffed with people. Children chase cars up and down the streets, selling everything from newspapers to bread to toothpaste. Little girls weave in and out of slowed traffic with large bowls of peanuts balanced carefully on their heads.

JEREMY SCAHILL: Many of the merchants on the street gravitate toward the long lines at gas stations, where people wait hours, sometimes days, for gas. These lines tell the sad story of a country that exports more oil than almost any other country on the continent, but suffers severe shortages for its own people. It is not unheard of in Nigeria for a gas station attendant who tells a soldier there is no gas left at his station to be shot and killed for bearing the bad news.

Nigeria has four oil refineries that refine fuel for domestic consumption, but it is rare that more than one is fully operational at any given time. This makes importing fuel a necessity for Nigeria.

AMY GOODMAN: And so the odd picture: in one of Africa’s largest oil-producing countries, gas stations with no gas are set against a backdrop of the headquarters of the world’s most powerful multinational oil corporations.

JEREMY SCAHILL: In August and September, we traveled to Nigeria to trace the flow of billions of petro-dollars back to its source, the heartland of oil country: the Niger Delta.

AMY GOODMAN: After searching Lagos for a car that would have enough fuel for a long trip, we drive five hours south of the city. Along the way, we pass more than a dozen military roadblocks manned by soldiers holding semi-automatic machine guns and horsewhips. At some of these roadblocks along the way, soldiers force our driver out of the car and demand money from him in order to pass.

JEREMY SCAHILL: We knew the reports of soldiers murdering drivers who refused to pay. Nigeria is one of the most corrupt countries in the world. The extortion at these stops can be as routine as paying a toll. The difference is the imminent threat of violence at every point.

AMY GOODMAN: Approaching the port town of Igbokoda, we’re forced out of the car. This particular checkpoint is manned not only by the military, but also by the police, the feared state security service, and a Nigerian customs agent. As they demand to see our passports, one of the officers begins to let the air out of our tires. Even with angry threats of detention, our guides manage to diffuse the situation, and we move on to Igbokoda.

JEREMY SCAHILL: There we rent a speedboat. As we head down one of the hundreds of creeks of the Niger Delta, we pass women canoeing slowly by, many transporting large plastic containers for water. The water in these riverain communities is too polluted to drink, as canals dug by Chevron have caused the saltwater of the Atlantic Ocean to invade the freshwater of Ilajeland. Villagers also complain that the canals, which the oil company contends facilitate local commerce, have led to severe erosion, causing whole communities to up and move.

AMY GOODMAN: Dead pigs dot the shallow banks. Villagers say the pigs and other animals have been dying in droves after a recent Chevron oil spill.

VILLAGER: I depend on the pigs and some other domestic animals for my livelihood. And now all of them are dead. I don’t know how I can survive, I am hungry.

JEREMY SCAHILL: This recent spill hits especially hard, coming just two months after two members of the community were shot dead protesting the desperate conditions in Ilajeland. That is what the villagers want to talk about today.

AMY GOODMAN: We walk along planks above the swampy ground to a shack on stilts with walls of raffia palm. As the sun goes down, villagers crowd into the dimly lit space to tell us their story.

MALUMI: We welcome you on behalf of the forty-two communities in the Chevron operational area in Ilajeland. We thank you sincerely for taking the pains to come to our community. And you can see our environment, how it is. It has been devastated. But once again, we welcome you on behalf of the forty-two communities.

JEREMY SCAHILL: The room is packed with people. It is a sweaty, hot Delta evening. Little kids peer over the shoulders of their parents outside the windows as one of the elders of the community recounts their story. It begins on Monday May 25th, 1998. The villagers say on that day more than 100 youths from forty-two communities of Ilajeland traveled by canoe and speedboat miles into the Atlantic Ocean, where Chevron has an offshore drilling facility known as the Parabe platform. The youths then proceeded to occupy the barge that was servicing the platform. Chief Nicolas Amamoa is an Ilaje elder.

CHIEF NICOLAS AMAMOA: [translated] When our children went to offshore, they went there to demand for their rights, our rights.

AMY GOODMAN: The villagers say they were fed up. They had written Chevron several unanswered letters and scheduled meetings that didn’t happen. While the Nigerian military regime says Chevron’s offshore facilities lie in federal territorial waters, the people of Ilajeland see it differently. They see themselves as host communities paying the price of oil exploitation and reaping little benefit.

Environmentalist Oronto Douglas is a lawyer from the Niger Delta. He says the demands of the community were modest.

ORONTO DOUGLAS: I said that, “Don’t pollute my water. Don’t destroy our mangrove forest. Don’t devastate our ecology. Come and listen to us. Come and talk to our elders.”

JEREMY SCAHILL: Coming up, activists occupy the barge. Chevron and the military respond.

UNIDENTIFIED: Soldiers, they don’t give any warning. They care their shooting. They don’t even care to listen to anything. They just care their shooting.

AMY GOODMAN: You’re listening to Democracy Now!

‘s investigative report, Drilling and Killing: Chevron and Nigeria’s Oil Dictatorship. We’ll be back in a minute.

[break]

AMY GOODMAN: This is Pacifica Radio’s Democracy Now!, an investigative special, Drilling and Killing: Chevron and Nigeria’s Oil Dictatorship. I’m Amy Goodman, with Jeremy Scahill.

JEREMY SCAHILL: On May 25th, 1998, more than 100 activists from the forty-two communities of Ilajeland went by speedboat and canoe to Chevron’s Parabe platform and the barge that was servicing it miles into the Atlantic Ocean. They say it was the only way to get the attention of Chevron’s management. Larry Bowoto is one of the activists who occupied Chevron’s facility.

LARRY BOWOTO: I went there for peaceful demonstration, because of the activities of Chevron in our area. We went there to just protest for the development of our community, because for thirty years — or thirty-two years now which Chevron is operating, we don’t have anything. So that is the reason we went there.

AMY GOODMAN: According to the activists, they boarded the barge, approached a member of the Nigerian navy, and told him they were there to express their grievances to Chevron’s management. Bola Oyinbo was one of the leaders of the occupation.

BOLA OYINBO: We don’t even have any weapon, not even a placard. But this is our grievances. We have been marginalized. That is why we are here. We’ve called Chevron. They refused to come. That is why we are here and want them to come to us here on the barge.

JEREMY SCAHILL: The activists demanded to meet with Chevron’s managing director, an American named George Kirkland. But instead, Chevron sent a helicopter to the barge with a Nigerian employee in charge of community relations. The activists told him to go and speak with their elders onshore.

When Chevron’s representative arrived at the community, the people presented their demands: clean drinking water, electricity, environmental reparations, employment and scholarships for youths, and rebuilding the eroding riverbanks. Chevron agreed to more jobs on the current project, but the company’s representative said he’d have to get back to the community in the next few days on the issue of reparations.

AMY GOODMAN: The demands of the villagers were hardly unusual, and neither were the actions they took. Barge occupations at offshore sites, roadblocks at onshore facilities, taking tugboats hostage, they’re all part of an increasingly angry resistance movement in the Niger Delta. Communities are fed up with providing fuel that powers the wealthiest countries in the world, while being left powerless themselves. In fact, just a few months earlier, another community in the area with grievances against Chevron had occupied its offshore facility, as well. What was different this time was Chevron’s response.

JEREMY SCAHILL: At this point, the work onboard the barge had been stopped for almost four days, which meant Chevron was losing money. But villagers say they thought they were still waiting for Chevron’s final response to their demands when helicopters descended on the platform.

Parrere is one of the youth leaders who occupied Chevron’s facility.

PARRERE: We just saw three helicopters coming. We were looking at all these helicopters, thinking that probably people inside these helicopters might have been Chevron’s reps who are actually coming to dialogue with us here. But I was at the top of the platform looking at the helicopters when they were about to land. They were about to land, when we heard shooting of tear gases and guns.

AMY GOODMAN: Larry Bowoto , another of the activists onboard, describes what he saw.

LARRY BOWOTO: About three chopper helicopters came there early in the morning when everybody’s sleeping, when we see that the helicopter landed with soldier men.

AMY GOODMAN: With soldier men?

LARRY BOWOTO: With soldier men. Before we discover, we hear the sound of gunshot. The next thing, they shot two of our guys.

AMY GOODMAN: The two protesters who were shot and killed on the barge were named Jola Ogungbeje and Aroleka Irowaninu. Again, Larry Bowoto.

LARRY BOWOTO: When they shot these two guys, I was rushing there to rescue this guy. When I am trying to rescue them, it is then they shot me. When they shot me with gun, I fell. It is then one of them stabbed me. From there, I don’t know what happened again.

