Nigeria’s oil spill agency, NOSDRA, says that Shell’s Bonga oil spill “is likely the worst in a decade.”

Peter Idabor of the National Oil Spill Detection and Response Agency told The Associated Press on Thursday that oil from the spill in Shell’s Bonga field has spread to roughly 100 nautical miles. Idabor said he expects oil to begin washing ashore on Nigeria’s southern coast later Thursday.

Some of the largest recorded oil spills in Nigeria have been offshore marine spills like Bonga. Fisherpersons (rather than regulators) are usually on the frontlines of oil spill detection.[1] Regular spills have devastated the basic human rights of local communities who depend upon fishing for their livelihoods. According to some commentators, Nigerian ‘Bonny light’ crude is believed to spread especially thinly on the surface of water, resulting in a quicker, wider radius of contamination than heavier forms of crude.

Shell’s appalling record of oil spills in Nigeria dates back over 50 years and has shown no signs of improvement. In November 2011, NOSDRA Director General Peter Nduka was quoted as saying that:

Shell Petroleum Development Company alone had a record of 513 oil spills over the last couple of years and that the spills were yet to abate.

NOSDRA: taking a stand?

Once described as a “muzzled watchdog”, the Nigerian agency responsible for tackling oil spills has in the last few months shown potentially significant bite.

NOSDRA’s task of monitoring and responding to incessant oil spills in the Niger Delta is not an easy one. A small, under-resourced team of Nigerian inspectors cover a network of onshore pipelines and oil facilities that stretch over an area the size of Portugal, not to mention the expanding and largely unregulated offshore platforms, rigs, floating production and storage and offloading vessels (FPSOs) and oil tankers.

Effective egulation of offshore facilities is well beyond the capacity of Nigeria’s inspection regime. Oil giants like Shell and Exxon-Mobil with substantial offshore facilities operate without adequate oversight and repeatedly cause marine pollution with impunity.

The vast scale of Nigeria’s oil infrastructure is just one of NOSDRA’s many challenges. The regulator depends for transport on the same oil companies they are supposed to police. Political obstacles also remain. Turf wars with the Department for Petroleum Resources and state oil company, NNPC, have stunted NOSDRA’s effectiveness. Moreover its powers to enforce environmental regulations are limited to relatively token fines.

But NOSDRA may be renewing efforts to enforce higher standards on an oil industry known for over 50 years of environmental devastation in the fragile Delta region. Since October, NOSDRA has slapped substantially higher fines on major (and minor) players in the industry and heavily condemned corporate practices. In theory at least, Shell should face a steep fine for its latest spillage from Bonga.

• Indian oil firm, SEEPCO,[2] which is listed on the NYSE was fined N68 million ($413,000) for failing to report an oil spill from its facilities in Okpai-Oluchi, in Delta State. According to NOSDRA, the oil spill lasted for 136 days, causing severe pollution. Only after the local community petitioned the government, SEEPCO conducted a Joint Investigation Visit to the site on 9 July.
• Nigerian State owned Pipeline and Products Marketing Company Limited (PPMC) was fined N21.5 million ($130,000) for failure to report a spill in summer 2011 and non-compliance with the law.
• Italian oil major Agip was fined N1 million ($6,000) for failing to immediately contain recover and clean up an oil spill from its gas plant at Obrikom Omoku in Rivers State. The impacted site was further polluted when the oil spill caught fire.

These fines are still relatively tiny and will not provide an effective deterrent against pollution by oil giants. Under current regulations, a single payment of $7,000 to NOSDRA completely discharges oil companies from having to clean up major oil spills. Such token fines would be unthinkable in the US or UK, but companies like Shell have exploited the lack of oversight for decades.

Statutory fines for pollution in Nigeria are simply not commensurate with the long-term damage caused by oil spillage and high costs of remediation. Estimates of the total cost of cleaning the Niger Delta vary from between $20bn – $500 billion, and the UN says that the process could take up to 30 years.

