FRIENDS of the Earth International (FoEI), a global federation of environmental rights advocacy groups, has accused the United Nations (UN) of unfair dealing in  their probe of devastating oil spills in the Niger Delta, Nigeria’s main oil and  gas basin.

The group which has Mr. Nnimmo Bassey of Nigeria as its Chair, is outraged by reports that a major UN investigation into Nigeria oil spills particularly in Ogoni, the home of the late Ken Saro-Wiwa, was allegedly funded by the Anglo-Dutch oil giant, Shell.

FoEI is claiming in an on-line statement to AkanimoReports on Monday that the UN relied more on figures produced by oil companies and Nigerian state statistics than on community testimony and organizations on the ground who work with communities.

After releasing some information some two weeks ago about its ongoing investigation, which is due to be released in early 2011, the UN Environment Programme (UNEP) was strongly criticised by environmental and human rights organisations.

The UNEP acknowledged in an August 23 statement that the report relies heavily on data supplied by the oil industry and stated that no draft report currently exists.

Shell oil spills and gas flaring in Nigeria are a major human rights and environmental tragedy.

Bassey, who is also the Executive Director of Environmental Rights Action (ERA) in Nigeria, said: “We monitor spills regularly and our observations often contradict information produced by oil companies and Nigerian regulatory agencies”.

Continuing, the renowned environmental rights activist argued, ”if the UNEP team would ask community monitors it would avoid falling into the trap of spinning Shell’s figures. The UN assessment is being paid for by Shell so we are not surprised that it tells Shell’s version of the facts. But the reality is that several studies have placed the bulk of the blame for oil spills in the Niger Delta on the doorsteps of the oil companies; particularly Shell.”

Adding, Geert Ritsema of Friends of the Earth Netherlands /Milieudefensie said, “UNEP should base its findings mostly on independent sources rather than on information from the oil companies responsible for the massive oil pollution in  Nigeria”.

According to him, ”UNEP team head Mike Cowing repeated last week Shell lies  that only ten percent of oil pollution in Ogoniland was caused by equipment failures and company negligence and 90% by locals stealing oil. Yet he himself earlier stated that Shell’s large scale oil pollution and performance in Ogoniland was ‘unacceptable’.

”These figures are not even consistent with some Shell official reports which admit that between 1998 and 2007 45% of all leakages from Shell facilities were due to poor maintenance of oil installation”.

In May 2008, four Nigerian citizens and Friends of the Earth Netherlands/Nigeria filed a unique lawsuit against Anglo-Dutch oil giant Shell. The Nigerians, fishermen and farmers, suffered major damage from oil spills because of oil production by Shell. The first lawsuit hearing is expected take place in The Hague (The Netherlands) later in 2010.

Oil extraction in the Niger Delta started during the 1950s and was suspended in Ogoniland in the 1990s because of unrest and many oil spills there have not yet been cleaned up by Shell.

A round table strategic meeting in Calabar, the Cross River State capital, on Reducing Emissions from Deforestation and Degradation (REDD), has kicked against continued selling of forests by communities and governments in Nigeria

The meeting which was organised by Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN) in collaboration with Rainforest Research Development Centre and GREENCODE, on August 18, 2010, said forests are human eco-systems.

In a communique e-mailed to AkanimoReports on Thursday by Mr. Philip Jakpor, Spokesperson for ERA, the thrust of the meeting was to build the capacity of critical stakeholders to understand, analyze, criticize and resist the REDD scheme prior to its adoption in Nigeria. Participants were drawn from non-governmental organizations, representatives of civil society groups, forests communities and students from Calabar.

In his opening remarks, the Executive Director of ERA and Chair, Friends of the Earth International (FoEI), Nnimmo Bassey  said that forests in Cross River State have been targeted for the REDD in Nigeria hence the need for participants to uncover any cover-ups by government which is detrimental to community forests and the environment.