JEREMY SCAHILL: Larry Bowoto was shot several times, including in the buttocks, which meant he was shot from behind. He was also stabbed. He remained in the hospital for nearly a month.

AMY GOODMAN: The brother of one of the two men killed that day was also on the barge. His name is Tayee Irowaninu. He speaks through a translator.

TAYEE IROWANINU: [translated] What happened is, when my brother now fell down and I saw that he was dead, I now decided I’m not going to leave my brother there. And what happened is they now locked us up in a particular container.

JEREMY SCAHILL: When we returned to Lagos, we looked up Bill Spencer, resident area manager of ETPM Services, the company that leased the barge to Chevron. We find him in his office in Lagos. Listen carefully.

AMY GOODMAN: What is the twenty-foot —- what are containers used for?

BILL SPENCER: It’s just a regular shipping containers that you see on the boats. They usually take supplies out in them. They take stores in them. Sometimes they use them as a store.

AMY GOODMAN: Uh-huh, to store things. Are they plastic?

BILL SPENCER: No, they’re metal. Just an ordinary, everyday shipping container. You know, they’re twenty foot by eight feet by eight feet, with big doors on the end.

AMY GOODMAN: Spencer is talking about the container onboard the barge.

BILL SPENCER: Be a good a place to put people as any. We don’t actually have a prison onboard. A brig. I guess we should put one in.

AMY GOODMAN: He says, “We don’t actually have a prison onboard. A brig,” then adds, “I guess we should put one in.”

JEREMY SCAHILL: Though we talked with several contractors working for Chevron at the time of the killings, only Bill Spencer was willing to go on the record. His company ETPM Services provides barges and workers for most of the oil multinationals in Nigeria. We talked with Spencer for more than five hours at his office on Victoria Island, a wealthy area of Lagos that houses foreign embassies and the Nigerian headquarters of multinational corporations. It was on this island that we visited the Chevron compound, a heavily secured, walled-in community. Behind those well-guarded walls looks like any American suburb, complete with its own bank and supermarket.

AMY GOODMAN: It was in this compound we found Sola Omole, Chevron’s general manager of public affairs. He talked about the occupation of the barge.

SOLA OMOLE: We’re talking about an invasion. We’re talking about kidnap. We’re talking about piracy of the highest order.

AMY GOODMAN: Until now, Chevron has claimed that its only action against the occupation was to call the federal authorities and tell them what was happening. But in a startling admission in a three-hour interview with Democracy Now!, Chevron spokesperson Sola Omole acknowledged that Chevron did much more. He admitted that Chevron actually flew in the soldiers who did the killing. And he further admitted that those men were from the notorious Nigerian navy.

SOLA OMOLE: I guess -—

AMY GOODMAN: Who took them in?

SOLA OMOLE: What’s that?

AMY GOODMAN: Who took them in?

SOLA OMOLE: Who took them in?

AMY GOODMAN: On Thursday morning, the Mobile Police, the navy?

SOLA OMOLE: We did. We did. We did. We, Chevron, did. We took them there.

AMY GOODMAN: By how?

SOLA OMOLE: Helicopters. Yes, we took them in.

AMY GOODMAN: Who authorized the call for the military to come in?

SOLA OMOLE: Chevron’s management.

JEREMY SCAHILL: Chevron’s management. So, Chevron authorized the call for the military and transported the navy to the barge. On top of that, Chevron’s acting head of security, James Neku, flew in with the military the day of the attack.

AMY GOODMAN: Were you on that helicopter?

JAMES NEKU: Yes, I was in the helicopter.

AMY GOODMAN: And how many people were there in that helicopter?

JAMES NEKU: That helicopter had seven — six of us. There were six of us, six officers.

AMY GOODMAN: Including the Chevron pilot or not including?

JAMES NEKU: I think excluding the pilot. Including the pilot would be seven.

AMY GOODMAN: And then, was it a mix of navy and —-

JAMES NEKU: A mix of navy and the police. The police were armed with tear smokes.

AMY GOODMAN: Was it the regular police or the Mobile Police?

JAMES NEKU: Mobile Police.

AMY GOODMAN: The Mobile Police, also known as the “Kill ‘n’ Go.” That’s the Kill and Go. Shell Oil, the largest producer of oil in Nigeria, came under heavy international condemnation in recent years for their use of the Mobile Police, forcing them to publicly renounce the use of the Kill and Go because of their brutal record in Ogoniland.

ORONTO DOUGLAS: They shoot without question. They kill. They maim. They rape. They destroy.

AMY GOODMAN: Environmental lawyer Oronto Douglas was one of the lawyers on Ken Saro-Wiwa’s defense team.

ORONTO DOUGLAS: The Kill and Go are a murderous band of undisciplined paramilitary Mobile Police force. Their order is to kill. When they go to a community, it’s not to maintain peace, it is not to maintain order.

AMY GOODMAN: It was for exposing the relationship between the Mobile Police, the Nigerian regime’s henchmen, and a multinational oil giant that Ogoni activist Ken Saro-Wiwa was ultimately executed.

OGONI MAN: Great Ogoni people!

CROWD: Great!

OGONI MAN: Great Ogoni people!

CROWD: Great!

OGONI MAN: I have devoted all my intellectual and material resources, my very life, to a cause in which I have total belief and from which I cannot be intimidated or blackmailed.

JEREMY SCAHILL: An Ogoni man reciting the last speech of Ken Saro-Wiwa.

OGONI MAN: I have no doubt at all about the ultimate success of my cause, no matter the trials and tribulations which I and those who believe with me may encounter on our journey. Neither imprisonment nor death can stop our ultimate victory. I repeat that we all stand before history. I and my colleagues are not the only ones on trial. Shell is here on trial, and it is as well that…

JEREMY SCAHILL: When we visited the parents of Ken Saro-Wiwa a few days before coming to Ilajeland, this man stood up and recited Saro-Wiwa’s closing statement before the military tribunal that would ultimately hang him.

OGONI MAN: In my innocence of the false charge I face here, in my utter conviction, I call upon the Ogoni people, the peoples of the Niger Delta and the oppressed ethnic minorities of Nigeria to stand up now and fight fearlessly and peacefully for their rights. History is on their side. God is on their side. Bene Ogoni!

AMY GOODMAN: Ogoni leader Ken Saro-Wiwa’s final words of resistance continue to echo throughout the Niger Delta, but so does the fierce response from the Nigerian regime and its multinational partners.

This is a Democracy Now! special, Drilling and Killing: Chevron and Nigeria’s Oil Dictatorship.

JEREMY SCAHILL: And so, here we have, on May 28th, 1998, Chevron flying in the Nigerian navy and the Mobile Police to confront a group of villagers who thought they were in the midst of a negotiation with the oil giant, which brings us to another admission by Chevron spokesperson Sola Omole. Again, listen carefully.

AMY GOODMAN: Were any of the youths armed?

SOLA OMOLE: I don’t know. I don’t know. I don’t know. So I cannot say that they came armed with -— there was talk about local charms and all that, but that’s neither here nor there.

AMY GOODMAN: So, you don’t think that they came onto the boat armed, you’re saying?

SOLA OMOLE: No. No.

AMY GOODMAN: The youths.

SOLA OMOLE: Mm-hmm.

ORONTO DOUGLAS: It is very clear that Chevron, just like Shell, uses the military to protect its oil activities. They drill. And they kill.

JEREMY SCAHILL: Again, environmentalist Oronto Douglas.

ORONTO DOUGLAS: They are shooting our people for just demanding for their right.

AMY GOODMAN: Chevron contends that when the helicopters landed on the barge, the soldiers got out and issued a warning that if the villagers calmly dispersed, they would not be hurt. Villagers say there was no such warning, that the soldiers simply started shooting. Either way, where could those who had occupied the barge disperse to? The barge was surrounded by water in the Atlantic Ocean, miles from shore.

JEREMY SCAHILL: They were then tear-gassed and shot. While Chevron security chief James Neku says that two of the villagers tried to disarm a soldier, which is why they were shot dead, Chevron contractor Bill Spencer says one of the men who was killed was actually trying to mediate the situation.

The final tally: two dead, one shot and seriously wounded, and reports of other injuries. And what of the eleven activists locked in the shipping container? They say they were held there for hours in what they described as suffocating heat. They were then transported to several jails in the dreaded Nigerian prison system. After three weeks, they were released.

AMY GOODMAN: Bola Oyinbo was one of the eleven activists imprisoned after the barge occupation. He says the prison authorities tried to extract a confession of piracy and destruction of property from him by torturing him. They began with handcuffs.

BOLA OYINBO: They used the handcuff to hang me on a fan for almost five hours.

AMY GOODMAN: Wait a second. They put you in handcuffs and hung you?

