NIGERIA: CLOSER DIALOGUE WITH THE OIL COMPANIES

1.(C) SUMMARY: On July 15, Ambassador Jeter hosted the first
"Three Plus Three" meeting of the Managing Directors of the
three major U.S., U.K. and Dutch oil companies together with
the three corresponding Chiefs of Diplomatic Missions in
Nigeria. ExxonMobil was unable to attend but the other two
expressed appreciation for this meeting and asked that the
group meet again in August. Prior to that meeting, the
Ambassador and the British High Commissioner will raise
mutual concerns on oil theft and insecurity in Warri with
President Obasanjo. END SUMMARY.


2.(C) The Embassy organized and hosted July 15 a meeting with
the Managing Directors of Anglo-Dutch Shell and ChevronTexaco
(CTX), the British High Commissioner and the Dutch Charge
d'Affaires. Shell's Director for External Affairs, Precious
Omuku accompanied the Shell MD and the CTX MD was joined by
visiting Corporate GM for Security Scott Taylor and
International Relations Manager Cedric Lavington -- both
based at CTX Headquarters in San Francisco. Although
invited, ExxonMobil was unable to attend. The British High
Commission's Economic and Political officers also attended as
well as Embassy Abuja's RSO, RAO, DAO, Economic Counselor,
Economic(Energy) Officer and Corporate Responsibility Officer
(CRO).


3.(C) After introductions by the Ambassador, CRO briefed the
group on the Voluntary Principles on Security and Human
Rights and plans for the Principles' implementation in
Nigeria, starting with an intensified dialogue with the GON.
Specifically, CRO pointed to the desired October 2003
conference among local stakeholders -- the companies,
Government of Nigeria agencies, and Delta communities -- to
launch a formal dialogue on best practices in the Delta.


4.(C) The Ambassador described the inaugural
"Three-Plus-Three" meeting as an attempt to strengthen the
Embassies' support for the companies and work with them and
the GON to improve security and the protection of human
rights in the oil producing areas of the Delta. Shell's
Managing Director, Ron Van Den Berg then briefed the group on
Shell's problem with oil theft from pipelines largely in
Delta State, a crime he compared with the drug trade in its
ability to produce a large payoff. According to Van Den
Berg, the GON has made some progress curbing this
large-scale diversion, which had reach as much as 100,000
barrels per day (bpd) by March 2003. Shell is now reporting
losses between 5,000 and 30,000 bpd throughout its system,
though the Shell MD expressed doubts this lower level would
be sustained. He bemoaned the release from jail of suspects
arrested with stolen oil, and called on the federal
government to take stronger measures against the Abuja-based
figures that he alleged were behind this crime. Van Den Berg
also expressed hope in attempts to track stolen oil by
"fingerprinting" suspect oil shipments showing up at West
African refineries outside Nigeria using chemical analysis to
determine the precise source of the oil.


5.(C) A discussion then ensued as to how the GON could better
protect oil operations of Shell and CTX. CTX's MD Jay Pryor
recounted a July 14 meeting company MDs had with President
Obasanjo and his senior security staff during which Obasanjo
appeared genuinely attentive to the concerns of the oil
industry. Scott Taylor of CTX's San Francisco headquarters
opined that Obasanjo has become focused on the law-and-order
crisis in Warri and seems prepared to take decisive action.
The British High Commissioner characterized the Warri crisis
as the most serious crisis facing Nigeria today and added
that the perceived fraud that marred the April elections in
key oil-producing states of Delta, Bayelsa and Rivers further
destabilize the political and security environment.


6.(C) The President reportedly asked for the names of the
major figures behind the trade in stolen oil, a request to
which the Shell MD demurred, saying the identification of the
culprits was a responsibility for the government's security
services. "Everyone around the President knows the barons
behind the crime," insisted the Shell boss. According to
Pryor, the President pledged to commit $50 million for the
purchase of small river boats and other equipment for the
army and navy personnel to patrol the waterways of Delta
State better. The CTX MD noted, however, that the Presidency
seems to lack a comprehensive strategy for restoring security
in the Warri area.


7.(C) Prompted by oil companies' concerns over the poor
performance of Nigerian police assigned to the Delta,
Ambassador Jeter reviewed a proposal he had previously
discussed with the MDs. As a way of addressing the severe
police training deficiencies, the oil companies could fund
improvements to the physical infrastructure of the country's
four major police training schools. To complement this
assistance, the Embassy would focus part of the existing
INL/ICITAP Police Reform program on special human rights and
community police training for police deployed to the Delta.
The CTX and Shell MDs voiced their support for this
collaborative idea.


8.(C) The two MDs encouraged the three Embassies to raise
concerns over oil theft and insecurity in Warri with the
Presidency. Shell's Van Den Berg specifically asked that we
tell Obasanjo "he must stop letting the (oil stealing) barons
go." Ambassador Jeter and the British High Commissioner
agreed and discussed jointly approaching Obasanjo in the near
future. While both Shell and CTX reiterated their opposition
to any large-scale GON security operation in the Warri area,
they expressed displeasure with the lack of any movement
towards restoring security in this area where oil production
(over 280,000 barrels per day) has been shut-in since
mid-March 2003.


9.(C) Comment: This meeting provided an excellent start for a
sustained and closer dialogue with the companies. Post
sought to focus this initial gathering on a topic of
immediate concern to the companies -- oil theft and security
concerns -- but will seek to expand the dialogue to include
human rights concerns and community development in future
meetings. A likely future agenda topic will be a discussion
of the companies' security agreements with the GON and
whether these meet the standards set out in the Voluntary
Principles. Post would appreciate any suggestions from AF or
DRL on items for the August meeting's agenda.
JETER