Presentations and positions articulated by the resource persons, actions and reactions from the representatives of CSO’s, forest communities and individuals, during the incisive brainstorming session, formed the basis for observations which were made and articulated thus:

Participants at the Calabar meeting observed that:

• Forests in Cross Rivers State-some of the few remaining tracks of mangrove and rainforest reserve in the world targeted for REDD are in grave danger due to the scheme.
• Carbon trading/market mechanism promoted by the REDD are false solutions to climate change.
• REDD promotes deforestation, more plantation and corporate land grabs.
• Nigeria’s forest dependent poor may be forcefully evicted from their land and denied access to the forests that form basis of their culture and livelihoods by the REDD.
• Forest-dependent communities that have been the original custodian of native forests have not been engaged or incorporated by government in the REDD negotiation process.
• Awareness on REDD is very low at all levels of engagement in Nigeria as there are obvious capacity gaps among government negotiators on the REDD debate.
• REDD attraction for the Nigerian government is the huge fund involved not the devastating environmental and socio-cultural implications.
• There are no plans to conduct Environmental Impact Assessment (EIA) on all REDD targeted forest communities in Nigeria.
• The World Bank and other financial institutions that have invested disproportionately by acting as climate bank to the detriment of our forests and environment should not be the instrument through which funds mobilized for addressing climate change should be channeled.
• African, particularly Nigerian forests and environment are in crises and require urgent action to rescue them from the path of grave degradation and consequences.

Recognizing that forests play key roles in human lives, they resolved that protection of forests and environment in Nigeria is a duty citizens owe the earth and humanity.

According to them, ”forests must be out of Carbon markets if there should be REDD. Forest is not for sale! It is our life and source of livelihoods for millions of forest-dependent peoples in forest-bearing communities in Africa. World Bank, IMF, UNEP and other multilateral institutions should hands off our forests”.

Continuing, they said government at all levels in Nigeria should take honest and practical steps in reducing deforestation and climate change instead of gambling and trading with our forests, adding, ”plantations are not Forests. REDD should reward community people who protect the forests and not drivers of deforestation and degradation like plantation merchants and unsustainable logging contractors”.

”The Nigerian Government”, they went on, ”should actively engage forest community dwellers; civil society groups in the ongoing REDD negotiation process and adopt Community forest management practices as one of the concrete solutions to climate change.

”All civil society groups on environment in Nigeria and Africa must deepen their struggles against environmental and climate injustices by building alliances, solidarity and sharing experiences on REDD and its versions.

”Government should conduct Environmental Impact Assessment (EIA) on REDD in targeted forest communities.

”Governments should engage civil society groups and forest community people in the entire REDD process.

”Allowing rich countries to keep polluting in the North otherwise known as annex 1 countries and coming to the south addressed as third world countries to cultivate plantations for rubber, palm oil, agro fuels, and palm oil is not the answer to climate change. This is unacceptable. They owe us an ecological debt as a result of colonialism and inequitable use of global commons and disproportionate contribution to emissions that have resulted in climate change.

”Awareness should be raised at all levels on the implications of REDD”.

AROUND 4,000 students, researchers and concerned environmental rights activists have so far visited oil spill sites in the Niger Delta in the last five years.

Field Monitors of Environmental Rights Action (ERA), Nigeria’s foremost environmental rights advocacy group, made this known to AkanimoReports in an exclusive interview in Benin City, the Edo State capital, on Friday.

Although they did not give out much detail, the Executive Director of the group, Nnimmo Bassey, however, gave credence to the claim of the field monitors, pointing out that there is increased environmental consciousness in communities across the country.

According to Bassey, who is also the Chair of the Friends of the Earth International (FoEI), ”communities are standing up in defence of their environment in the Niger Delta, and there is increased international alliance on environmental issues”.

Adding, the ERA boss said, ‘‘Our reports have caused students, researchers, and activists from local and international organisations to have interest in visiting spill sites in the communities across the Niger Delta particularly in Ogoni, and Ijaw”.