BOLA OYINBO: Hung me. And there’s a hook they use for ceiling fans. So they put me there for almost five hours.

AMY GOODMAN: They hung you from a ceiling fan hook?

BOLA OYINBO: Hook, yes.

AMY GOODMAN: For five hours.

BOLA OYINBO: Five good hours.

AMY GOODMAN: Your feet weren’t on the floor?

BOLA OYINBO: My feet were not on the floor. I was hung, suspended in the air.

JEREMY SCAHILL: We asked Bill Spencer what he thinks of the torture Bola Oyinbo says he endured.

BILL SPENCER: I don’t think anybody here really is under the impression that when you go to jail in Nigeria, it’s pleasant.

AMY GOODMAN: Was there concern about the young people who were held in detention? Was there any follow-up?

BILL SPENCER: By me? Not at all. No.

AMY GOODMAN: Were you concerned about them in detention?

BILL SPENCER: I was more concerned about the 200 people that work for me. I could care less about the people from the village, quite frankly.

AMY GOODMAN: But once your people were safe?

BILL SPENCER: Did I personally have any concern for them? Not one little bit.

ORONTO DOUGLAS: Two people dead, several people injured, and there is now still a threat of clampdown on the local people.

JEREMY SCAHILL: Again, environmentalist Oronto Douglas.

ORONTO DOUGLAS: What have they done? They have simply asked for: take care on our environment; give us a cup of water to drink, because you have polluted our water; give us the means of livelihood so that we can survive as a people. Is that too much?

AMY GOODMAN: Coming up in the final segment of this special investigation.

ORONTO DOUGLAS: They are professional undertakers. They are here to kill, because they must produce oil for the American people.

STEVE LAUTERBACH: It’s, generally speaking, the policy for all embassies overseas to support American companies and their operations abroad and to, as far as possible, promote American exports.

ORONTO DOUGLAS: They drill. And they kill.

OGONI MAN: Who killed Abiola?

CROWD: Soldier!

OGONI MAN: For oil money?

CROWD: Soldier!

OGONI MAN: Who killed Saro-Wiwa?

CROWD: Soldier!

OGONI MAN: For oil money?

CROWD: Soldier!

OGONI MAN: Who killed my nation?

CROWD: Soldier!

OGONI MAN: For oil money?

CROWD: Soldier!

AMY GOODMAN: Drilling and Killing: Chevron and Nigeria’s Oil Dictatorship. Stay tuned for the final segment of this special investigation here on Pacifica Radio’s Democracy Now! We’ll be back in a minute.

[break]

AMY GOODMAN: This is Pacifica Radio’s Democracy Now!, an investigative special, Drilling and Killing: Chevron and Nigeria’s Oil Dictatorship. I’m Amy Goodman, with Jeremy Scahill.

In all of our conversations with contractors, we asked them their thoughts on working with a military government. One said, quote, “In uncivilized countries like these, democracy brings nothing to the table.” Chevron contractor Bill Spencer expressed similar thoughts.

BILL SPENCER: My thoughts on it? I don’t have any. That’s their business. It isn’t mine, you know?

AMY GOODMAN: Mm-hmm.

BILL SPENCER: I’m not leading a moral campaign. Just here to do our — to work. Strictly commercial venture. Not a political one.

JEREMY SCAHILL: When you talk about the Mobile Police or the navy, and, you know, you acknowledge that they can be quite ruthless or could be prone to, you know, beating people on the street, do you have any reservation about working with those forces, knowing or acknowledging that they can, in fact, be ruthless?

BILL SPENCER: No, I don’t know. Life is tough here. And people, I think — you know, you often hear it said that life is cheap here. And I guess it is. And it’s looked at a little differently. I think that that’s something that doesn’t happen in our society. Our life is a little more — maybe a little more precious or whatever. But I think here it’s — in any of these, any of the countries, developing countries, it tends to be a little cheaper.

JEREMY SCAHILL: But who thinks life is cheap? The general population or the generals? Chief Gani Fawehinmi is Nigeria’s leading human rights activist. He says the Nigerian government revolves around a gun.

CHIEF GANI FAWEHINMI: They govern with a gun. They loot with a gun. They rob the resources of this country with a gun. The gun in Nigeria is not used to protect and advance the liberty of Nigerian people. It’s used to suppress and repress the hopes and aspirations of Nigerian people.

AMY GOODMAN: Among human rights activists, it’s accepted as fact that the Nigerian military serve as hired guns that protect the interests of the multinational oil companies in the Delta. But most oil companies do not want to admit this. Chevron spokesperson Sola Omole.

AMY GOODMAN: Does Chevron give special duty pay to the naval officers who are onboard, you know, for the whole time, not to the Mobile Police who are onboard on these barges?

SOLA OMOLE: Those guys were working for the contractor. I guess you have to ask the contractor that.

AMY GOODMAN: In terms of special duty pay. But ultimately you said that since they’re all working for Chevron, that Chevron’s ultimately responsible for that, because you’re paying the contractor.

SOLA OMOLE: Well, you’ll have to ask the contractor, really.

JEREMY SCAHILL: And so we did. We headed back to Chevron contractor Bill Spencer’s office and asked him who paid for the military housed onboard the barge, as well as those who came in by helicopter the day of the attack. To be absolutely sure, Bill Spencer called his head of operations in the Delta, Habib Fadel. In fact, we had visited Habib several days before in the Delta, but he did not want to go on record. Now, through Spencer, he did.

BILL SPENCER: Yeah. Habib. Say, on the day of the brig 101, we seem to be — we’re doing an inquest here for the benefit of who knows who, but… Who paid for the military that day? Were they ours, or were they Chevron’s? The ones actually that were living on the barge in the long term. Mm-hmm. Were they Chevron’s regular guys from — do you know? Oh, OK, from Escravos. Anytime we hire the navy, we go through the — I hesitate to say the high command, but anyway. Yeah, I knew we went through — OK, yeah. So we went — we usually — if it’s Chevron, we go through Chevron to do it. And then, in that — if we do it that way, if it’s done that way, we would pay whatever that is to the navy base. Oh, OK. OK.

AMY GOODMAN: What about on Thursday morning?

BILL SPENCER: Just I’ve already asked that.

AMY GOODMAN: Oh.

BILL SPENCER: Yeah, OK, that’s it. If there’s anything else, I’ll give you a call. Yeah, bye.

They were not ours. They were paid — they were supplied by Chevron.

AMY GOODMAN: On Thursday morning, too.

BILL SPENCER: All of them. Everybody that was out there.

AMY GOODMAN: And how does Chevron feel about its partnership with the Nigerian military? Company spokesperson Sola Omole.

AMY GOODMAN: You can’t speak for the military, but if Chevron is working with the military, calling the military in, then doesn’t Chevron bear some of the responsibility for what the military does?

SOLA OMOLE: No. We told you that this is a joint vent… We’re just using military. This thing is owned by Nigeria. Sixty percent by Nigeria. Military is just one component.

JEREMY SCAHILL: It’s a military government.

SOLA OMOLE: Excuse me, please. I’m not talking about government.

AMY GOODMAN: You would not be willing to criticize the Nigerian military for illegal detentions, for deaths in custody?

SOLA OMOLE: Now we’re going — now we’re going into other areas, and I think we need to bring this to a close.

AMY GOODMAN: But it’s the same area —-

SOLA OMOLE: I’m sorry. I’m sorry.

AMY GOODMAN: —- because the military killed two people on your barge.

SOLA OMOLE: I’m sorry. I’m sorry. We’ve got to bring this to a close now. Thank you very much.

AMY GOODMAN: So you have a deadly combination: a military with a miserable human rights record that’s employed by one sector of society — corporations with an interest in suppressing dissent and maintaining their free and open access to oil in the Delta. It’s this relationship, says Nigerian environmental activist Oronto Douglas, that killed the villagers of Ilaje.

ORONTO DOUGLAS: Two people shot dead, several injured, and the community is in poverty. Look at the darkness. Look at the wretchedness. Look at the helplessness. This is what cannot be tolerated in the United States of America, where Chevron comes from.

JEREMY SCAHILL: And what about the United States, where Chevron is based? Though the execution of Ken Saro-Wiwa and eight other Ogoni activists drew widespread international condemnation, the United States government refused to impose oil sanctions against the Nigerian regime. The US continues to buy nearly half of the dictatorship’s oil.

Steve Lauterbach is the spokesperson for the US embassy in Lagos, Nigeria.

STEVE LAUTERBACH: It’s, generally speaking, the policy for all embassies overseas to support American companies and their operations abroad and to, as far as possible, promote American exports overseas. That applies in Nigeria, and it applies in almost every embassy overseas.

