Should Ghana give licence to Shell to explore oil in the country?

“Father we pray and put a stop to this in Jesus Name…NO NO NO”.

“Be careful what you ask for”

“Please leave the oil and don’t allow shell, BP, Exxon, don’t look too far Nigeria and how much destruction they’ve cause environmentally. Is mayhem and poverty of Delta Niger even the rest of Nigeria for all these years it a SHAME!!! These resource companies think about themselves and their shareholders not the people, the country in mind.”

The above were comments made by some readers on ghanabusinessnews.com after we carried a story saying that Royal Dutch Shell officials are in talks with Ghanaian officials to acquire a licence for exploration of the country’s newly discovered oil.

A Reuters’ publication cited by ghanabusinessnews.com on Wednesday, September 21, 2011 said the Royal Dutch Shell Plc, one of the world’s major oil and gas companies is aiming at exploring for oil in Ghana.

The publication said the oil giant has approached Ghana oil officials to express interest in exploring for oil in the country.

“We have a growing appetite for Ghana and we are seeking the opportunity to participate in the country’s upstream activities,” Mike Muller, the global head of Shell trading, was quoted as saying.

Mr. Muller said, “We are working to acquire a licence for exploration…we hope we get the opportunity.”

After Ghana found oil in commercial quantities in June 2007 and commercial production began December 15, 2010, many oil companies have expressed interest in the country’s offshore, seeking for the black gold. ExxonMobil, China National Offshore Oil Corporation (CNOOC) and British Petroleum (BP) all at one time wanted to acquire stakes in the Jubilee oil fields. Some of the oil operators in Ghana are Tullow, Kosmos Energy, Anadarko, Afren, Eni, LUKoil and so on.

With Shell in the process of acquiring a license for Ghana exploration, it is very important that as a country we should be guided by the history of such a company noted for oil spills in its operations.

Shell’s history of oil spillage

Aside Gazprom, Exxon Mobil and Chevron, Shell is one of the biggest players in the Nigerian oil industry. Its main operations are based in the oil-rich Niger Delta State. The company has some history of oil-spillage in its operations globally.

A recent one is the oil-leak in the North Sea of Scotland.

It was reported by the BBC on August 15, 2011 that more than 200 tonnes of oil could have entered the North Sea after Shell’s recent spill.

A leak in a flow line leading to the Gannet Alpha oil platform 113 miles (180 km) off Aberdeen was found last week but Shell said the situation was under control and estimated 216 tonnes – 1,300 barrels – had spilled, according to the BBC.

Due to the spill, some conservationists in Scotland say the oil leak poses a threat to seabirds

But Technical Director of Shell’s exploration and production activities in Europe, Glen Cayley was quoted as saying, “It is not easy to quantify the total volume spilled but we estimate so far that it is around 216 tonnes.”

The company however, never blamed the oil spill in Scotland on saboteurs or thieves on its damaged pipelines as it used to say in the case of Nigeria.

According to Shell on its website, more than 70% of spills from Shell Petroleum Development Company facilities in the Niger Delta over the last five years (2006-2010) resulted from sabotage or leaks caused when thieves damage pipelines and wellhead.

The company has been denying responsibility for causing oil spills in Nigeria until recently in a dramatic turn of events, admitted it is responsible for two devastating oil spills in Ogoniland in Nigeria. The incidents happened in 2008 and 2009.

The oil spills that occurred in the period destroyed the Bodo fishing community in Ogoniland, a small community in the oil-rich Niger Delta, depriving the community of its livelihood. The community sued Shell in the UK, claiming the spills had destroyed the environment.

According to the BBC, the lawyer for the Bodo community said they would seek hundreds of millions of dollars in compensation for what they describe as the ‘world’s most devastating oil spills.’

Shell, however, insists it will only pay compensations under Nigerian laws and claimed less than 40,000 gallons of oil were spilt, but the Guardian newspaper of the UK reported that the spills could equal the 1989 Exxon Valdez disasters in Alaska. In that incident, 10 million gallons of oil spilled and destroyed the remote coastline.

The United Nations Environment Programme (UNEP) said an amount of $1 billion is needed to clean-up the over 50 years of pollution of Ogoniland by the operations of oil companies, and it will take over 30 years to do the clean-up, it adds.

Shell however, has stopped pumping oil in Ogoniland for about 15 years now.