Our correspondent who was in Benin City for a three-day intensive training on the relevance of environmental/human rights field monitoring and advocacy organised by ERA reports that the training attracted key management staff of the group, some legal luminaries, top media practitioners and field monitors across the country.

For Morris Alagoa, an ERA functionary in Bayelsa State, ”our field monitoring have made some appreciable impacts in the last couple of years. For instance, Shell’s replacement of old, rusty pipes that have been the cause of series of spills at JK4 [Edagberi community in 2000 onwards especially 2010], Ahoada West

Local Government Area of Rivers State [about three kilometers] is an impact from our field reports and advocacy”

ERA’s Director in-charge of Programmes and Administration, Dr. Godwin Ojo, says Shell has commenced a cleanup of spill sites at Ikarama community (2009/2010), ”even those spill sites that had been forgotten by community folks, including those Shell claimed to have cleaned up which our organisation exposed as not done at all, is another impact of our field monitoring efforts and relentless advocacy for change”.

Continuing, the ERA chief said Agip’s mobilisation to clamp a spill site that lasted for about two months at Kalaba community in 2009, five days after their field monitoring report and advocacy, ”is an impact of our efforts in the field”.

Some of the other impacts being played up the environmental rights group include Agip’s mobilisation to clamp a gas leak spot at Kalaba community in June,2010, a week after their reports including visiting with the press; considering the fact that the leakage had lasted about three weeks before their intervention; at Kalaba community before Agip clamped [following ERA’s intervention], the Italian oil giant also mobilized to site and clamped a gas/oil leak site at Ikarama within four days after ERA’s intervention in July 2010.

They are claiming that as a direct consequence of their field monitoring and advocacy for environmental justice, the oil companies have been inundated with calls from journalists and other stakeholders, which compel the companies to make related statements more often, like commenting on specific incidences of spills and communities.

”Following our field monitoring and campaign on gas flaring a process of ending the obnoxious practice is being discussed though the oil companies continue to buy time through delayed actions”, said Mr. Chima Williams, of the legal department of ERA, adding that field monitoring and awareness rises among policy makers has resulted in increased environmental bills at the National Assembly.

The about 50 participants at the Benin City training observed that 50 years after Nigeria’s independence, the country’s environment was still suffering from threats; and the people from human rights violations, arrest and detentions, maiming and sometimes death.

These threats to life and property, according to them, frequently have adverse effects on farmlands, farms and marine life. On a regional level, they noted that environmental degradation in the Niger Delta is playing out through oil spills, gas flaring, pollution, deforestation, illegal logging; while in the North desertification and illegal mining are common features; and in the South East various forms of erosion menace. It was also observed that unlike others ERA’s field monitoring has been participatory.

They noted that the involvement of victims and experts in identifying problems and solutions is different from having a team of experts who visit communities without taking inputs from the people concerned.

After a robust debate there was a consensus of opinion that environmental field monitoring is of high relevance to environmental human rights protection in the country. Indeed environmental monitoring should be a concern of all citizens and not field monitors alone. Participants therefore declared that monitoring is relevant in order to document the state of environmental impacts which includes the level of changes/harm to people/livelihood/the ecosystem.

They amplified the ERA mantra ‘all ecosystems are human ecosystems’. Further, they submitted that conducting field monitoring helps to provide alternative views that are authentic and mirror the reality; uncover cover up of spill and expose denial of responsibility.

The training workshop however, affirms that field monitors play the role of the environmental police or watchdogs or whistle blowers. They are relevant in raising awareness on environmental issues, advocacy and policy briefs so that government will make laws to protect the environment.

Participants acknowledged that ERA played pivotal role in the country in the field of environmental rights advocacy. Their tactics and methods do not appear to go down well with the extractive industry identified as prime offenders in the environmental despoliation of the country.

