Nigerian oil: Anger in the delta over who gets paid

Borrowing a page from militants, a village chief threatens Shell over naming rights for the country's first well.

When foreign prospectors struck oil deep below the red earth and lush green forest of southern Nigeria, local residents held a wild all-night party that still brings toothless smiles to the wrinkled faces of village elders.

Decades later, a peeling signboard at Nigeria's rusted oil well No. 1 bears the name Oloibiri, after this riverside village in southern Nigeria. But villagers in nearby Otabagi say the well is on their land and they want the local Royal Dutch Shell unit, to rename it.

What's behind a naming-rights dispute after so many years? The villagers suspect that high oil prices mean that Shell may reopen the well – shut down in 1977 – and that could mean more cash payments.

The village dispute is a microcosm of many larger fights here over getting a "fair share" of Nigeria's oil wealth. On Thursday, a militant group launched a rare attack on a Shell offshore oil installation. Shell told the Associated Press that it had shut down production from the Bonga Field, which normally produces about 200,000 barrels of crude per day.

The field accounts for about 10 percent of Nigeria's current daily output of around 2 million barrels per day – already significantly down from the amount produced before years of militant attacks degraded the oil infrastructure.

The Movement for the Emancipation of the Niger Delta, a militant group, told the Monitor in an emailed statement that they had kidnapped an American worker from a vessel they encountered while returning home from the attack. The US State Department confirmed that an American citizen had been taken hostage.

Meanwhile, the two squabbling villages make vague threats toward Shell, too, fueled by a similar sense of inequity.

"Our mothers and our fathers – we knew nothing about oil, we were ignorant about things at that time. There was no school, no nothing," said chief James Ekalagha recently at a meeting of some two dozen Otabagi chiefs and elders. "We are annoyed. See the community, how backward we are. If the name is not changed I will not permit them [oil companies] to enter the bush again."

Decades after oil began flowing in the 1950s, oil continues to be divisive in Nigeria, largely benefiting a superrich ruling class lording it over a poor majority. Despite earning billions from oil each year, most of Nigeria's 140 million people exist on just a couple of dollars a day.

Control of resources has also caused political splits. Since independence from Britain in 1960, Nigeria has divided into 36 federal states, as military and civilian lawmakers have sought greater regional control of federal money. While this decentralization of resources has enabled more political elites to feed at the oil trough, that money has not trickled down. Most Nigerians lack basics such as clean drinking water, electricity, or adequate education and health care.

This trend towards fractionalization, reflected in the Oloibori-Otabagi fight, undermines Nigeria's democracy, says Lucky Akaruese, a professor of philosophy at the University of Port Harcourt, in Nigeria's southern oil region. He says the state is becoming increasingly weak even as it is still trying to cement democratic rule since civilian rulers took over in 1999 from military juntas.

"Your family comes first, secondly your ethnic group, so the nation-state recedes to the background," says Professor Akaruese. "When the Nigerian state cannot protect lives, cannot protect property, of what use is the state? It will just wither away."

In the Niger Delta, those oil-fueled divisions are testing kinship allegiances, and villages like Oloibiri and Otabagi, which once saw themselves as part of the same community, are now rivals. But as is often the case at the community level, the Otabagi and Oloibiri villagers are arguing not over access to oil resources, but over the real and perceived benefits that oil companies distribute to host communities.

Nigeria has a long history of foreigners distributing gifts and favors to villages while extracting resources. Slave and palm oil traders started out with bottles of gin and small bundles of cash, village chiefs say. Then came the discovery of crude oil, which brought oil-company handouts of schools, roads, and health clinics, all aimed at better "community relations."

Shell says it has contributed hundreds of millions of dollars to community development projects in the Niger Delta (and continues to), particularly in the areas where the company operates. Activists say those contributions represent little more than payouts meant to keep angry villagers quiet.

In 1956, the disputed oil well began gushing. The well was corked in 1977, says Shell. But only in the last few months have impoverished residents have begun arguing over whose land Nigeria's first oil well was drilled on.

The villagers believe Shell will reopen the well, with high oil prices rendering it economical again. And with that, they say, the community relations payments, however small, will also flow again. Shell officials won't confirm any plans to reopen the well, saying it is company policy not to comment on their future operating plans.

But that hasn't stopped the bickering here. Elders of Otabagi say that Oloibiri has received substantial benefits from Shell – including numerous scholarships for its youths – in return for hosting the oil well.

Elders of Oloibiri say they've seen little benefit. A Shell official says it continued to support community development projects around this first well, even after it was corked. Most of those projects were for education and infrastructure, Shell says, but did not give further details.

In the past, Shell officials have argued that hundreds of billions of dollars in oil revenue have been turned over to the Nigerian government, which should be responsible for providing the schools and other projects the company funds.

Analysts deride the village dispute as a fight over the crumbs of the oil industry.

"These benefits they [Oloibiri and Otagabi] are talking about are laughable when ... compared with the amount of money that comes out of these oil wells," says Dimieari Von Kemedi, a consultant in Yenagoa, Nigeria, who specializes in conflict resolution. "They should be able to come together on that basis and agree on common ways of sharing the benefits – if any."

While Mr. Von Kemedi isn't sure how to solve this village dispute, he says that the solution is obvious – if difficult to achieve – in many other similar fights in Nigeria, where citizens feel they haven't benefited from the more than 50 years of oil production.

Oil companies need to start listening to communities more, he says; working with them to find out what their needs are and accepting responsibility that their industry can be divisive and should promote social cohesion.

"The oil industry does not ...support a consensus-building process under which all communities come together," says Von Kemedi.

He also says that Nigeria's federal and state governments need to channel more oil money into job creation and basic infrastructure and services. Most of the oil funds sent to the region by the federal government are stolen by state and local officials, say analysts, or earmarked for sweetheart contracts given to well-connected businessmen. This, in turn, has helped hinder the growth of sustainable economies that can provide jobs for young people, locking villages like Oloibori into cycles of poverty.

"Politicians know the right thing to do, but they don't have the political will to correct it," says Robert Nadioni, a surveyor who grew up in Oloibiri. "Let the larger society have the needed ingredients for development, then there will be peace."

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