Nigerian regulators need real powers, but the Petroleum Industry Bill is set to further weaken an already chaotic system. Until Nigerian the government clamps down on polluters and diversifies its policies and economy away from heavy dependence on oil, the onus is on home states such as the UK, EU and US governments to fill the void and hold corporations like Shell and Exxon-Mobil to account through judicial mechanisms and government sanctions.

Envisat ASAR image analyzed by SkyTruth (http://www.skytruth.org) - data courtesy European Space Agency

The Bonga oil field, one of Shell’s largest offshore oil facilities was shut down on Tuesday 20 December after a massive oil spill. The cause? It appears to be a combination of human error and / or equipment failure. What the BBC describes as “leak during a transfer of oil to a tanker” led to a reported 40,000 barrels of crude oil spilling into Nigerian waters.

Sattelite images show a clearly identifiable slick that measures 356 square miles. Digital scientists Sky Truth have published the shocking images which show an enormous mass of crude oil afloat in the Gulf of Guinea. [UPDATE 22 Dec: The AP reports that the oil spill is "moving to the coast" where it could impact heavily on local fishing communities.]

Skytruth also provided detailed measurements of the visible oil slick:

it is about 70 km (45 miles) long, 17 km (10 miles) wide at it’s widest, and covers 923 square kilometers (356 square miles) of ocean

This is a major spill, even by Shell Nigeria’s shocking standards. In August 2011, Shell was heavily condemned by the UN for failing to comply with basic industry measures and covering up the extent of the pollution in the Niger Delta. Fifty years of oil pollution could take up to 30 years to clean up, according to UNEP.

This latest spill casts serious doubt over the viability of Shell’s offshore drilling programme. Shell has held up Bonga and other “ultra-deepwater” facilities in Nigeria as being safe and secure operations that use cutting edge, clean technology. That a spill of this magnitude could occur despite the technology deployed shows that Shell’s deepwater drilling poses severe risks to the environment.

Deepwater drillling activity has expanded aggressively across the West African rim and poses substantial threats to the coastal environment. In more remote and inhospitable regions like the Arctic, where Shell and other companies are planning to drill next summer, the consequences of a deepwater spill could be even more catastrophic.

North Sea Troubles:

Earlier in August 2011, Shell was responsible for causing the worst oil spill in the area in the UK North Sea for over a decade. A leak in a pipe between an oil well and the Gannet Alpha offshore platform spilled 1,300 barrels of oil into the sea. Shell has yet to clear the remaining oil trapped inside the 4 kilometre subsea pipeline. The company may face a criminal prosecution following an investigation by the Department for Energy and Climate Change. Gannet Alpha is 113 miles (180km) off Aberdeen.

A damning investigation into rusty, ageing rigs in the North Sea by the Express newspaper revealed an appalling level of risk on board Shell’s oil platforms. Bill Campbell, ex-group auditor for Shell International and safety campaigner said:

data showed there were 85 gas releases and 443 dangerous occurrences last year. “The probability of an undesirable event is extremely high,” he said.

Jonathan said the country has been running on a deficit budget because the institutions that are supposed to protect public resources and prevent leakages have collapsed.

He said his office has been turned into a regular consultation room for ministers because systemic rot made it impossible for them to operate independent of the presidency.

The president said even doctors, who are supposed to protect lives, sometimes end up killing people and nobody takes action because the institutions that should monitor their activities have also collapsed.

These issues are related to the impact of the discovery of oil, and the consequent dwindling of non-petroleum sectors such as agriculture and manufacturing.Nigeria relies on oil for over 89.4% of its total revenue. This overwhelming dependency on oil has created an economy based on rent rather than productive activity, corruption over public service, and a polity that does not rely on its citizens (and crucially, their votes), to survive. While the national elections in April 2011 marked an improvement on the blatant fraud of 2007, there were still widespread irregularities, especially in rural areas. It will take more than credible elections to cure Nigeria’s oil curse.

