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Jul 8, 2008 | 21:46 GMT

5 mins read

Nigeria: Gazprom in Ogoniland

Russian energy giant Gazprom has reached a preliminary agreement with Nigeria to replace Royal Dutch/Shell as the main operator in Ogoniland. Gazprom's security division is up to the challenge posed by the conflict-ridden region in the Niger Delta, but its public relations unit may not be; Ogoniland has a long history of opposing foreign companies seeking to exploit its natural resources, and its popular movement has connections to the world's biggest nonprofit organizations.
Russia's Gazprom has struck a preliminary deal with the Nigerian government allowing it to take over oil production in Ogoniland, a small region of the Rivers State in the Niger Delta where Royal Dutch/Shell suspended activities in 1995. The giant energy company will get more than it bargained for in this especially complicated region of Nigeria's troublesome Niger Delta: Its security team will have to operate in extremely violent conditions under the watchful eyes of the world's biggest nongovernment organizations (NGOs). Shell began operating in Ogoniland in 1958, extracting approximately $30 billion worth of oil by 1988. Resentment grew among members of the 500,000-strong Ogoni tribe, who complained that Shell left a trail of pollution and did not reinvest any of its profits into the area for social and economic development. In 1990, local activists formed the Movement for the Survival of the Ogoni People (MOSOP) and issued the Ogoni Bill of Rights. With internationally known poet Ken Saro-Wiwa at the forefront, MOSOP gained support from Western NGOs such as Amnesty International and Greenpeace. In 1993, MOSOP staged massive protests against Shell. Oil prices were slumping after the first Gulf War, and Shell was looking to make cuts in expensive production sites, so it decided to pull out of Ogoniland. Even with Shell gone, violence erupted in the region. The Sani Abacha regime instigated violence among the various tribes, leading to the death of some 2,000 Ogoni and the displacement of another 80,000. In 1995, after an angry Ogoni mob killed four government officials, Saro-Wiwa and eight other MOSOP activists were put to death, sparking international protests and a public relations nightmare for Shell, which had washed its hands of the question of Saro-Wiwa's death sentence. Shell has returned only to cap the old wells and clean up after occasional oil spills, such as the one in February 2003 that Shell claims was caused by tampering or thieving locals. With no oil revenues whatsoever to buoy its poverty-stricken people, Ogoniland has suffered terrible violence and lawlessness since the 1990s. In June 2008, Nigeria announced that it would find another company to develop Ogoniland's oil deposits, citing the region's rocky relationship with Shell in the past. Shell, for its part, was unwilling to return. Now Russia's Gazprom has signed a preliminary deal with Nigeria, showing its readiness to take over where Shell left off and inherit the remaining crude reserves as well as 10 trillion cubic meters of natural gas. Ogoniland poses no significant geological challenges, as it is entirely onshore, and many facilities remain in place from Shell's work there 15 years ago (in fact, Shell claims 400,000 barrels of crude are still trapped there). Moreover, Gazprom is eager to expand its reserves and diversify its sources, and moving toward Nigeria will be one new front in this international strategy. Nevertheless, Ogoniland will pose two real challenges for the Russian energy behemoth, both stemming from the region's history. First, Gazprom will have to face the security situation in Ogoniland, which is highly volatile. In truth, security threats posed by tribal militants and rebel groups will not dissuade Gazprom from operating in the Niger Delta. Aside from its security team of former soldiers and KGB agents, Gazprom has access to a pool of some of the world's most formidable security experts — namely, the Chechens. On a purely operational level, private security firms consisting of ex-Chechen militants should be able to rapidly dispatch the fiercest onslaughts of local Nigerian rebels. The second challenge facing Gazprom in Ogoniland lies in public relations. Ogoniland is the virtual birthplace of the global corporate social responsibility movement. The MOSOP movement and the execution of Saro-Wiwa generated furor against Shell in the Western hemisphere, including denouncements in major media outlets and boycotts. Shell found it difficult to recruit new workers in Europe for a time, and one of its retail stations was firebombed in Germany. To combat its blemished public image, Shell adopted a number of corporate and government-sponsored codes of conduct and committed itself to transparency obligations in dealing with foreign (and often shady) governments. Several energy multinationals followed suit, and global corporate social responsibility expectations were born. However, Russia — unlike Britain and the Netherlands — does not have a long history of managing public relations debacles and juggling the criticisms of numerous NGOs at once. If Gazprom is to undertake operations in Ogoniland, it will have to manage its corporate security in such a way as to be effective against rebel attackers while drawing minimal criticism from NGOs. With Gazprom under the spotlight of the global media establishment, socially conscious viewers will scrutinize some of its less genial aspects for the first time. Given the brutality of Nigerian militants, Gazprom will have to resort to tough tactics. But in the hands of international observers, any of the Russian company's major security blunders — for instance, involving civilian casualties — will snowball into a full-fledged international controversy. This makes the Chechens, with their history of torture, beheadings and mass executions, a risky option for Gazprom.

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