US embassy cable - 03ABUJA1908

C O N F I D E N T I A L SECTION 01 OF 02 ABUJA 001908 
 
SIPDIS 
 
 
NOFORN 
 
 
E.O. 12958: DECL: 11/01/2013 
TAGS: PGOV, EPET, PINS, NI 
SUBJECT: OIL COMPANIES DIFFER ON RESTARTING WARRI 
PRODUCTION 
 
REF: A. ABUJA 1761 
     B. ABUJA 1656 
 
 
Classified by Political Counselor James E. Maxstadt for 
reasons 1.5 (b) and (d). 
 
 
1. (C/NF) Summary:  Shell's October resumption of oil 
production in Warri has highlighted a widening split between 
the Anglo-Dutch oil firm and Chevron on how to manage 
relations with local Ijaw and Itsekiri communities, and how 
to maintain security.  Shell put its money into increasing 
the Nigerian military presence at its facilities and 
contracting some local communities for more security, and is 
now basking in self-confidence, having restarted two-thirds 
of the production lost since March.  Chevron has refused such 
a piecemeal approach, arguing instead for a comprehensive 
security or political/security resolution for the region, and 
is now sitting on the sidelines counting its losses, 
vandalized facilities, and soured community relations.  That 
wheel could turn again, however, when the volatile area 
erupts in new violence.  End Summary 
 
 
Restoring Shell's Production 
---------------------------- 
 
 
2. (C/NF)  Over the past month, Shell has brought back on 
line over 100,000 barrels per day (bpd) of 150,000 bpd 
previously shut down in the Warri swamps.  Shell accomplished 
this largely through the substantial support of the Nigerian 
military's Joint Task Force (JTF) implementing "Operation 
Restore Hope," which is commanded by BGEN Zamani and which 
has an estimated 3,000 troops in the Warri area.  Five out of 
seven Shell flow stations forced to close after the outbreak 
of Ijaw-Itsekiri fighting in March 2003 have now been 
restaffed and reopened, each with attendant military 
deployments.  These include Egwa-1, Egwa-2, and Otumaru.  The 
key Jones Creek flow station, which is close to the Ijaw 
militants' base in Okenrenkok, remains closed, though Shell 
plans to reopen this facility in the coming weeks. 
 
 
Shell's Military Support 
------------------------ 
 
 
3. (C/NF) In meetings with Mission officers, Shell security 
officials disclosed Shell's provision of substantial 
logistical support for Operation Restore Hope, including 
boats, vehicles and the occasional use of Shell helicopters 
for reconnaissance of the swamps.  One Shell official 
intimated that the company has acceded to the Joint Task 
Force's request for several million dollars to support the 
troops and other elements of Operation Restore Hope.  Chevron 
officials insist Shell is paying, while claiming that they 
have received similar requests from JTF Commander Zamani but 
turned them down. 
 
 
4. (C/NF) In specific support of Shell's return to the flow 
stations closed after March, groups of 50-80 JTF personnel 
have deployed to each of the reopened sites.  According to 
Shell's own security manager for the Warri area, and 
confirmed by General Zamani, Shell provides these JTF 
personnel with accommodation on Shell houseboats, and with 
board and stipends for the hardship of their posting deep in 
the swamps.  The JTF soldiers stationed at the Shell sites 
are tasked with other missions in addition to protecting the 
company's assets.  During a meeting with CRO in mid-October, 
General Zamani confirmed that the personnel assigned to the 
Shell sites are expected to support all of the objectives of 
Operation Restore Hope, and could be called on to patrol the 
waterways, pursue suspected militants and search for arms 
caches. 
 
 
5. (C/NF) In discussing the Joint Task Force's plans in the 
coming weeks, General Zamani disclosed that he is attempting 
to establish a permanent forward base in Okerenkoko, 
currently the base of FNDIC (Ijaw) militants.  The General 
claimed that he would attempt to "negotiate" a military 
presence there through talks with community leaders. 
(COMMENT: Military action against the militants here could 
become a flashpoint, possibly leading to enhanced security as 
well as probably leading to many civilian casualties. 
 