AMY GOODMAN: It’s general practice here, just going around the country, we have found, through the Niger Delta and all around, that the US multinationals and the oil corporations here hire the military as security, either the Nigerian military or the Mobile Police. Does the US embassy have a position on that?

STEVE LAUTERBACH: I’m not aware of any position that we — official position we have on that. No, I can’t comment on that.

AMY GOODMAN: Commenting on US policy is something Gani Fawehinmi has no trouble doing. As the leading human rights lawyer in Nigeria, he knows the military regimes of his country. He’s been imprisoned by them dozens of times. He was the lead counsel for Ogoni activist Ken Saro-Wiwa and represents dozens of other Delta activists in and out of jail. He says if the United States and the European Union or EU countries would impose oil sanctions, the Nigerian regime would fall in less than two to three months.

CHIEF GANI FAWEHINMI: If America imposes oil sanctions today, and it is supported by the EU countries, this government military will be brought down to its knees in less than two to three months.

AMY GOODMAN: Chief Fawhinmi says the military would never find its way back to the body politic of Nigeria.

JEREMY SCAHILL: As for the two men killed during the attack, Chevron returned their bodies to the families more than a month after they were killed. The company has agreed to pay what it calls burial expenses to the families, but says this is not compensation. Nigerian environmental attorney Oronto Douglas scoffs at the payment.

ORONTO DOUGLAS: Now, they have improved by now paying 450,000 naira. They are professional undertakers. They are here to kill, because they must produce this oil for the American people. So it is important to note that this kind of situation has continued without any remorse whatsoever from Chevron. And I am very sure that more killings in Chevron’s area of operation will continue in the years to come, in the months ahead, because as the company gets more desperate, as the community continues to resist environmental degradation, exploitation and the continuous neglect of their local ecology and their way of life, there will be that protest, that resistance for survival.

AMY GOODMAN: After a brief hiatus following the killing, Chevron has just resumed its operations off the shore of Ilajeland. And Chevron’s contractor, Bill Spencer, says that once again Chevron is bringing in the navy.

JEREMY SCAHILL: And the young people of Ilajeland are coming out in force, as well. Sowore Omoyele was born there. He went on to study at the University of Lagos, where he became student body president. When he learned of the killings, he called Ilaje students together at the university to organize a fitting memorial service for the two men killed onboard the Chevron barge.

SOWORE OMOYELE: What we are saying is that Chevron have come to destroy our lands, doing what they cannot tolerate in America. They would never have tolerated a black man to come and mine oil in America, talk less of allowing this such a black person to kill American youths. But that is what is happening here. The youths will take over this fight effectively on behalf of our fathers. Those of our colleagues that were murdered, we are coming for a proper, befitting remembrance for these youths. I want to draw the attention of the whole world for a proper, befitting remembrance for these youths. I want to draw the attention of the whole world to our community and the fact that we are becoming fast, even faster than the Ogonis, an endangered species of human beings.

AMY GOODMAN: At the time of the recording of this report, Democracy Now! got word that Sowore Omoyele has been arrested. He was in the midst of arranging that befitting memorial service for the two protesters killed on May 28th at the Chevron offshore drilling site.

OGONI MAN: Who killed Abiola?

CROWD: Soldier!

OGONI MAN: For oil money?

CROWD: Soldier!

OGONI MAN: Who killed Saro-Wiwa?

CROWD: Soldier!

OGONI MAN: For oil money?

CROWD: Soldier!

OGONI MAN: Who killed my nation?

CROWD: Soldier!

OGONI MAN: For oil money?

ORONTO DOUGLAS: Chevron, just like Shell, uses the military to protect its oil activities.

STEVE LAUTERBACH: The policy for all embassies overseas to support American companies and their operations abroad and to, as far as possible, promote American exports.

ORONTO DOUGLAS: Don’t pollute my water. Don’t destroy our mangrove forest. Don’t devastate our ecology.

They drill. And they kill.

BOLA OYINBO: They used the handcuff to hang me on a fan for almost five hours.

AMY GOODMAN: Wait a second. They put you in handcuffs and hung you?

BOLA OYINBO: And there’s a hook they use for ceiling fans. So they put me there for almost five hours.

AMY GOODMAN: They hung you from a ceiling fan hook?

BOLA OYINBO: Hook, yes.

AMY GOODMAN: For five hours.

BOLA OYINBO: Five good hours.

AMY GOODMAN: Your feet weren’t on the floor?

BOLA OYINBO: My feet were not on the floor. I was hung, suspended in the air.

BILL SPENCER: I don’t think anybody here really is under the impression that when you go to jail in Nigeria, it’s pleasant.

AMY GOODMAN: Was there concern about the young people who were held in detention? Was there any follow-up?

BILL SPENCER: By me? Not at all. No.

AMY GOODMAN: Were you concerned about them in detention?

BILL SPENCER: I was more concerned about the 200 people that work for me. I could care less about the people from the village, quite frankly.

AMY GOODMAN: But once your people were safe?

BILL SPENCER: Did I personally have any concern for them? Not one little bit.

ORONTO DOUGLAS: Two people dead, several people injured, and there is now still a threat of clampdown on the local people. What have they done? They have simply asked for: take care on our environment; give us a cup of water to drink, because you have polluted our water; give us the means of livelihood so that we can survive as a people. Is that too much?

BILL SPENCER: And people, I think — you know, you often hear it said that life is cheap here. And I guess it is. And it’s looked at a little differently. I think that that’s something that doesn’t happen in our society. Our life is a little more — maybe a little more precious or whatever. But I think here it’s — in any of these, any of the countries, developing countries, it tends to be a little cheaper.

CHIEF GANI FAWEHINMI: They govern with a gun. They loot with a gun. They rob the resources of this country with a gun.

AMY GOODMAN: But ultimately you said that since they’re all working for Chevron, that Chevron’s ultimately responsible for that, because you’re paying the contractor.

SOLA OMOLE: Well, you’ll have to ask the contractor, really.

BILL SPENCER: They were not ours. They were paid — they were supplied by Chevron.

AMY GOODMAN: On Thursday morning, too.

BILL SPENCER: All of them. Everybody that was out there.

AMY GOODMAN: After this documentary was produced, Sowore Omoyele left Nigeria. He is now a graduate student at Columbia University in New York City.

Condoleezza Rice served on the board of directors of Chevron at the time of the killings. Today she is President Bush’s National Security Adviser, traveling with him in Nigeria. Chevron highlighted her dedication to the firm by naming a 130,000-ton oil tanker after her.

In May 1999, Larry Bowoto and families of victims of the killings filed a landmark lawsuit against Chevron in a US court. ChevronTexaco has repeatedly attempted to have the suit thrown out, without success. On May 23rd, 2003, a court in San Francisco heard oral arguments to decide whether the victims can sue the parent company ChevronTexaco rather than its Nigerian subisidiary ChevronTexaco Nigeria Ltd. According to the Center for Constitutional Rights, if the court backs the victims, it will greatly aid several other human rights cases currently pending in US courts that seek to hold multinational corporations responsible for their involvement in human rights abuses abroad.

Source-Transcript


CASE NAME: Nigeria Petroleum Pollution in Ogoni Region-Shell

1. The Issue

Oil has been an important part of the Nigerian economy since
vast reserves of petroleum were discovered in Nigeria in the 1950s.
For example, revenues from oil have increased from 219 million
Naira in 1970 to 10.6 billion Naira in 1979. Currently, Nigeria
earns over 95 percent of its foreign exchange from the sale of oil
on the global market. Foreign oil companies have dominated oil
exploration, drilling, and shipping in Nigeria. For example, Shell
Oil controls approximately 60 percent of the domestic oil market in
Nigeria. Shell operates many of its oil facilities in the oil-rich
Delta region of Nigeria. The Ogonis, an ethnic group that
predominate in the Delta region, have protested that Shell’s oil
production has not only devastated the local environment, but has
destroyed the economic viability of the region for local farmers
and producers. The Nigerian Federal Government, on the other hand,
has been charged with failing to enact and enforce environmental
protection against oil damage by Shell and other oil companies.
Furthermore, many Ogonis have been harassed and even killed by the
Federal government for organizing protests and threatening sabotage
of oil facilities.

