The Federal Government may soon revoke Royal Dutch Shell Plc oil license in Ogoniland area of River State, although the timing has not been officially decided.Agency reports yesterday quoted an Assistant Director at the Department of Petroleum Resources (DPR), Mrs. Bamidele Ogedengbe as telling newsmen at an energy conference that: We are going to revoke Shell's license to operate in Ogoniland.
The reason for the planned revocation of Shell's drilling rights in Ogoni according to Ogedengbe is the inactivity by Shell to do anything with its license. They (Shell) have no future plans for the license. We hope we can attract other investors who do have plans for the license, said Ogedengbe, who added that she did not know the precise time frame of when the license would be withdrawn.
However, Shell officials said Friday that they believed negotiations with the government on the licensing matter were ongoing, as Nigeria reviews many oil licenses ahead of the country's next oil-licensing round planned for October.
As far as we are aware, there are many options that are still being considered, Shell spokeswoman Eurwen Thomas said.Earlier this week, Minister of State for Petroleum Resources and OPEC President Edmund Daukoru said Shell's return to Ogoni might still be on the cards. We have to look at this, and we hope it would happen, but if not, we need to find an alternative situation, Daukoru told a news agency.
Even though Shell quit operating in Ogoni years ago, Daukoru said the issue of whether it would return remains very delicate for me to talk about.
Daukoru said even if Shell does not return to Ogoni, the development of the area's oil resources by a third-party contractor who is deemed acceptable by Shell might be a suitable option.
At the weekend, international news agencies reported that some analysts downplayed the financial significance of Shell's drilling rights in Ogoni.
They haven't been operating there since 1993, so it's been inactive for a while there, said Oswald Clint, a London-based energy analyst at Sanford Bernstein.
Shell has actually beneficted by not producing onshore blocks in Nigeria, like Ogoni, because it has to pay higher taxes and royalties for onshore operations compared with offshore areas, where contract terms are more favourable, Clint said.The less they drill onshore the more stable Shell's revenue and profits are from Nigeria, Clint said.Shell's stock traded down 10 pence, or 0.56%, at GBP17.76 in London at 1152 GMT on Friday.
Some people familiar with the matter have said recently that the government had demanded Shell pay four times more for the license in order to maintain it.Ogedengbe declined to comment on whether the government had sought more money from Shell for the license, but said, there was no financial reason to revoke.
Shell stopped operating in Ogoniland in 1993 after the company was hit by a storm of protests by locals over its operations in the area. The protests which became violent at a point was co-ordinated by the Movement for the Solidarity of Ogoni People (MOSOP) led by late environmentalist, Ken Saro-Wiwa. As an aftermath of the crisis, ninetop Ogoni leaders were murdered in a mob action as they were accused of co-operating with government and the oil companies.
Saro-Wiwa and eight others who were tried for the murder of the four leaders were executed after a questionable trial by a tribunal.
Shell has one license consisting of seven to eight oil fields in Ogoni. It remains the biggest international oil company in Nigeria, even after it halted its operations in the Ogoni area.
Ledum Mitee, President of MOSOP told news agency earlier this week that locals would allow oil production to resume much sooner in Ogoni if Shell was no longer the operator. Ill feelings by locals toward the company continue, he said. It will take a lot more to sell to the people, if Shell is the operator, Mitee said.
Shell has made efforts for years to reconcile with the Ogoni people over issues such as oil-spill accidents. The company has operated a number of community-development projects in the area.