NIGERIA: OGONI BRACING FOR SHELL SUCCESSOR

C O N F I D E N T I A L SECTION 01 OF 02 LAGOS 000226 SIPDIS DOE FOR GPERSON,CHAYLOCK TREASURY FOR DFIELDS,RHALL COMMERCE FOR KBURRESS STATE PASS USTR FOR ASST USTR FLISER STATE PASS OPIC FOR ZHAN AND MSTUCKART STATE PASS TDA FOR NCABOT STATE PASS EXIM FOR JRICHTER STATE PASS USAID FOR GWEYNAND AND SLAWAETZ E.O. 12958: DECL: 06/25/2016 TAGS: EPET ENRG PGOV NI SUBJECT: NIGERIA: OGONI BRACING FOR SHELL SUCCESSOR REF: SEPTEL Classified By: Acting Consul General Helen C. Hudson, Reasons 1.4 (B,D) ¶1. (C) Summary: Ledum Mittee (strictly protect throughout), of the Movement for the Survival of the Ogoni People (MOSOP) told Acting Consul General June 6 and 24 that President Yar'Adua's announcement that Shell would lose its concession in Ogoniland came as a surprise. The Ogoni will soon engage the Federal Government on "benchmarks" that they are asking any new operator of the Ogoniland concession to meet, including demonstrated respect for the indigenous cultures and for protection of the environment, and commitment to giving the Ogoni an equity stake in the form of a trust fund to be used for development. Mittee speculated that a reason for resolving the issue now is that the Federal Government is grappling with ways to access natural gas to fuel domestic electric power generation needs; Ogoniland's gas may be the only gas in Nigeria not yet under contract for export. Mittee's story shows how far the Ogoni's concerns over environmental and developmental issues are from the minds of policymakers as they maneuver to access Ogoniland's riches. It remains to be seen whether the Ogoni will succeed in achieving the seemingly reasonable concessions they seek. End Summary. ¶2. (C) Ledum Mitee(strictly protect)of the Movement for the Survival of the Ogoni People (MOSOP) told Acting Consul General conversations June 6 and 24 that President Yar'Adua's June 4 announcement in France that Shell would lose its concession in Ogoniland (septel) came as something of a surprise; he read about it in the papers, he said. Mittee said he assumed that the announcement was the end result of the process started in December 2006 when MOSOP met with then-President Obasanjo. In that meeting, Obasanjo asked "What do the Ogoni want?" Mittee replied that because of the history of their dealings with Shell, the only way the area would return to production was if the government were to find another operator for the fields. Obasanjo replied that he had taken the decision that Shell would have to leave, and that he had chosen Repsol, a Spanish company, to take over the concession. Later, Mittee said, he learned that Repsol had an agreement with Obasanjo and the former President's aide-de-camp Andy Uba. At the time, Mittee said, he was skeptical that anything would come of the conversation. However, the President may have taken steps in the direction he had indicated. Father Matthew Kukah, who at Shell's request had been mediating between Shell and the Ogoni, wrote to Obasanjo to say that he had almost finished the conciliation process, that the only issue remaining between the parties was that of environmental cleanup in the area, and asking that he be allowed to finish his work. A leaked copy of the letter made its way to Mittee, and resulted in the open rift between the Ogoni and Kukah, Mittee said. ¶3. (C) In February 2007, Mittee met with Nigerian National Petroleum Company (NNPC) Group Managing Director Funso Kupolokun at Kupolokun's request. Kupolokun said that the Department of Petroleum Resources (DPR) and the Minister of State for Petroleum wanted to cancel the Shell contract, but that Shell had threatened to go to court. Kupolokun proffered that, rather than cancel the contract with Shell, NNPC would take it over, and appoint another operator. Mittee understood from Kupolokun that an NNPC takeover would allow Kupolokun to decide who would operate the concession, whereas cancellation of the concession would allow DPR to decide. ¶4. (C) According to Mittee, Kupolokun spoke with the major international oil companies (IOCs) to ascertain their interest in operating the fields, but none was interested. In addition, NNPC itself does not have the technical expertise to operate the fields, Mittee said, and would be "worse than Shell." "If they could choose," Mittee said, the Ogoni would select one of the IOCs to operate the fields. At various times, Mittee has heard from DPR contacts that Shell's concession would terminate automatically if not LAGOS 00000226 002 OF 002 worked for 10 years, that the government had given Shell a year to resolve its problems and return to production, and that the Ogoni concession would go up on the next bid round. (Note: Mittee did not seem to be aware that on June 16, Minister of State for Energy (Petroleum) Odein Ajumogobia announced that the Nigerian Production and Development Corporation (NPDC),NNPC's upstream operating unit, would operate the fields. However, in a June 25 meeting, Shell's Regional Vice President for Africa, Ann Pickard, told Ambassador that Shell is not going to fight the issue on the fields and press reports show that the Chinese are seriously looking at taking them over. End Note) ¶5. (C) Mittee also noted that he had recently heard that Shell will not challenge the President's decision in court. As a result, Mittee said, the Ogoni are fearful of what they may face after a new operator is chosen. They have decided to engage the Federal Government on benchmarks which they will ask that the new operator meet. The benchmarks are already in draft form, and will be made public June 28 or 29. The Ogoni will ask that the operator be able to demonstrate a commitment to preservation of the indigenous culture and to protection of the environment. They will also ask for an equity stake in the form of a trust fund to be used for development of the area. Shell could always be contacted in London, Mittee said, but how will the Ogoni ever hope to influence the Chinese, he asked rhetorically. ¶6. (C) Mittee speculated that one of the reasons for resolving theissue at this time is that the Federal Government is grappling with how to get access to natural gas for electrical power generation in Nigeria. Ogoni gas may be the only natural gas not currently committed for export, Mittee said, and the Federal Government wants to make sure that it is available for domestic use. ¶7. (C) Comment: Ledum Mittee, a founder of the Ogoni non-violent movement, was Deputy to executed Ogoni activist Ken Saro-Wiwa. As Mittee's story shows, the Ogoni's concerns over the environment and development in their area are far from policymakers thoughts as they maneuver to access Ogoniland's riches. It remains to be seen whether the Ogoni will be able to make the Federal Government take into consideration their seemingly reasonable requests. End Comment HUDSON