2. Description

Oil production in Nigeria has had severe environmental and
human consequences for the indigenous peoples who inhabit the areas
surrounding oil extraction. Nigeria’s export of 12 million barrels
of oil a day comes from 12% of the country’s land, and indigenous
minority communities in these areas receive no economic benefits.
Development strategies focused on increasing foreign investments in
Nigeria’s oil industry to boost exports have not caused overall
development. The revenue gained has helped to benefit foreign
nations and Nigerian government elites more than native
populations. Indigenous groups are actually further impoverished
due to environmental degradation from oil production and the lack
of adequate regulations on multinational companies, as they become
more vulnerable to food shortages, health hazards, loss of land,
pollution, forced migration and unemployment. These affected
groups include Abribas, Andonis, Edos, Effiks, Gokanas, Ibibios,
Ejaws, Ika-Ibos, Ikwernes Isekiris, Isokus, Kalaboris, Urhobos and
Ogonis, who together comprise one fourth of Nigeria’s population
(approximately 30,000 million people). The welfare of these
various groups has been completely neglected by the ruling military
regime and the multi-national companies who operate joint ventures
in the exploration of Nigeria’s resources. Given that 87% of the
Nigerian total government revenue comes from oil production, and
that oil companies sole purpose is to maximize profits, both
institutions have an interest in maintaining production at the
status quo.

The Ogoni have sought more political autonomy and compensation
for environmental damage to their land by oil companies since 1990.
Their campaign, against Shell Oil Company which has extracted an
estimated US $30 billion of oil from Ogoniland since 1958, has
been met with force and extreme violence by Nigeria’s military
government. Protesters have been jailed, killed and silenced for
demonstrating against the multi-national company. For example, Ken
Saro-Wiwa, leader of the Movement for the Survival of the Ogoni
People, has been jailed and accused of inciting members of the
group to kill four Ogoni elders. However, “his more likely
“crime” is his effort to organize the Ogoni ethnic minority to stop
destruction of their homeland caused by operations of Shell and
Chevron, the multinational oil companies, and seek compensation for
his people’s lost farmland and fisheries.”

Military coups have become something of a tradition in
Nigerian politics, dating from the military seizure of power which
followed the federal elections in 1964 in an effort to forge
national unity. A succession of military regimes ensued
(interrupted only briefly by civil rule), each replaced for its
failure to effect national unity, policy reform, and effective
economic policy. In 1993, Nigeria’s democratically elected
president was ousted out of office by the military government of
General Abacha, who then became president. As a result oil
production workers went on strike demanding that the fairly elected
president, Moshood Abiola, be allowed to return to power. The oil
workers joined pro-democracy activists in striking against the
military rulers who were widely viewed as having totally mismanaged
Nigeria’s economy. The Unions , eager to get the oil industry out
of corrupt hands, forced the state owned Nigerian National
Petroleum Company to become largely in debt, causing Shell Oil
Company a loss of one third of its usual production of 920,000
barrels per day. Companies oil production in Nigeria was being
hampered by the debt burden, in turn hurting Nigeria’s foreign
exchange earnings from oil exports. The strikes were met with
brute force by the Abacha regime which rules the country with an
iron fist, often committing human rights abuses and otherwise
suppressing political dissent. Abacha believes that the task of
this military regime is to “bear the burden of managing the
delicate transition from military to civil rule.” However,
Abacha is intent on bearing this burden for as long as he can.
Community Attempts at Collective Action

In the context of this wider political crisis, the government
feared that the Ogoni’s protests against environmental degradation
would have a snowballing affect and that other ethnic groups would
begin to fight with each other. In an effort to suppress this, the
regime uses brute force and systemic violence claiming that they
are actually helping to curtail the fighting between ethnic groups.
The story of the Ogoni people has received world wide attention as
a result of the arrest of Saro-wiwa, which has been exposed by
human rights and environmental groups. Amnesty International and
Greenpeace have campaigned against his arrest and have accused
Nigeria’s military government of looting, rape and executions of
oil protesters. “The Nigerian security forces have been
responsible for the extrajudicial executions of Rivers State
villagers protesting against environmental damage and inadequate
compensation for destruction of land and crops by oil companies.”
In a Greenpeace study on the Ogoni and Shell oil company, protests
met with state violence in eight communities along the Niger Delta
are documented. For example, a community in southern Lijaw sealed
Shell’s Dieby Creek Flowstation to protest against non-payment by
Shell for an oil spill which occurred in 1992. The Ogbia community
produced a Charter of Demands and established an organization to
demand compensation for damages caused by Shell. In another
instance, in 1990, about 80 people in Umuechen by the Mobile
Police Force killed and 495 homes were destroyed during a peaceful
protest against Shell, after the company requested the assistance
of the police.

Environmental Damage

The social and environmental costs of oil production have been
extensive. They include destruction of wildlife and biodiversity,
loss of fertile soil, pollution of air and drinking water,
degradation of farmland and damage to aquatic ecosystems, all of
which have caused serious health problems for the inhabitants of
areas surrounding oil production. Pollution is caused by gas
flaring, above ground pipeline leakage, oil waste dumping and oil
spills. Approximately 75% of gas produced is flared annually
causing considerable ecological and physical damage to other
resources such as land/soil, water and vegetation. Gas flares,
which are often times situated close to villages, produce “soot
which is deposited on building roofs of neighboring villages.
Whenever it rains, the soot is washed off and the black ink-like
water running from the roofs is believed to contain chemicals which
adversely effect the fertility of the soil.” Without fertile
soil, indigenous groups lose their mode of survival and are faced
with the crisis of food shortages.

Gas pipelines have also caused irreparable damage to lands
once used for agricultural purposes. These pipes should be buried
to reduce risk of fracture and spillage. However, they are often
laid above ground and run directly through villages, where oil
leaks have rendered the land economically useless. An account of
Shell Oil Company’s record in the Ogoni region uncovers a “ravaged
environment ..(in which) oil pulses out of burst pipes and slicks
dead vegetation.” Although in its operation in other countries
Shell ensures that it does not degrade the environment, it does not
take such precautions in Nigeria. For example, “for Shell’s
pipeline from Stanlow in Cheshire to Mossmoran in Scottland, 17
different environmental surveys were commissioned before a single
turf was cut… A detailed Environmental Assessment Impact covered
every measure of the (pipeline) route.. Elaborate measures were
taken to avoid lasting disfiguring and the route was diverted in
several palaces to accommodate environmental concerns..The Ogoni
have never seen, let alone been consulted over, an environmental
impact assessment.”

Oil spills and the dumping oil into waterways has been
extensive, often poisoning drinking water and destroying
vegetation. These incidents have become common occupance due to
the lack of laws and enforcement measures within the existing
political regime. Between 1970 and 1982, 1,581 incidents of oil
spillage were documented in Nigeria. In addition, “according to
an independent record of Shell’s spills from 1982 to 1992,
1,626,000 gallons were spilt from the company’s Nigerian operations
in 27 sperate incidents. Of the number of spills recorded from
Shell – a company which operates in more than 100 countries – 40%
were in Nigeria.”

Environmental regulations which are common practice in
developed nations are often not followed due to their lack of
power, wealth and equity of the affected communities. As a result,
oil companies often evacuate inhabitants from their homelands,
further marginalizing them. The system of oil production in
Nigeria clearly is heavily skewed in favor of the multi-nationals
and government elites who are the direct recipients of oil
production revenue.

The oil industry in Nigeria has had a number of environmental
and socio-economic effects both in the regions where oil drilling
and shipping primarily take place, and in the larger country
itself. The current crisis is largely concentrated the
southwestern oil producing areas of Rivers, Cross River, and Delta.
These areas of the country have been severely damaged by
environmental pollution from oil spills, dumping of waste products,
burning of excess gases, pipe-line leaks, oil well blowouts, and
gas-flaring operations. One particular ethnic group in Nigeria,
the Ogonis, have organized and protested against both the Nigerian
federal government and Shell Oil, as the major oil producer in the
region. The Ogonis have charged that Shell Oil has consistently
damaged the local environment by: operating a number of off-shore
rigs and oil port facilities which have seriously damaged “the
tropical rain forest in the northern reaches of the Delta and
mangrove vegetation to the south” (Hutchful, 1985). These areas
are vital to the local fishing industry and other local industries.
As well, mangrove wood which is found in this area is used in
construction, and as firewood and charcoal (see Mangrove Case).

Shell is also being accused of engaging in “widespread
ecological disturbances, including explosions from seismic surveys,
pollution from pipe-line leaks, blowouts, drilling fluids and
refinery effluents, and land alienation and disruption of the
natural terrain from construction of industry infrastructure and
installations” (Ibid). For example, oil spill contamination of the
top soil has rendered the soil in the surrounding areas “unsuitable
for plant growth by reducing the availability of nutrients or by
increasing toxic contents in the soil” (Ibid). Gas flaring, on the
other hand, “has been associated with reduced crop yield and plant
growth on nearby farms, and disruption of wildlife in the immediate
vicinity” (Ibid). Shell and other oil companies have developed an
easy and inexpensive way to deal with by-products from oil
drilling: “indiscriminate dumping” (Ibid).

