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Financial Times: Shell uses Nigerian companies linked to rebels

Financial Times: Shell uses Nigerian companies linked to rebels


By Dino Mahtani and Daniel Balint-Kurti in Lagos

Published: April 26 2006 22:09 | Last updated: April 26 2006 22:09


Royal Dutch Shell has admitted it has subcontracted work to companies run by Nigerian militant activists involved in a violent insurrection in 2003 that shut down 40 per cent of the country’s oil output.


The activists in question have links to a rebel group, the Movement for the Emancipation of the Niger Delta (Mend), that attacked Shell oil facilities this year, closing down more than a fifth of the output of the world’s eighth largest exporter.


Industry analysts say subcontracting work to local strongmen is one method some oil companies have used to buy off militants threatening attacks on oil facilities in the Delta.


Shell did not respond to questions on this subject but disclosed to the Financial Times that it had used two companies, Shad-Ro Services and Integrate Production System Surveillance (IPSS), for waste disposal and pipeline security work in the western Niger Delta region, which has been the focal point for this year’s attacks.


Confirming the use of the two firms, Caroline Wittgen of Shell International said they were both on a list of companies registered to work with the oil giant. It is not known if Shell is using them at present.


Shad-Ro Services is run by Shadrack Otuaro, half-brother of Kingsley Otuaro, secretary-general of the Federated Niger Delta Ijaw Communities (FNDIC), a militant group involved in the 2003 uprising that heavily targeted Chevron. Many FNDIC officers were given jobs or paid off by their state governor to quell tensions after the 2003 insurrection.


This year the government used FNDIC members to persuade Mend to release foreign hostages seized during attacks on oil facilities – as such, the federation is seen as Mend’s link to the outside world.


There is an overlap between the membership of the two groups and in some of their aims.


The Otuaro brothers are key activist figures in the Delta area and recently attended an Abuja meeting with Nigeria’s President Olusegun Obasanjo to discuss insecurity in the region.


IPPS is run by Messio German – who works closely with Kingsley Otuaro and other FNDIC members – to undertake pipeline surveillance for Shell. Such contracts have been worth more than $100,000 a year since the contracts started in 2004, said Mr German. He said Shell had paid IPPS “incident free” bonuses in the past.


All three men are currently engaged in political campaigns ostensibly on behalf of the Ijaw, the majority tribe in Nigeria’s oil producing Delta region.


Many Ijaw leaders say their people have been cheated out of their oil wealth by the government and oil companies while they live in poverty among oil slicks and gas flares.


Chevron last year abandoned its previous corporate policies on community relations, saying it had led to or added to the “causes of conflict among communities”. The company released a new memorandum of understanding last year but industry analysts say its new strategy is unclear.


FNDIC members such as Kingsley Otuaro have denounced Shell’s corporate policies relating to community development. Shell, however, says it negotiates all contracts in good faith and continues “to actively seek the involvement of local communities in the contracting process”.


A report commissioned by Shell and leaked in 2004 said its corporate policies would force the company to abandon onshore operations in Nigeria by 2008.


Many analysts fear that heightened political tensions around national elections next year could spill into widespread chaos. FNDIC have been maintaining pressure on the government to give the Ijaw more political power and access to a greater share of the country’s oil revenue.


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