For instance, Shell had labeled ERA among those they classified as ‘busy bodies’. Undeterred environmental field monitoring and advocacy activities since the 1990s have brought increased awareness to communities and civil society groups that has led to some declarations such as the Kaiama Declaration of Ijaw Youths, as working documents for change.

Participants also noted the fact that women of the Niger Delta now express themselves on environmental/human right issues which was hitherto not so. Field monitoring and advocacy on the harmful effects of gas flaring forced government to set deadline in principle to stop gas flare in Nigeria. Today the issues have gone beyond the Niger Delta, it is global.

Our correspondent reports that as an organisation, ERA won a landmark victory in court against Shell that gas flaring is illegal and violates human rights. In addition, oil companies that fail to disclose oil spill within 24 hours of their occurrence now run foul of the law, and are liable for a fine of one million naira.

The launch of the EACC was scheduled take place today at the notable Gustav-Stresemann Institute, in Bonn, Germany. Presentation was to be made by Warren Evans, Director, World Bank Environment Department, and Sergio Margulis, EACC study leader. Representatives from both participant and donor countries were to feature as discussants.

Foremost environmental rights advocacy group, Environmental Rights Action (ERA), has taken on the Federal Government over non-availability of clean and safe drinking water for citizens.

The group therefore, wants Abuja to stop continued politicisation of water, claiming that the era of politicising access to water must now give way to commitments to better the lot of citizens.

According to them, ”the Federal Government’s much-touted commitment to the year 2015 Millennium Development Goals (MDG) target of halving the number of people without access to clean and safe drinking water can only be demonstrated by its appending of a resolution at the United Nations (UN) advocating the human right to water and sanitation”.

Their assertion is coming even as 23 countries the previous week at the UN General Assembly tabled a resolution titled: The Human Right to Water. Sponsors include Central African Republic, Georgia, Ecuador, Saudi Arabia, Paraguay, Venezuela and Yemen.

Sponsors backed the resolution with provisions of several international statutes including the Universal Declaration on Human Rights, the International Covenant on Economic, Social and Cultural Rights (ESCR), Convention of the Rights of Persons with Disabilities, and all previous resolutions of Human Rights Council on human right to water and sanitation, among others.

In an on-line statement to AkanimoReports, ERA which is also the Nigerian chapter of Friends of the Earth, said the UN estimates that nearly one billion people, mostly in developing countries like Nigeria, lack access to safe drinking water and that another 2.6 billion do not have access to sanitation.

The organisation is also alarmed that 1.8 million children under five years of age die from water and sanitation-related sicknesses each year.

”This resolution is a boost to demands by the water justice and social movements that have for years demanded the recognition of water as a human right. For us as a nation, no longer will access to water be determined by political patronage or corporations that profit from commodifying our commonwealth. The Nigerian government must now go beyond the empty rhetoric of describing water as a democracy dividend by signing on to this decision,’ ‘said ERA Executive Director, Nnimmo Bassey.

Bassey, who is also the Chair of the Friends of the Earth International (FoEI) explained that the major impediment to access to water in Nigeria is corruption, even as he noted that the country has adequate surface and groundwater resources to guarantee adequate water for all.

”Is it not shameful that reports from donor agencies that have funded water projects in Nigeria indicate that for all the millions of dollars obtained by both federal and state governments for water projects in this country virtually all failed? Is it also not incredible to note that the Senate Committee on Water Resources which unearthed a N24 billion scam involving faceless contractors who allegedly implemented borehole projects across the country between 2004 and 2006 is yet to name those who got the monies and refused to provide the people with safe drinking water?

”The era of politicizing access to water must now give way to commitments to better the lot of our people. Nigeria cannot be left out of this landmark decision to guarantee the right of the worlds’ citizens to safe water and sanitation. We reiterate our belief that denial of access to clean and portable water is fodder for business interests to subject this all-important gift of nature to the uncompromising rules of business. The Federal Government must go beyond lip-service, join this resolve and enact laws that guarantee access to water as a right,” Bassey insisted.