The Ogonis have been critical of the Nigerian Federal
government’s role in oil-exploration and drilling activities. For
example, the Federal government is responsible for issuing oil
mining and exploration leases; the government has issued such
leases for a large part of the land and offshore areas of Rivers
State. The government has done this as the sole administrator of
oil licensing through the Nigerian National Petroleum Corporation
(NNPC) with no consultation with local government groups. The
Federal government has also been criticized for allowing the oil
companies to dump wastes in a manner that would be illegal in the
United States. For example, “U.S. environmental regulations
completely prohibit the discharge of produced water or drilling
muds from onshore facilities into surface-water bodies; produced
water has to be reinjected for recovery or injected into disposal
wells, while drilling muds are to be landfilled” (Nwankwo and
Irrechukwu, 1981). However, in Nigeria, oil companies often
dispose of wastes from oil drilling directly into fresh-water
bodies, or do not follow proper pollution-reducing techniques (see
Nigeria case).

Many Ogoni leaders have pointed to the nearly complete
devastation of the local economy due to socio-economic and
environmental disturbances from the oil industry. Although Shell
earns a considerable deal of money from its drilling in the Rivers
region, it has done little to nothing to reinvest a portion of its
profits back into the local communities where drilling takes place.
For example, in the Rivers region, “there is an almost total
absence of schools, good drinking water, electricity, medical care,
and roads in many peasant communities” (Hutchful, 1985).
Communication and transportation facilities for local villagers are
seriously limited. The Nigerian federal government is being
accused of diverting profits away from the oil producing regions to
other parts of the country.

Other critics charge that industry wastes from the oil
industry could be used to address, in part, infrastructural
deficiencies in the local communities. For example, the disposal
of gas from flaring “could constitute the basis for generating
power for urban and rural electrification” (Ibid). Other industry
wastes “could form the feedstock for the petrochemical industry,
such as plastics, synthetic fibers, detergents and solvents”
(Ibid). However, Shell and the other oil companies operating in
Nigeria “consider it cheaper to burn away the gases that could have
been used to give electric power and light to these villages”
(Ibid).

The oil companies have also introduced major distortions into
the social and economic fabric of the local societies. Apart from
the destruction of local economic activities, Shell and other oil
companies have perpetuated “regional and class inequalities” by
creating “oil colonies” in local areas where oil executives live
quite lavishly in comparison to the impoverished conditions of the
local communities (Ibid). Because the oil industry requires
highly-skilled workers, local villagers are either forced to
migrate to the urban centers after being economically displaced, or
to become low-skilled workers dependent on the oil company. These
structural changes in the economic life of the local communities
has often “generated bitter conflict as the issue of employment and
participation in the oil industry” has divided different segments
of the communities, often along ethnic lines (Ibid). Other
structural effects of the oil industry are “rural depopulation,
disintegration of the peasantry, and urban marginalization” (Ibid).

The crisis over environmental pollution and economic
marginalization from the oil industry reached a peak in January
1993 when 300,000 Ogoni protested against Shell Oil. This
organized protest was followed by repeated harassment, arrests, and
killing of Ogonis by Federal government troops. Developments in
the Ogoni region have been documented by the Office of the General
Secretary, Unrepresented Nations and Peoples Organization (UNPO)
from January 1993 through April 1994, and are as follows:

1993

January 4
300,000 Ogoni protest against Shell Oil activities and the
environmental destruction of Ogoni land.

February 15-16
Shell International advisors meet with the Shell Petroleum
Development Company (SPDC) in London and the Hague to consider
strategies for countering the “possibility that internationally
organized protest could develop” over Shell’s activities in Ogoni.

April 18
Ken Saro-Wiwa, chairman of the resistance group “Movement for the
Survival of the Ogoni People (MOSOP),” is held by the Nigerian
State Security Service at Port Harcourt Airport for 16 hours
without charges, is released, but then arrested 5 days later.

April 30
Construction work on Shell’s Rumuekpe-Bomu Pipeline destroys
freshly planted Ogoni farmland sparking a peaceful demonstration of
approximately 10,000 Ogoni villagers. Nigerian Federal government
soldiers open fire on the crowd of demonstrators, wounding at least
10.

May 1
Mass demonstrations along Bori Road against the pipeline
construction continue. Shell decides to withdraw American workers
and equipment.

May 3
Agbarator Otu is shot and killed by members of the Nigerian
military while protesting work on the pipeline at Nonwa.

May 16
Mr. Saro-Wiwa has his passport seized while trying to leave for
London.

May 19
Amnesty International issues an Urgent Action concerning the extra
judicial killing of Mr. Otu and the Nigerian government’s use of
force against peaceful Ogoni protests.

May 24
Mr. Saro-Wiwa begins a European tour and succeeds in drawing
attention to the struggle of the Ogoni people. Shell responds to
the international attention and is ‘happy to discuss these matters
further….’

June 12
Presidential elections are boycotted by the Ogoni. A ruptured
pipeline begins to spray oil in Bunu Tai, Ogoni land. Forty days
later, the flow is yet to be stopped. Mr. Saro-Wiwa is prevented
from travelling to the UN conference in Vienna by Nigerian SSS, and
his passport is seized.

June 21
Mr. Saro-Wiwa and other MOSOP officials are arrested.

June 22
Ogoni people march in Bori, in protest against MOSOP arrests. In
reaction, Federal government soldiers are moved from Port Harcourt
and stationed in Bori. Indiscriminate beatings and arrests of
Ogoni people by ‘heavy[ily] armed and unfriendly Nigerian soldiers
and police’ are frequent.

June 30
Amnesty International issues a Fast Action concerning Mr. Saro-
Wiwa.

July 9: At least 60 Ogoni people are killed by Andoni when
arriving back from the Cameroon Republic by boat. This ‘incident’
marks the beginning of Ogoni-Andoni violence.

Mid-July
Mr. Saro-Wiwa is moved to a hospital and later released on bail,
but charges still stand.

August 5
Kaa is the first village attacked in the Andoni-Ogoni conflict,
resulting in 33 deaths and 8,000 refugees. Over the coming months,
similar incidents occur in over 20 other villages. MOSOP accuses
Shell of being behind the Andoni-Ogoni violence.

August 31
MOSOP leaders are summoned to Abuja for a meeting with the Interim
government, installed by former head of state Babangida after the
annulment of the June 12 election results. This is the first time
that the Nigerian government officially discussed the situation in
Ogoniland with MOSOP.

Beginning September
Mr. Saro-Wiwa, Senator Birabi, and representatives of the Rivers
State Security Council visit the destroyed village of Kaa and urge
Governor Ada George to take measures to curb Andoni-Ogoni violence.
Meetings are arranged between Andoni and Ogoni leaders and
government representatives. This leads to the creation of a Peace
Committee, headed by Professor Claude Ake.

September 15
General Sani Abacha promises Mr. Saro-Wiwa that Federal troops will
be sent to Ogoniland to help curb Andoni-Ogoni violence.

October 6
A Peace Agreement is signed concerning the Ogoni-Andoni troubles,
but without the signature of Mr. Saro-Wiwa, or the ‘consultation of
the communities involved.’

October 17
An oil spill at Korokoro oil fields in Ogoni, operated by Shell.
Baritonle Kpormon is shot dead at a checkpoint in Bori by a Federal
soldier who has been sent to ensure peace at the Ogoni-Andoni
border; however Bori is not at the border. A MOSOP Steering
Committee meeting accepts the Peace Agreement but for two
paragraphs, and calls for a Judicial Commission of Inquiry to be
installed by the Federal government.

October 19
Professor Ake, chairman of the Peace Conference, send a letter to
Governor Ada George, stating that he does not agree with the Peace
Agreement. According to him, it was drafted in haste and without
proper consultation of the communities involved.

October 23
Two fire trucks from SPDC are seized at Korokoro by local
inhabitants.

October 25
Three Ogoni men are shot at Korokoro oil fields by Federal
government soldiers accompanying Shell workers who went back to
retrieve the fire trucks. One man dies (Uebari Nna), and two are
wounded (Pal Sunday and Mboo Ndike).

November 17
The interim government resigns. General Abacha becomes the new
Nigerian head of state.

December 13
Governor Ada George is replaced by Lt. Col. Dauda Komo. Violent
clashes between Ogoni and Okirika over crowded land at waterfronts,
Port Harcourt. Over 90 people are reported dead, many more
wounded.

December 28
Probably to prevent the start of the Ogoni Week, MOSOP leaders Dr.
Owen Wiwa and Ledum Mitee, a lawyer, are arrested without being
charged. The Ogoni Assembly is dispersed by Nigerian soldiers.
Lt. Col. Komo states that Ogoni Week was aborted because MOSOP
didn’t apply for a permit.