While the relationship between political and business elites is complex, Nigeria’s oil dependence has enabled multinational companies to act with impunity, exploit lax government regulations and get away with appalling abuses, from gas flaring to oil spills, that would not be tolerated elsewhere. Oil companies, like Shell, Chevron and ExxonMobil have benefited from political instability. Rather than harming business, Nigeria’s chaotic and ungoverned politics has opened the  for massive gains, fraudulent accounting and operational cost cutting. As ruling elites and companies benefit, over 70% of Nigerian citizens suffer below the poverty line.

Functioning government institutions are urgently needed in Nigeria to prevent the daily corruption and abuse of human rights that lie at the root of conflicts in the North and South of the country. But President Jonathan, in yesterday’s speech, was short on concrete proposals.

“NEITI does not see the rationale for passing a bill that is designed to reduce government revenue from petroleum operations by a minimum of $3 billion annually through inappropriate and unfavourable adjustments to the fiscal provisions,” the agency said in a statement.

“Sadly, the House of Representatives Report establishes fiscal terms with a government share of oil revenues below internationally competitive levels and with a structure that will result in a rapid erosion of government petroleum revenues during the next 5 years.”

Here’s some background to the story.

This chart shows the split of revenues under Joint Venture oil agreements in Nigeria. Oil companies claim costs, (often at inflated rates) and cash flow (C/Flow), while the government claims Tax, Royalty and NNPC cashflow.

The PIB, presented to the National Assembly in2008,  is Nigeria’s attempt to re-structure its embattled oil industry, primarily to resolve long-standing funding issues and incorporate NNPC, the national oil company. However, the Bill has been subject to substantial mission creep, and could eventually affect a wide range of issues from fiscal terms, gas flaring to host community rights.

Earlier drafts of the PIB included a proposal to increase in the taxes and royalties due to the state, (known as state “take”). Oil companies such as Shell, Exxon Mobil and Chevron have fought long and hard to defeat such an increase in taxes. Anne Pickard, the top Shell executive in West Africa, boasted of infiltrating government ministries, and spoke of using the US Embassy as a “silver bullet” to kill off offending terms in the PIB. Companies argued that the increase in taxes would make Nigerian oil industry uncompetitive, and drive business elsewhere. Uncertainty over the new fiscal terms in the PIB was said to be blocking $60 billion in oil investment.

In a country dependent on oil for 85% of total government revenues, oil companies wield immense power and influence. Under such pressure, lawmakers at the House of Representatives are now proposing to downgrade Nigeria’s tax regime below internationally competitive rates. Far from increasing taxes on oil companies, they now plan to drop taxes even lower.

For those following the oil industry, it’s a familiar story. A host country attempts to change the rules governing its oil industry to increase the state share of profits from its natural resources. Deals signed under dictatorship or occupation, are seen in the cold light of day to be unfair and exploitative. But multinational companies unanimously oppose any changes. Heavy political  lobbying, scare tactics and histrionics follow, with companies claiming that even minor increases in the state’s take will lead to the industry crumbling and a massive exodus of foreign investors.

Ultimately, when the rules do change and the taxes on oil companies rise, everybody returns to business as usual and profits remain high. The exodus never seems to get off the ground so long as there’s crude oil beneath it.

This rhetoric is welcome, but Nigeria’s National Oil Spill Detection and Response Agency (NOSDRA) is a muzzled watchdog, easily overshadowed by oil giants, like Shell. Under current regulations, a single payment of $7,000 to NOSDRA completely discharges oil companies from having to clean up major oil spills. Such token fines would be unthinkable in the US or UK, but companies like Shell have exploited the lack of oversight for decades, with widespread human misery and environmental devastation the result.

President Goodluck Jonathan must empower Nigeria’s environmental regulators to bite as well as bark. Allowing companies a free hand to pollute will continue to devastate the Delta’s marginalised poor, and make a mockery of Nigeria’s sovereignty.

So poor is Shell’s record that over the weekend, the Nigerian government had to remind the company to respect international standards when it does get around to cleaning up a fraction of over 2,400 spill sites in the Delta.

Minister of Environment John Odey has asked Shell Petroleum Development Company (SPDC) to ensure that its plan to carry out the clean-up of some 268 sites in the Niger Delta conforms with the Federal Government’s guidelines on environmental standards.