Burdened by the unbearable harmful effect of gas flaring, youths of Gbarain communities in Bayelsa State, say they are ready to take their destiny in their own hands.

To this end, they have warned the Anglo-Dutch oil and gas super major, Shell, to end continued gas flaring in their communities or brace for war. AkanimoReports gathered from local sources that the aggrieved youths have sent a protest letter to Shell Petroleum Development Company (SPDC) over the rising anger among indigenes of Obunagha and Zarama communities against gas flaring activities from the Central Processing Facility site of the company located at Okotiama.

Our sources say the youths have warned that if the flaring activities are not stopped, there will be what they described as ”violent actions” against the company.

They are allegedly saying that the previous ”show of insensitivity” by Shell in 2007 on the complaint raised by the Gbarain communities on the gas flaring activities in the area was pardoned; the recent flaring and the attending negative effects on the people of the area will not be pardoned and will be resisted with blood if not stopped.

In the letter dated July 5, 2010 and titled “Urgent Matter”, the youths of the Gbarain communities under the canopy of the Gbarain Youths Federation (GYF) said indigenes of communities in the area are not comfortable with the flaring activities of the company and have observed that the two major sources of water in the communities have become a death trap with incidences of noise, water and structural pollutions recorded in the community.

The letter which was jointly signed by the President of the federation, Wozi Zamabo and General Secretary, Dickson Sam Ebinimi, indicated that indigenes of the affected communities have showed signs of diseases and unusual vibrations of buildings in the area.

The letter said, ”as you know, 95 per cent of the people in Gbarain depend on the rivers and rain water for drinking, cooking, bathing and other domestic uses. But today, as a result of the gas flare in the kingdom, the company has converted these two major sources of water to death traps for us. Therefore we are exposed to water borne diseases from consuming contaminated water. Another serious problem you have exposed us to is the noise pollution. As a result of the on-going flaring, we hardly sleep at night without being disturbed by loud noise generated from the flaring. Either from the CPF site or from Zarama location at Okotiama”.

Continuing, they said, ”our buildings are no longer safe for us to live. In some communities, buildings are as well vibrating anytime the flaring is on. Therefore, our buildings are no longer as safe as they were before. The high density of carbon we are exposed to is a thing of concern and worry to us. The health of our people is not safe.

”The environment is not safe. Our properties are not safe including crops, animals and others. Yet despite that, our ecosystem has been damaged, the kingdom cannot boast of any acceptable or portable drinking water flowing to cushion the effects from consuming polluted rain and river water”.

The Ijaw youths are insisting that the actions of the company is a threat and unacceptable, pointing out that they wish to bring to the knowledge of Shell, in strong terms that we are not in any way comfortable with the gas flaring activity.

”We reverently frown at your negligence of putting into cognisance the ability of the Gbarain people. Knowing that this very act of gas flaring is very dangerous not only to the environment but worse still, to humanity. You have exposed our people”, they added.

Over 10,000 citizens, including women and children, in the Edo State axis of the Niger Delta, have been cut-off from the source of their drinking water following an oil spill which occurred at a facility belonging to the Nigerian National Petroleum Corporation (NNPC).

The development is currently causing serious concern in the environmental rights community in the volatile oil region.

Already, the country’s foremost environmental rights advocacy platform, Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN) is pressing the Federal Government to compel the NNPC to clean up the Akhiaba River in Edo State, polluted by the corporation’s facility and compensate two communities impacted by the spill.

The river, shared by Urhuokuosa-Nowa and Okeaghianwan communities in Uhunmwonde Local Government Area has remained in a polluted state since July 9, 2010 when the spill was first noticed and has placed both communities in dire need of water.

ERA’s field monitors say until a few days back, children that drank the water were admitted in various hospitals in the state capital, Benin City.

In an e-mail wired to AkanimoReports on Thursday, from Benin City, ERA/FoEN bemoaned what they described as NNPC’s “nonchalance” to the demands of the people for a cleanup, insisting that the long silence of the corporation is an act of insensitivity which the Federal Government must investigate.

