Rivers makes OML 11 move

The Rivers State government claims to have bought Shell Petroleum Development Co.’s (SPDC) 45% stake in OML 11, part of the Ogoniland, in execution of a legal ruling.

The sale was carried out in pursuit of a fine levied on SPDC for a spill from a pipeline in 1970. This occurred in the Ejama-Ebubu community and it is said to have polluted 255 hectares of land, swamps and rivers. The governor accused Shell of failing to take action to remedy the problems.

There were a number of legal hearings on the case, but little demonstration of actual progress, Wike continued. “Therefore, I directed the Rivers State Ministry of Finance to make a bid of $150 million supported by a bank guarantee and cash payment to the deputy sheriff in the sum of 1 billion naira, the later payable to the judgement creditors while the former is escrowed,” the governor said. The contract names local community leaders as the counterparty, led by Chief Isaac Asaro Agbara, in addition to SPDC.

Wike said SPDC had been unable to develop the block, given longstanding opposition to the company’s presence in Ogoniland. Putting the block’s potential capacity at nearly 250,000 barrels per day, the governor said the federal government was missing out from its 55% stake, while Rivers had missed out on the 13% derivation that is due to it. Production will begin from OML 11 in 15 months, he said.

Rivers’ decision to buy the stake was preferable to another buyer, he said, which would “further exacerbate the poverty of the people of the state”. It was preferable, he said, that “a responsible and responsive state government should weigh in and bid for the purchase of SPDC interest already set down for auction”.

A Shell representative noted that while the company did not comment on portfolio issues, the matter was linked to various legal proceedings in Nigeria.

Wike’s statement highlighted a number of legal hearings over the alleged pollution. The Supreme Court of Nigeria dismissed Shell’s appeal in January, the governor said. The judgement carried a penalty of 194bn naira ($535mn), while Shell had offered to pay 7bn naira ($19.3mn). The local community then applied for leave to sell OML 11 and the company’s yard at Kidney Island.

Wike also said that Rivers would relinquish some of its 45% equity in the block to local communities, with the aim of improving participation and the sharing of benefits.

Shell has had a sporadically difficult relationship with Rivers. A High Court sentenced three high-ranking SPDC officials to three months in prison for contempt in December 2018. The ruling was dropped following an appeal from SPDC.

Nigerian Minister of State for Petroleum Timipre Sylva was in Rivers on the weekend in order to broker a peace on OML 25, between Belema Oil and SPDC. Community members had occupied a platform in 2017 and called for a local company, Belema, to take over operations.

Under the Sylva-negotiated agreement, SPDC will retain the operatorship of the asset while Belema will take over operations and maintenance, while employing locals. This deal should allow output of 35,000 bpd to resume.

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