1994

January 2
Mr. Saro-Wiwa is placed under house arrest.

January 4
Dr. Owen Wiwa and Mr. Ledum are released and Mr. Saro-Wiwa’s house
arrest is lifted.

January 11
A seven member Commission of Inquiry is installed by the Rivers
State government to investigate Ogoni-Okirika clashes, and starts
public sittings in Port Harcourt.

January 20
A three-member ministerial team starts a two-day tour of Rivers
State to investigate the hostilities between the communities there,
as part of a general inquiry of community clashes. The Nigerian
government is especially worried about troubles in oil producing
areas.

January 21
A $500 million contract is signed in Port Harcourt between Shell
Nigeria and ABB Global Engineering UK, allowing the latter to
collect gas from 10 flow stations in Rivers State.

January 24
The three major oil companies in Port Harcourt estimate to have
lost over $200 million during 1993, due to ‘unfavorable conditions
in their areas of operation,’ and call for urgent measures to
combat the situation.

Beginning April

A small conflict between Ogoni and Okoloma leads to serious
clashes; Lt. Col. Komo is reported to have said that soldiers have
been directed to deal with aggressive communities, and if necessary
shoot trouble makers. Fifteen Ogoni people are arrested without
being charged, including Dr. Owen Wiwa.

Since this report was compiled, Mr. Ken Saro-Wiwa, along with
eight other MOSOP members, were arrested and charged with the
murders of four traditional chiefs belonging to a pro-government
group in the Ogoni region. The murders occurred during a bloody
clash in May 1994 between Ogoni activists and Federal government
soldiers. On October 31, 1995, a federal military tribunal
convicted Ken Saro-Wiwa and the eight others of murder and
sentenced them to death. On November 10, 1995 Ken Saro-Wiwa,
Barinem Kiobel, John Kounien, Baribor Bera, Saturday Dobee, Felix
Nwate, Nordu Eawo, Paul Levura, and Daniel Bgokoo were hanged in
Port Harcourt by the Nigerian federal government. Reactions by the
international community were swift and included:

1. Protest marches at Nigerian embassies and Shell offices all
over the world;

2. Suspension of Nigeria from the Commonwealth of Britain (a
group comprising of Britain and its former colonies);

3. The withdrawal of ambassadors by several countries;

4. Calls for a multilateral oil embargo and other sanctions by
world leaders;

5. Plans for a United Nations General Assembly resolution
condemning the executions;

6. Protest actions by human rights groups such as Amnesty
International and environmental groups such as Greepeace;

7. Calls by the European Union to impose economic sanctions;

8. Imposition of a ban on arms sales to Nigeria by a number of
countries;

9. Protests in Nigeria by thousands of students and other
individuals; and

10. Under extreme pressure, the International Finance Corporation
cancels a proposed $100 million loan and $80 million equity deal to
Nigeria LNG, a company owned by the Nigerian government and the top
oil producers in Nigeria (Shell, Elf, and Agip), to produce a gas
plant and pipeline in the Niger delta.

Royal Dutch Shell, on the other hand, announced plans on November
16, 1995, just six days after the hangings, that they intend to
proceed with the $5 billion natural gas plant in Nigeria, despite
numerous protests by world leaders, including South Africa’s Nelson
Mandela. In mid-November 1995, Shell reiterated its belief that
sanctions would do more to hurt ordinary Nigerians and that the
country will benefit from the natural gas plant. Meanwhile, the
Nigerian government has defrayed all criticism by stating that the
executions were in the purview of the country’s domestic judicial
system, and therefore not in a position to be judged by the
international community.
The following is the closing statement of Ken Saro-Wiwa to the
military-appointed tribunal:

My lord,
We all stand before history. I am a man of peace, of ideas.
Appalled by the denigrating poverty of my people who live on a
richly endowed land, distressed by their political marginalization
and economic strangulation, angered by the devastation of their
land, their ultimate heritage, anxious to preserve their right to
life and to a decent living, and determined to usher to this
country as a whole a fair and just democratic system which protects
everyone and every ethnic group and gives us all a valid claim to
human civilization, I have devoted my intellectual and material
resources, my very life, to a cause in which I have total belief
and from which I cannot be blackmailed or intimidated. I have no
doubt at all about the ultimate success of my cause, no matter the
trials and tribulations which I and those who believe with me may
encounter on our journey. Nor imprisonment nor death can stop our
ultimate victory.

I repeat that we all stand before history. I and my
colleagues are not the only ones on trial. Shell is here on trial
and it is as well that it is represented by counsel said to be
holding a watching brief. The company has, indeed, ducked this
particular trial, but its day will surely come and the lessons
learnt here may prove useful to it for there is not doubt in my
mind that the ecological war that the company has waged in the
Delta will be called to question sooner than later and the crimes
of that war duly punished. The crime of the company’s dirty wars
against the Ogoni people will also be punished.

On trial also is the Nigerian nation, its present rulers and
those who assist them. Any nations which can do to the weak and
disadvantaged what the Nigerian nation has done to the Ogoni, loses
a claim to independence and to freedom from outside influence. I
am not one of those who why away from protesting injustice and
oppression, arguing that they are expected in a military regime.
The military do not act alone. They are supported by a gaggle of
politicians, lawyers, judges, academics, and businessmen, all of
them hiding under the claim that they are only doing their duty,
men and women too afraid to wash their pants of urine. We all
stand on trial, my lord, for by our actions we have denigrated our
country and jeopardized the future of our children. As we
subscribe to the sub-normal and accept double standards, as we lie
and cheat openly, as we protect injustice and oppression, we empty
our classrooms, denigrate our hospitals, fill our stomachs with
hunger and elect to make ourselves the slaves of those who ascribe
to higher standards, pursue the truth, and honor justice, freedom,
and hard work. I predict that the scene here will be played and
replayed by generations yet unborn.

Some have already cast themselves in the role of villains,
some are tragic victims, some still have a chance to redeem
themselves. The choice is for each individual. I predict that the
denouement of the riddle of the Niger delta will soon come. The
agenda is being set at this trial. Whether the peaceful ways I
have favored will prevail depends on what the oppressor decides,
what signals it sends out to the waiting public.

In my innocence of the false charges I face here, in my utter
conviction, I call upon the Ogoni people, the peoples of the Niger
delta, and the oppressed ethnic minorities of Nigeria to stand up
now and fight fearlessly and peacefully for their rights. History
is on their side. God is on their side. For the Holy Quran says
in Sura 42, verse 41: “All those that fight when oppressed incur
no guilt, but Allah shall punish the oppressor.” Come the day.
Ken Saro-Wiwa’s final words before he was hanged: “Lord take my
soul, but the struggle continues.”
3. Related Cases

COLOMOIL Case
EXXON Case
KOMI Case

Keyword Clusters
(1) Trade Product: Oil
(2) Bio-geography: Tropical
(3) Environmental Problem: Pollution Land (POLL)

4. Draft Authors: Kerstin Moesinger and Amy Maglio

B. LEGAL CLUSTER

5. Discourse and Status: DISagreement and ALLEGAtion

6. Forum and Scope: NIGERia and UNILATeral

In 1993, Ken Saro-Wiwa, an Ogoni activist leader, sought
international support for their campaign against Shell.
“addressing the third General Assembly of the Unrepresented Nations
and People’s Organization (UNPO), Wiwa accused Shell of ‘waging an
ecological war against Ogoni’. Shell became alarmed over the
attention paid to the Ogoni’s plight. As a result, SPDC claims to
have a program which is improving Ogoni facilities, assessing
environmental performance and assisting the community in
infrastructure, health, agriculture and education.