”While we have never failed to condemn acts of impunity on our environment by oil multinationals, it is simply unacceptable for our own NNPC to turn a deaf ear to calls by the community people for a cleanup of their river. This injustice must stop”, said ERA/FoEN Executive Director, Nnimmo Bassey.

Bassey, who is also the Chair of Friends of the Earth International (FoEI) revealed that ERA monitors that visited the impacted communities found the surface of the river covered with oily substances and a putrid smell that pervades the air.

”Time and again we have said that the NNPC has been negligent in the maintenance of its facilities. From Mowe in Ogun State to Abesan and Ijegun in Lagos, the situation is the same: ill maintained facilities that affect water and disrupt the lives of the people”, the front line environmental rights activist said.

Bassey claimed that the demand of the impacted communities reinforces ERA/FoEN’s conviction on the need for a total overhaul and replacement of NNPC obsolete pipelines across the federation and an investigation to ascertain the cause of this situation.

The Economic Community of West African States (ECOWAS) July 6 launched a regional renewable energy centre in Cape Verde. West Africa ranks among the lowest in access to modern electricity services in the world. The centre which was formally opened at the capital city of Praia is to help harness the region’s vast renewable energy resources.

ECOWAS also signed headquarters agreement with the government of Cape Verde at the occasion of the launch of the centre. Prime Minister Jose Maria Neves signed for his country while ECOWAS Commission President, Amb. Victor Gbeho, signed for the regional body.

Jose Maria Neves said ECOWAS Centre for Renewable Energy and Energy Efficiency (ECREEE) will help boost his country’s energy access programme and the sustainable social, economic and environmental development of the region as a whole.

A specialized agency of ECOWAS, the centre will focus on energy access and efficiency in key sectors of the regional economy and  also become the main implementing agency for the $150 million dollar programme that is partly financed by the Global Environment Facility. It was stablished November last year with the support of the commission, the governments of Austria, Cape Verde and Spain with the technical support of the UN Industrial Development Organization (UNIDO). A statement from ECOWAS this week said Brazil has indicated it would also support the centre which is expected to act as a driver for economic growth, providing basic services which will help in the fight against the region’s pervasive poverty.

“ECREEE will contribute towards increasing access to modern energy services and improved energy security in ECOWAS member states, thereby supporting the region’s economic and social development in an environmentally benign but sustainable manner”, Gbeho, said during the opening ceremony.

Developing countries are expected to significantly improve access to energy under the Millennium Development Goals. According to Gbeho, vast potentials in solar, wind and bio energy in the region could all be tapped to meet the increasing needs of citizens for modern, clean and sustainable energy.

At least, half of the population is expected to use it to stimulate economic development and reduce poverty when the 15-year lifespan of the MDGs come to an end in four years’ time. “ECOWAS region has a hydro-electric potential of 23,000 MW of which only 16 per cent has been exploited, a situation that shows the untapped energy resources of the region,” he added.

A statement from ECOWAS Commission also cited the president saying that some member states have wind, tidal, ocean thermal and wave energy which are also untapped. But traditional biomass is the main source of energy for the poor majority in the region and accounts for 80 per cent of the domestic energy consumption.

Among the attractions of renewal energy, Gbeho noted, are its capacity to penetrate rural and remote areas, its potential to contribute to reduction in fuel import bills thereby enhancing balance of payment, its capacity to contribute to job creation, increase rural incomes, enhance food security as well as the delivery of such services as health, education and water.

“Overall, renewable energy and energy efficiency technologies and services have the potential to unlock the economic potential of the ECOWAS region and effectively contribute towards poverty reduction”, he further said. ECREEE will focus on fund mobilization, policy and quality assurance, capacity building, knowledge management and promoting investment in the sector.

