Coalition wants halt to Shell’s $2.4bn Nigeria oil assets sale over safeguards

Business a.m.

A coalition of 40 organisations, including Amnesty International, have voiced their concerns about the impending sale of Shell’s onshore oil business in the Niger Delta, a region plagued by long-standing issues of human rights violations and environmental degradation caused by oil-related operations.

The organisations urged the Nigerian government to prevent the sale from taking place, warning that the sale could result in further atrocities against the region’s residents, already suffering from ongoing human rights abuses and the lasting effects of pollution from the oil industry.

In their plea to the Nigerian government, the signatories to the open letter, insisted that the proposed sale of Shell Petroleum Development Company (SPDC) to Renaissance Africa Energy should not be permitted to go through unless the environmental pollution caused by SPDC has been fully assessed, sufficient funds are provided by SPDC to guarantee clean-up costs can be covered, and local communities have been fully consulted.

Olanrewaju Suraju, chairman of Human and Environmental Development Agenda (HEDA), noted that Shell’s operations in the Niger Delta over many decades have come at the cost of grievous human rights abuses of the people living there. 

“Frequent oil leaks from its infrastructure and inadequate maintenance and clean-up practices have left groundwater and drinking water sources contaminated, poisoned agricultural land and fisheries, and severely damaged the health and livelihoods of inhabitants,” Suraju said. 

Isa Sanusi, Amnesty International’s Nigeria director, said: “There is now a substantial risk Shell will walk away with billions of dollars from the sale of this business, leaving those already harmed without remedy and facing continued abuse and harm to their health.

“Guarantees and financial safeguards must be in place to immediately remedy existing contamination and to protect people from future harms before this sale should be allowed to proceed. Shell must not be permitted to slip away from its responsibilities for cleaning up and remedying its widespread legacy of pollution in the area.”

The letter follows Shell’s announcement in January that it had agreed to sell SPDC to the Renaissance consortium, which comprises four exploration and production companies based in Nigeria and an international energy group, in a deal worth up to $2.4 billion, financed partly with a loan to the buyers from Shell.

The letter noted that the deal appears to fall far short of several regulatory and legal requirements. These include the apparent lack of an environmental study to assess clean-up requirements, and an evaluation to ensure sufficient funds are set aside for potential decommissioning of oil infrastructure – a sum that is likely to amount to several billions of US dollars. It also noted the lack of an inventory of the physical assets being sold, which is a red flag potentially indicative of the state of disrepair of pipelines and infrastructure from which many leaks have emanated. 

The letter also observed that some similar previous sales in Nigeria have exposed people in polluted communities to enduring harms, as purchasers have sometimes lacked sufficient financial resources to manage infrastructure effectively, and even just ceased operating entirely.

It pointed out that following a previous Shell divestment of Oil Mining Lease 26 (OML 26) to First Hydrocarbon Nigeria in 2010, the majority shareholder of the acquiring company went into liquidation and its chief executive officer and chief operating officer were convicted in the United Kingdom of fraud.