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.

from the June 20, 2008 edition

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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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