The World Bank has said it will begin to implement the first phase of its new policy on access to information July 1. The policy is one of several major reforms the global financial institution has undertaken to increase its effectiveness, efficiency, and accountability, the bank added.

The new policy was first announced June 3, 2010 when the bank said the measure positioned it as a transparency leader among multilateral organizations. It changed the bank from an institution which declared what it could make public under the current disclosure policy to one which makes available to the public all information in its possession. Exceptions are information staff personal and those which are still being deliberated upon and had not yet been accepted as policy.

The bank said today that the policy is a fundamental shift and is seen in the development community as setting a new standard for international organizations.

Approved by the board of executive directors of the bank November 2009, the sea change policy adopts broad information from Indian and United States laws.

“This new policy constitutes a major shift in the Bank’s approach to information disclosure, transparency, sharing of knowledge, and accountability,” said Robert B. Zoellick, World Bank President. “The public will now have access to a much broader range of information than ever before, particularly information about projects under preparation and implementation and the board’s actions.”

Examples of newly available information from today include minutes of board committee meetings; chairman’s summaries of board meetings and committees of the whole meetings. Others include summaries of discussion, annual reports of board committees as well as portions of implementation status of bank-assisted projects and results reports. Country portfolio performance reviews and concept notes and consultation plans for policy reviews that are subject to external consultations are also to be made available from today. So are audited annual financial statements of borrowers for projects “for which the invitation to negotiate is issued after July 1, 2010”.

“The new access to information policy is much more than a simple policy change,” said Jeff Gutman, Vice President, Operations Policy and Country Services. “It is an enormous cultural shift for the institution, both in terms of how we engage with the outside world and how we view and handle information.”

“Experiences of other institutions and countries that have adopted disclosure policies of this magnitude clearly demonstrate that we have a steep learning curve ahead of us,” said Peter Stephens, Chair of the Access to Information Working Group and Director, External Affairs. “But the Bank is committed to the principle that is the foundation of this new policy – maximizing access to information to improve the quality of the development process,”

“A requester can appeal if he or she believes that the Bank has improperly or unreasonably denied access to information that should be publicly available according to the new policy, or when a requester wishes to make a public interest case for disclosure of information that is restricted under the policy,” said Anne-Marie Leroy, Senior Vice President and General Counsel, World Bank Group.

Despite the Linguistic Faux-Pas of Its Name, Nigaz Demonstrates Russia’s Geopolitical Priorities and Has Tangible Implications for the World Gas Markets in the Long-Term

It has been a year since Gazprom signed an agreement with the Nigerian National Petroleum Corporation (NNPC) forming a 50/50 joint venture, called the Nigaz Energy Company Ltd. Gazprom committed $2.5 billion of investment to Nigaz. The agreement sent shockwaves across Europe and the United States because it was viewed as Russia’s strategic move not only to expand to Africa, but also to preserve its traditional gas market in Europe by claiming a stake in the Trans-Saharan gas pipeline. However, even considering the overall strategic implications, would Russia be better off building, or adding to, its own gas utilization capacity?

Nigeria possesses the seventh largest proven natural gas reserves in the world. However, most of these reserves remain untapped due to a lack of infrastructure for its extraction, transportation, and marketing. For the last decade, the Nigerian government has been working to realize a long-term strategy to commercialize its gas endowments. Part of this strategy is to reduce the amount of associated gas flaring.

Utilizing gas domestically as an energy source is also part of Nigeria’s government “gas plan.” Nigaz is anticipated to add to the gas utilization infrastructure in Nigeria by constructing refineries and gas power stations. It will also bid for Nigerian gas exploration projects. Finally, one of the major components of the joint venture’s scope of activities is to build a section of the Trans-Saharan gas pipeline (TSGP), the 4,128 kilometer-long pipeline from Nigeria to Algeria via Niger, expected to be completed in 2015.