And on Tuesday, Nigeria ‘cautioned’ Exxon Mobil over its frequent oil spills from its offshore facilities. Yet oil companies do not speak the language of reminders and cautions. ‘They will only respond if the boot is on their neck,’ observes an on environmental and waste management expert in Nigeria. ‘They won’t improve anything by themselves.’

The necessary challenge for the Ministry and the National Oil Spill Detection and Response Agency is to turn their political capital in the wake of Deepwater Horizon into enforceable environmental protection for oil-producing communities who have suffered decades of neglected spills.

Post-Deepwater Horizon, governments face a stark choice. Do nothing, and the oil companies will continue drilling deeper in our seas, lakes and oceans, endangering lives and livelihoods in order to maximise profit. Or take action, by halting further offshore drilling and imposing tougher regulations that force companies to avoid oil spills, conduct proper clean up responses and to pay for the damage that currently falls on local communities.

As Ghana’s Daily Graphic reports:

The Chief Economist of Shell Trading, Mr Roberto Siebert, told the Daily Graphic at the Oil and Gas Summit in Accra that “we have the expertise in trading, environmental management, exporting and importing and diversity in the contest of strong business principles”, adding that “Shell will also ensure that Ghana benefits from the perspective of health, safety and environment”.

Mr Siebert said Shell had a global spread and it was respected wherever it found itself because of its commitment to ensuring strong business principles that do not only ensure the benefit of the company, but also the countries in which it operated.

For evidence of Shell’s lack of ‘commitment to business principles’, Ghanaians may look to Nigeria, where Shell and other oil companies have effectively lost their ‘social license’ to operate in the Niger Delta region. Decades of routine gas flaring and oil spills have polluted the environment, destroyed livelihoods and in many areas have contributed to a total break down of community relations.

The company’s excessive reliance upon heavily armed government security forces has also led to grave human rights abuses. For many locals, Shell is the object of fear and anger, but not respect.

Shell is a late arrival in the rush for Ghana’s oil. Other oil majors such as Exxon Mobil have already had their attempt to gain a foothold in the country’s prized Jubilee Field frustrated by a government seeking a deal on better terms. It remains to be seen whether the Ghanaian government and civil society will draw lessons from the Nigerian experience and block Shell’s advances before it becomes too late.

The government estimates as many as 20,000 militants could participate in the programme… Under the plan, the screening of gunmen and collecting of weapons will begin on Aug. 6 at 15 amnesty camps located in Delta, Bayelsa, Rivers and other southern states in the Niger Delta. [President] Yar’Adua was expected to ask state governments in the Niger Delta, oil companies and international organisations to share the costs of the amnesty programme. It was not clear how much money was needed.

The cracks have already begun to show, and the unclarity of the government’s message was met with consternation by the Ijaw Elders and Leaders Forum. The Nigerian news service, NEXT, reported that:

Ijaw leaders have queried the offer of amnesty to Niger Delta militants, pointing attention to section 175 (1) (a) of the 1999 Constitution. According to them: “there has been no conviction against any of the alleged militants to warrant the granting of amnesty.”… The forum noted that that seven months after the submission of the report of the Technical Committee on Niger Delta, the Federal Government had taken no concrete step to implement any of its recommendations.

Despite the fact that the Nigerian army still occupies the region, militants have retaliated by blowing up pipelines and oil infrastructure belonging to Shell, Chevron, Agip and Exxon, a move which helped push the world oil price up to $69. Come 6th August, the government may be less optimistic that insurgents from the main militant group, the Movement for the Emancipation of the Niger Delta (MEND) will be getting in line to handover their weapons.

Urgent action is needed from all sides to halt the killing of innocent civilians. The conflict is exacerbated by the joint failure of multinational oil companies and the government to respect the rights of local communities, many of whom suffer the daily impacts of gas flaring and oil spills on their land and health. A better way to fight the cycle of violent conflict is to address people’s long-standing grievances: invest urgently in local development and povery alleviation, compensate communities for violations of their rights and enforce protection of the environment.