Judgment Against Shell May Affect Inflow of FDI in oil and gas industry

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Oil Spill: Environmental rights group hails judgement against Shell

Olusola Bello

Stakeholders in the oil and gas industry have expressed surprise at Shell Petroleum Development Company (SPDC) decision to agree to pay the Ogoni community N45.9 billion instead of resolving the case amicably with the people concerned out of court.

They have also argued that the court order may have some implications on foreign direct investment in the industry.

According to them, most of the foreign direct investments that have come into the industry recently were those that are driven by Shell. They name the Nigeria Liquefied Natural Gas NLNG, Train 7, and Asa North gas project.

Another set of concerned industry operators  have also accused  the Federal Government of not living to the spirit and letters of bilateral treaty it has entered into regarding foreign investors in the country. The bilateral treaty they said ensures the government protects the interest of any international investors.

Some of the stakeholders A said that if the money is paid, interested foreign investors may stay off the country and go elsewhere  while other stakeholders  argued that some investors might  not be disturbed if the judgment is obeyed.  “This is because if they see the judgment obeyed, they might say since the rule of law is being held, their investment is safe, if there is any problem, after all, the government has obeyed the court order”

Abiodun Adesanya managing director and chief executive of Degeconek, while commenting whether the incident would act as disincentive to investors, he said, if they obey the court order, this would demonstrate there is existence of rule of law. But if they fail to obey the order, then it would affect investors’ confidence.

He said already Nigeria is in terribly bad shape as regards investors’ confidence which is almost not existing.

Diran Fawibe, group chairman and chief executive officer, international Energy Services Limited in his own reaction said the Federal Government is never proactive in some of these things.

He said where the problem lies is that the government should not have allowed the situation to degenerate to this stage. “It should not have allowed it occurs.”

According to him, “if we are to trace the origin of the spill, first of all, we should ask, to what extent can we say that the operator, Shell is actually liable, or responsible. Because we know too well that some of the oil spills in Niger Delta are as a result of act of sabotage by some of the people or some criminal elements that actually cause problems with the pipelines.”

He asked: “Can we say it is a case of carelessness on the parts of officials of Shell, that made the spill to occur or a question of old pipelines that ought to have been changed prior to the occurrence that caused the oil spill.” He said If the answer is no, then it could be that the act could emanate from members of the community that want to cause oil spill so that they could ask for compensations.

He lamented that the Nigerian system is so bad that people can carry out all manners of sabotage and there would never be thorough investigations that would lead to apprehending whoever is responsible. So that when he is found culpable he gets punished.

“Nobody has been prosecuted for illegal refineries and oil theft, since all these while companies have been complaining about them.”

Speaking whether investors can be discouraged by the judgment, he said, it could, in a way. But that any foreign investor coming to Nigeria should look at the subject matter objectively and make efforts to ascertain if there was spillage, if there was a spillage, how did it happen.

Some other stakeholders that don’t not want their names mentioned have however gave some possible reasons why the company agreed to pay the money.

One, they said the company may have agreed to pay the  money as a result of frustrations it has encountered in the course of its operations in the Niger Delta, especially in Ogoniland, and  also government approach to issues that should have been promptly attended to.

Secondly, they said since the government refused to act promptly on the issue, especially when Shell has alleged that incident that the Ogoni people are laying claims to happened during the civil war by a third party, the company many have given up on the matter and felt the best way is just for it to pay the money, after all the government, would bear the greater part of the burden.

The government will pay 55 percent of the money while Shell pays, 30 percent, Total 10 percent and Eni 5 percent.

Thirdly, since the company is divesting it assets from onshore it may just feel there is no justification to begin to look for alternative ways to resolve the issue.

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