The Ogoni people of the Niger Delta have suffered unimaginably since Nigeria discovered oil in the 1950s. They are among the most marginalised and underdeveloped in that country.

In 1995, one of the Ogoni people’s most prominent citizen and the African continent’s prolific writers and environmental activist, Ken Saro-Wiwa was executed after a controversial trial that drew global attention. The then military leader of Nigeria Sani Abacha, ignored global appeals for clemency and executed Saro-Wiwa and his compatriots, who were in the forefront of the campaign against Shell’s operations in the Niger Delta, particularly, Ogoniland.

The other eight who were executed together with Saro-Wiwa are Dr. Barinem Kiobel, John Kpuinen, Baribo Bera, Saturday Dobee, Felix Nwate, Nordu Eawo, Paul Levura and Daniel Gboko.

In 2009, after 13 years of persistently fighting for justice against Royal Dutch Shell for the company’s activities in their land, the Ogonis of the Niger Delta in Nigeria won a court case against Shell.

Following the court case settlement in New York, Shell agreed to pay $15.5 million to the Ogonis, but denied all the charges, claiming the company had done no wrong, but was paying the amount to facilitate reconciliation.

Why Shell wants Ghana

Even though Shell’s Mike Muller said they are eyeing exploration operations in Ghana due to “a growing appetite for Ghana’s upstream activities”, it must be noted that their operations in Nigeria seems to be encountering some challenges as the country tries to pass its Petroleum Industry Bill (PIB).

The PIB is to establish the legal and regulatory framework, institutions and regulatory authorities for the Nigerian petroleum industry, to establish guidelines for the operation of the upstream and downstream sectors, and for purposes connected with the same. It is also supposed to rewrite Nigeria’s decades-old relationship with its foreign oil partners and alter everything from fiscal terms to the structure of the state-oil firm.

But oil investors, the largest contributors of foreign direct investments (FDI) inflows into Nigeria are unwilling to invest because the PIB seems to impose heavy taxes on such companies.

FDI inflows into Nigeria, Africa’s most populous nation, dropped by $2.55 billion due to the uncertainty surrounding the PIB, according to the latest world investment report 2011 prepared by the United Nations Conference on Trade and Development (UNCTAD).

In 2010, Shell held unto $40 billion worth of potential investment in deepwater oil projects in Nigeria due to lack of clarity over the terms of the PIB, says a Reuters report.

Nigerian legislators are also not willing to make amends to the bill in order to be more investor-friendly before becoming a bill, a situation which has led Shell selling its most profitable onshore oil block in Nigeria, the Oil Mining License (OML) in April 2011 to billionaire and founder of Glo Mike Adenuga for a reported $650 million, according to Forbes magazine.

It’s clear now that Shell wants a fresh country to explore in Africa and Ghana is a potential. Already the Western Region where over 15 million barrels of oil have been produced so far as at June 2011 and 15 oil cargoes have been exported, according to Tullow Oil, is also the hub of Ghana’s cocoa, timber, and gold among the highest foreign exchange earners for the country.

These commodities have earned the country billions of dollars but the region is considered as one of the poorest in the country, a situation the Omanhene of Essikado, Nana Kobina Nketia bemoans according to a recent publication by the Ghana News Agency.

The chiefs in the region demanded 10% of the oil revenue to be made available to the region for development but that was not accepted by the country’s legislators when they passed the oil revenue management bill this year. However, the chiefs were unimpressed and displeased but President John Ataa Mills calmed them down by promising them of ‘massive development’ in the region.

Conclusion

With all these facts and a history of oil spill by Shell following the company wherever it goes, government officials at the Energy Ministry and the Ghana National Petroleum Corporation (GNPC) should give a serious thought before considering the company’s request for a licence to operate at any of Ghana’s oil fields.

Yes Ghana needs more investments in its oil industry but as Ms. Obiageli Ezekwesili, World Bank Vice President for the Africa Region in a speech delivered as part of celebrations to mark the African Union Day told investors and African ambassadors in Washington DC May 25, 2011, even though Africa is open for business, it is not open to just any business and that the “continent does not need irresponsible investments.”

Ghana at this stage of its oil sector development, certainly does not need an oil company like Shell with all its history. Its operations in Ghana should remain as an Oil Marketing Company (OMC).

By Emmanuel K. Dogbevi & Ekow Quandzie