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Moles in High Places -Part 2

December 11, 2010

I have to concede that prior to reading the views of Ann Pickard, the
American spy (?)who doubled as the Executive Vice President for Shell
Companies in Africa, on why the International Oil Companies and some
European nations and the United States of America were opposed to the
Petroleum Industry Bill, I also had my reservations on the same.

I have to concede that prior to reading the views of Ann Pickard, the
American spy (?)who doubled as the Executive Vice President for Shell
Companies in Africa, on why the International Oil Companies and some
European nations and the United States of America were opposed to the
Petroleum Industry Bill, I also had my reservations on the same.

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At the core of my reservations on the PIB was that in an effort to
comprehensively deal with the challenges of the petroleum sector, the
drafters of the Bill not only redefined some of the existing
government agencies but also went on to propose the creation of
additional government agencies adding to the bureaucracy that already
exists in that sector.

In addition to the President of the Federal Republic of Nigeria, the
Minister of Petroleum Resources, the Nigeria National Petroleum
Corporation, Nigerian Content Development and Monitoring Board it is
proposed that the following agencies be created, such as National
Petroleum Assets Management Agency, Nigerian National Petroleum
Research Centre, and National Frontier Exploration Service.

Others are the Petroleum Technology Development Fund, National
Petroleum Directorate, Nigerian Petroleum Inspectorate, and Petroleum
Equalization Fund, but the IOCs and their backers probably have no
issues with these agencies being created as all they have to do is to
recruit more moles for implanting in these agencies so as to continue
with business as usual.

But the Wikileaks revelations of the cables from the American embassy
in Nigeria shows that there is more to the PIB that has made the IOCs
who are ordinarily fierce rivals to become totally aligned at every
level to ensure that the status quo on the petroleum sector is
maintained or at best that PIB as proposed is radically altered to
suit the IOCs and their backers.

Ann Pickard concedes that the PIB has potential benefits such as “the
creation of fully integrated independently functioning international
joint ventures (IJV) would solve the oil and gas industry’s
longstanding funding problems if the IJVs are done right”, a position
supported by the World Bank who are already working to make the IJVs
bankable to the annoyance of Ann Pickard.

The main reason why the Government of Nigeria through the Nigerian
National Petroleum Corporation is the junior partner in most JVs with
the IOCs was the insistence by international banks and other lending
organizations that funding would only be available if the IOCs were
the ones who were the senior partners in those projects.

Other benefits highlighted by Ann Pickard were the proposed division
of responsibilities between NNPC and the Directorate of Petroleum
Resources, freeing NNPC from its regulatory functions, and that
Nigerian owned companies in oil exploration and production will now be
taxed at the same rate as the IOCs, a proposal which has resulted in
these companies joining ranks with the IOCs to oppose the PIB.

The first issue that the IOCs have against the PIB is that it requires
an end to gas flaring by 2010, which Ann Pickard says is not feasible
due to lack of investment and security, and the inability of the
Government of Nigeria who owns 60% of the JVs to fund its share of the
bill for ending gas flaring, which in the case of Shell comes up to $4

Ending gas flaring would also require Shell to “shut in oil production
in fields were it would be uneconomic to end gas flaring, and it would
let others have the gas for free where it is economic to do so”, added
Ann Pickard, implying that the cheaper option for Shell was to
continue gas flaring and continue to produce oil even if the
environment and climate was the worse for it.

The second issue that the IOCs have with the PIB is the possible loss
of acreage as the Bill redefines how a company can hold on to its
exploration and production blocks, limiting what can be kept to two
kilometers around each well, thereby forcing the IOCs to bring
satellite productions on stream faster especially offshore or risk
losing the blocks.

This proposal addresses the long standing problem of IOCs holding onto
for years to blocks that have potential but taking no steps to develop
such blocks citing bureaucratic bottlenecks when such developments
would ordinarily increase the crude oil reserves of the Government of
Nigeria if those blocks are handed over to Nigerian, Chinese and
Indian companies desperate to explore them.

Ann Pickard says that Shell stands to lose 80% of its acreage in
Nigeria should this proposal be implemented and that the other IOCs
would also lose acreages, and notwithstanding that Nigeria stands to
gain from this, all the IOCs and their home governments are deploying
every weapon in their arsenal to torpedo the PIB.

The banding of the IOCs and their home governments to protect their
interests and oppose the PIB is expected but our expectation also
should be that seeing the immense benefits of the PIB to the Nigerian
people and government, why has this Bill not been passed and by the
National Assembly and sent to President Goodluck Ebele Jonathan for
signing into law?

Ann Pickard also provides answers to this, the most obvious being the
moles Shell has planted in key ministries and agencies of government
who have probably been instructed to block or delay the PIB with every
tool at their disposal, and the continuing use of the embassies of
nations such as US and UK to continue to deliver low-level messages of
concern on the PIB.

Then there are the meetings Shell has been having with the Ministry of
Finance and the Central Bank of Nigeria at all levels, whatever that
means, and then the intervention of the International Monetary Fund
which is preferred to that of the World Bank, whose political agenda
worries Shell because the World Bank is working to make the IJVs to be
created by the PIB bankable.

But most intriguing has been the engagements of Shell with the
National Assembly especially the House of Representatives it was
stressed by Ann Pickard at a meeting with the US Ambassador to Nigeria
to make a call to Dimeji Bankole, the Speaker of the House of
Representatives to see where he stood on the PIB, implying that he was
still undecided on the passage of the Bill?

Even when the Government of Nigeria wanted the PIB passed by the
National Assembly by November 17, Shell is not perturbed as Ann
Pickard indicates that tey will be able to obtain favorable changes to
the PIB before it becomes law, and again because fortunately, “we are
working with the House (House of Representatives) and the House
appears to want to work with us”.

The only reason why it won’t matter if the Senate passes what Shell
refers to as a bad bill is if the House of Representatives passes a
version that is a good bill to Shell and the IOCs, and that the
process of harmonization of the versions of both chambers of the
National Assembly turns out to be favorable to the IOCs but not in the
interest of Nigeria.

From the Wikileaks revelations, the selling of our collective birth
rights for a plate of porridge runs through the length and breadth of
our public service right through to the corridors of power, and in
other countries would have resulted in the conduct of high level
investigations to ensure that these moles in high places are unmasked
and charged for treason, tried, convicted and executed. 

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