 
Repeating Bad Habits: Buying off Communities 
-------------------------------------------- 
 
 
6. (C/NF) In order to mollify local unhappiness over the 
deployment of military troops at the various reopened Shell 
sites, Shell community liaison officers have been offering 
new contracts to various communities, according to local 
NGOs.  While the details of these contracts are not known, 
the contracts largely involve the community youth providing 
security or surveillance of Shell facilities -- the same sort 
of "protection racket" that historically in the Delta has 
provoked have nots to fight haves, and ultimately encouraged 
a culture of extortion among otherwise idle youth against 
other villages and more recently against the companies 
themselves. 
 
 
Chevron Won't Play 
------------------ 
 
 
7. (C/NF) Chevron officials have long stated their concerns 
over the unsettled security situation in the Warri swamps and 
have indicated a great reluctance to return to the abandoned 
flow stations and wells.  Where in the past they too have 
provided development aid to some communities, and worked with 
some local commanders, they now want a comprehensive solution 
for the Delta.  What was initially an informal preferred 
option by some within the company appears now to have been 
formalized as corporate policy. Chevron's corporate security 
advisor in Nigeria, Hamish MacDonald, claims that Chevron 
will stay out of on-shore production in Warri until the 
federal government brings the law-and-order situation in the 
area up to a level assuring the company of a minimum level of 
safety, noting that Chevron suffered hundreds of millions of 
dollars in damage to two flow stations vandalized by Ijaw 
militants in March and April.  In its efforts to pressure the 
highest levels of the GON to take the necessary steps to 
establish the rule of law in the Delta, MacDonald stated, 
Chevron will be asking the Embassy and Department for 
assistance. 
 
 
8. (C/NF) Despite the reversion by Shell to past divisive 
practices, or perhaps because of it, the attitude of most in 
the swamps of Warri is now relatively positive towards Shell 
and very critical of Chevron.  That may begin to change as 
the military, funded in part by Shell and often basing from 
Shell sites,  increases its operations to disarm militants. 
Ill feelings towards Chevron are largely the result of the 
company's absence from the area since March; the communities 
are feeling the absence of Chevron's contracts. 
 
 
U.S. Award to Chevron 
--------------------- 
 
 
9. (C/NF) Along similar lines of self-interest, both Itsekiri 
and Ijaw groups have criticized the Secretary's "Corporate 
Excellence" award to Chevron in Nigeria.  Youth leaders among 
the Itsekiri -- ironically the ethnic group that received 
Chevron's corporate benevolence evacuating them -- visited 
the Embassy October 30 and criticized Chevron for failing to 
help Itsekiri refugees return to their villages around 
Chevron installations.  The Itsekiri were unhappy with 
Chevron receiving the award, Itsekiri youth leader Lucky 
Akaruese claimed, but were particularly upset by the Abuja 
ceremony at which the award was presented to Chevron's 
Managing Director, Jay Pryor.  Akaruese complained that few 
Itsekiri were invited to the event and that Pryor was flanked 
by two chiefs of the Ijaw -- the tribe that destroyed over 50 
Itsekiri villages and two of Chevron's flow stations -- while 
giving his remarks on Nigerian television.  Ijaw youth 
leaders have criticized the award publicly too, claiming that 
Chevron in the past has favored Itsekiris in an unbalanced 
community development program in the Niger Delta. 
 
 
Comment 
------- 
 
 
10. (C/NF) It seems gratitude is hard to come by in the 
Delta.  Chevron's present stance is a marked break from the 
divisive past, although it may be making virtue out of a 
reality that resuming production in the face of a clear and 
as of yet unchecked insurgent threat is cost prohibitive. 
Shell, which has enjoyed a better relationship with some 
communities among the Ijaw, is nevertheless assuming 
unprecedented political risks in returning to the swamp at 
this time.  The multiple missions of military personnel 
assigned to Shell sites could well result in Shell being tied 
to a major human rights incident if the military attempts to 
assert its control over communities dominated by militants, 
ironically Ijaws.  The latest Shell strategy seems surprising 
in light of the relative improvement in Shell's corporate and 
social responsibility profile over recent years.  Shell 
officials on the ground seem aware and accepting of the 
balance between gains and risks, especially the risk of 
renewed fighting; as one Shell official characterized it in a 
recent discussion with the CRO: "we want to keep civilian 
losses to a minimum." 
MEECE