But there is still a long journey from the project’s announcement to its realization. The TSGP will be the longest in the world, stretching over the trying sands of the Sahara desert. Alexander Burgansky, the head of oil and gas research at Renaissance Capital, said that like any project of this technical complexity, be it in Africa or in Europe, it entails a long process of consensus-building over the ecological, technical, and financial aspects. He added that despite its long-standing economic and geopolitical significance, the joint-venture might be low on Gazprom’s priority list right now. Indeed, there was no mention of Nigaz, or any corresponding investment, in Gazprom’s 2009 financial statements and management report.

The realization of the TSGP has been repeatedly stalled since July of 2009, when Nigeria, Niger, and Algeria signed an agreement on the start of the construction. The anti-pipeline resistance in Nigeria, political tensions in Niger, and jihadists in Algeria pose a tangible security threat to the pipeline. Nigeria’s militant Movement for the Emancipation of the Niger Delta (MEND), which had previously attacked Nigeria’s oil and gas infrastructure, threatened to attack the Trans-Saharan gas pipeline. Thus, the TSGP’s viability is still in question.

Despite Russia’s anticipated contribution to Nigeria’s gas utilization strategy, Russia is the world leader in gas flaring. According to the U.S. National Oceanic and Atmospheric Administration (NOAA)/World Bank Global Satellite Survey on Gas Flaring, Russia leads the list of all offenders worldwide, with 40.2 billion cubic meters flared in 2008, and Nigeria is second with 14.9 billion cubic meters. Russia lacks the infrastructure to connect gas pipelines controlled by Gazprom to oil wells run by others. There is also a lack of political will to provide incentives to oil producers for the capture and use of associated gas, for instance, in generating energy. Another reason is the regulation of domestic gas prices.

In Russia, extraction licenses are issued by the Ministry of Natural Resources and regions. Gas flaring regulations are determined locally, since the federal licensing standards do not include restrictions on flaring. In 2008, the World Bank developed a gas flaring reduction project, which would involve the utilization of associated gas that would otherwise be flared at the new gas power plant at the North-Danilovsk oil field in Western Siberia. The project is supposed to be financed by a supply contract between the plant owner and LUKoil. This and similar projects demonstrate that there are market opportunities for associated gas utilization in Russia.

In 2007, PFC Energy, an energy consultancy, conducted an economic study on the use of associated gas in Russia. The study concluded that even though significant volumes of associated gas are produced from small oil fields in regions remote from major gas markets, existing technologies would allow utilizing one third of the currently flared gas. As a result, $2.3 billion in incremental annual revenues will be generated at current prices. That is, of course, if gas transportation and utilization infrastructure is made available and market mechanisms are effectively introduced.

The estimated 150 billion cubic meters of gas flared annually in the world are equivalent to about 30 percent of the European Union’s gas consumption per year. In 2008, Russia flared 27 percent of the above amount. This means that the country wastes roughly a quarter of its annual supply to Europe, since Russia satisfies about 25 percent of Europe’s gas consumption. Why go to Africa then? The answer lies in the geopolitical arena.

Firstly, Nigaz is part of Gazprom’s ambitious strategy to expand its operations worldwide. Gazprom has just announced that it is looking into buying a U.S. shale-gas company to boost its expertise in shale extraction technology.

Second, on a broader geopolitical scale, Gazprom’s commitments in Nigeria imply its participation in an alternative gas transportation route to Europe via the Trans-Saharan gas pipeline. Nigaz is also part of the government’s strategy to boost its presence in Africa vis-?-vis Chinese, American, and European interests. The so-called “Africa strategy” of the Russian government is a reality that manifested itself in Medvedev’s visit to Nigeria, Egypt, Angola, and Namibia in June of last year to reaffirm Russia’s interest in a number of projects, ranging from a nuclear power plant in Egypt to the construction of dams in Angola.

The joint venture between Gazprom and NNPC is an example of Russia’s long-term, strategic interests in the world energy markets. However, it is not clear how these ambitious plans will help Russia to deal with its own lack of associated gas utilization infrastructure.