7. Decision Breadth: 1 (NIGERia)

8. Legal Standing: NGO

C. GEOGRAPHIC FILTERS

9. Geographic Locations

a. Geographic Species Domain: AFRICA
b. Geographic Conflict Site: Western AFRICA (WAFR)
c. Geographic Impact: NIGERia

10. Sub-national Factors: Yes

11. Type of Habitat: TROPical Rainy Forest

D. TRADE FILTERS

12. Type of Measure: Regulatory Standard (REGSTD)

MOSOP and other Ogoni activists are calling for the Nigerian
Federal government to regulate the oil exploration, drilling, and
processing activities of Shell Oil and other oil manufacturers in
the oil producing regions of Nigeria. This includes enforcing
standards on the location of oil drills, the proper disposal of oil
wastes, and appropriate clean-up procedures in the event of spills.
MOSOP and other Ogoni activists are also asking that a larger share
of the profits from the oil industry be directed to the oil
producing regions of the country. MOSOP also wants local
government leaders to be included to a larger extent in the
planning and decision-making of future oil explorations and
expanded activities related to current oil drilling and processing.
13. Direct vs. Indirect Impacts: DIRect

14. Relation of Measure to Environmental Impact

a. Directly Related: YES
b. Indirectly Related: NO
c. Not Related: NO
d. Process Related: YES

15. Trade Product

16. Economic Data

It is estimated that Nigeria earns over 90 percent of its
foreign exchange and over 80 percent of government revenues from
the petroleum industry. Nigeria produces approximately 1.9 million
barrels of oil per day (b/d), has a refining capacity of 433,250
barrels per calendar day (b/cd), and has 17.9 billion barrels (bbl)
in reserves. Foreign firms own up to 40 percent of the petroleum
agreements in Nigeria. AGIP, Texaco, Chevron, Mobil, and Shell
operated the majority of oil fields in Nigeria, with Shell
controlling over 50 percent of the domestic market. Nigeria has
earned a high of $30.85 per barrel in 1983 to a low of $15.88 in
1988. Today, Nigeria earns approximately $20.00 per barrel. The
oil shocks in the 1970s, and the resultant crash of global oil
prices, caused Nigerian oil revenues to drop from $22.4 billion in
1980 to $9.6 billion in 1983. Because of the role of the foreign
oil companies in the Nigerian oil industry, there are a large
number of foreign workers in the petroleum sector. Employment in
the sector is typically tied to high-skill workers with technical
Knowledge. The number of local residents who are employed in the
petroleum industry is limited when compared to other sectors of the
economy (e.g., agriculture). Although revenues from oil have
decreased, Nigeria still earns the majority of its foreign exchange
from the sale of oil, thus its importance to the national economy
cannot be stressed enough.

The oil industry employs only 5% of the labor force (as
opposed to 70% which agriculture once employed before the country
become a single commodity export economy with oil production).

17. Impact of Measure on Trade Competitiveness

Both Shell Oil and the other foreign oil companies operating
in Nigeria have argued to the Nigerian Federal government that any
attempt at regulating the petroleum industry will have a
detrimental impact both on company profits, but also on national
government revenues and local employment. Shell has argued that it
is in the national interest of Nigeria for the government to
support efforts at expanding current drilling operations and
promoting exploration and establishment of new oil-wells which will
contribute to the economic viability of Nigeria in the competitive
global oil market. Because the Nigerian government receives the
vast majority of its foreign exchange earnings from the sale of
oil, any restrictions on the oil producers or explorers could have
a negative impact on Nigeria’s economic earnings. For example,
even a slight reduction in current production levels could have a
large impact on the economy.

18. Industry Sector: PETROLeum

19. Exporter and Importer: NIGERia and USA

Total exports of Nigerian oil to the United States equalled $5
billion in 1992. Nigeria exports the remainder of its oil to
countries in the European Union, specifically Germany and England.

E. ENVIRONMENT CLUSTERS

20. Environmental Problem Type: SOURCE and SINK

The spills from oil, blowouts, gas flares, and other
disruptions have lead to bio-diversity loss (BIODIV), species loss
by land, air, and sea (SPLL, SPLA, SPLS), pollution of the land,
air, and sea (POLA, POLL, POLS), and waste in the form of drilling
mud and formation water (POLA, POLS).

21. Name, Type, and Diversity of Species

a. Name: Many
b. Number: Many
c. Species Genera: Predominantly in Rivers State region

(1) Plants and animals located in the salt-water riverine
area immediately adjoining the coast where the Niger and its
tributaries flow into the sea; (2) fresh-water riverine further
inland.

22. Impact and Effect: HIGH and STRCT

The environmental problems in Nigeria surrounding the
extraction of oil are both a source and sink problem. Although
Nigeria has a heavy volume of oil reserve, there will eventually be
a limit to amount of oil that can be produced. The problems of
pollution that oil extraction causes is extensive. Pollution for
oil production causes soil erosion, ground water and marine area
contamination, air pollution and severe health problems for the
indigenous communities surrounding oil production.

23. Urgency and Lifetime: DECADES and DECADES

24. Substitutes: RECYC and CONSV

F. OTHER FACTORS

25. Culture: Yes

The Ogoni have a long history of preserving their environment,
which they regard as sacred: rivers and streams provide water for
bathing and fish for food, making their environment intricately
connected with communities way of life. The Ogoni, whose
population of 500,000 occupies 404 miles of Nigerian land,y once
made a living farming and fishing. For over 30 years Shell and
Chevron financed drilling on Ogoni land has increasingly pushed
them into the forests and mangrove swamps to survive. “Those who
remain in the townships and villages are subjected to displacement,
expropriation of their property, violence and rape. The Ogoni have
received virtually none of the $30 billion from oil pumped out of
their lands, and they have been actively demonstrating against
such injustices.

26. Human Rights: Yes

The Nigerian Federal government has been charged with
violating the human rights of Ogoni activists who have peacefully
protested against Shell Oil and other oil companies regarding their
oil drilling and exploration activities in the Delta region of
Nigeria. Several Ogoni protestors have been killed and numerous
others injured in attacks by government soldiers. Other Ogoni
activities charge that Shell Oil is responsible for instigating
clashes between different ethnic groups in the region.

27. Transboundary Issues: No

28. Relevant Literature

Aguiyi-Ironsi, Louisa, et al. “Nigeria: The Looming Shadow”.
Newswatch. July 18, 1988.

Amnesty International (press release). “Fear of Extrajudicial
Execution/Death Penalty.” UA 176/94. Index AFR 44/02/94. May
4, 1994.

Amnesty International (press release). “Nigeria: Ken Saro-Wiwa,
Writer and President of the Movement for the Survival of the
Ogoni People”. Index AFR 44/03/94. May 22, 1994.

Amnesty International. 1994, June 24. Nigeria: Security forces
attack Ogoni villages.

Awobajo, S.A. 1981. An analysis of oil spill incidents in Nigeria:
1976-1980.

Brooks, Geraldine. “Sick Alliances: Shell’s Nigerian Fields Produce
Few Benefits for Regions’s Villagers”. The Wall Street Journal.
Friday, May 6, 1994.

Duke, L. 1995, November 11. “Nigerian policy seen as a sign of
Failed S. African policy.” Washington Post.

Economist Intelligent Unit. Country Profile: Nigeria. v. 1993/1994,
1994/1995.

Graf, William. The Nigerian State. (Portsmouth: Heineman). 1988.
Ikein, Augustine. The Impact of Oil on a Developing Country: The
Case of Nigeria. (New York: Praeger). 1990.

Hutchful, E. 1985. Oil companies and environmental pollution in
Nigeria. In Political economy of Nigeria, ed. Claude Ake. London:
Longman Press.

Komisar, Lucy. “Pen Calls on Nigeria and Burma to Release
Imprisoned Writers: Ken Saro-Wiwa Fights His Government and Shell
Oil”. The Pen Newsletter. Winter 1995. Issue #86.

Mcgreal, C. 1995, November 17. “Generals shrug off sanctions.” The
Guardian, 17.

Maduka, Ugwu. “Will Chaos in Lagos Send Oil Prices Sruring?’.
International Business, Business Week. August 22, 1994.

“Nigeria; Anybody Seen A Giant?”. The Economist. August 21, 1993.

Nigerian Environmental Study/Action Team, et al. The Path to
Sustainable Development in Nigeria: An NGO Report Prepared for the
United Nations Conference on Environment and Development, Rio de
Janiero, Brazil. (London: NEST). 1991.

Nwankwo, J.N. and Irrechukwu, D.O. 1981. Problems of environmental
pollution and control in the petroleum industry: The Nigerian
experience.

Odogwu, E.C. 1981. Impact of environmental regulations on the
petroleum industry: Economic and social considerations.

Osaghae, E.E. 1995. “The Ogoni uprising: Oil, politics, minority
agitation, and the future of the Nigerian state.” African Affairs,
94:325-44.

Rowell, Andrew. Shell Shocked: The Environmental and Social Cost of
Living with Shell in Nigeria (The Netherlands: Greenpeace
International). July, 1994.

Saro-Wiwa, K. 1995. “Notes from a gulag.” World Press Review,
42(10): 40.

“Shell’s game in Nigeria.” 1995, November 5. The Washington Post,
C7.

“The evil at the heart of Nigeria: Executed Nigerian writer Ken
Saro-Wiwa’s final interview epitomized his 20-year campaign.” 1995,
November 14. The Independent, 17.

“The Ogoni crisis: A case-study of military repression in
Southeastern Nigeria.” 1995. Human Rights Watch-Africa, 7(5).

Unrepresented Nations and Peoples Organization. 1994, June.
Background material on Ogoni.

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