US embassy cable - 04LAGOS2492

C O N F I D E N T I A L SECTION 01 OF 02 LAGOS 002492 
 
SIPDIS 
 
STATE FOR AF/W 
STATE FOR EB/ESC/IEC/ENR/BLEVINE 
STATE FOR DS/IP/AF 
STAT FOR INR/AA 
STATE PASS DOE FOR DAS JBRODMAN AND CGAY 
STATE PASS TREASURY FOR ASEVERENS AND SRENENDER 
STATE PASS DOC PHUPER 
STATE PASS TRANSPORTATION FOR MARAD 
STATE PASS OPIC FOR CDUFFY 
 
E.O. 12958: DECL: 12/03/2009 
TAGS: EPET, EINV, EAID, PGOV, NI 
SUBJECT: MISSION COMMENTS ON OPIC INSURANCE FOR WAGP 
 
REF: LAGOS 2274 
 
Classified By: Consul General Brian L. Browne for Reasons 1.4 (D & E) 
 
Summary 
-------- 
 
1.  (C)  This cable responds to OPIC requests for Mission 
comments on OPIC insurance for the West Africa Gas Pipeline 
project.  Mission is not aware of any GON opposition to the 
WAGP project, and believes the project advances GON and USG 
goals.  There could be some negative publicity generated by 
non-governmental organizations (NGOs) such as Friends of the 
Earth/Environmental Rights Action regarding the project. 
Local communities and landowners that feel threatened by the 
project may also voice opposition.  In a country with a 
history of community and militia invasion and destruction of 
energy facilities, negative publicity regarding the project, 
whether well-founded or not, could be employed in a manner 
that increases the project's political risk.  However, most 
Nigerians support or are benignly indifferent to the project. 
 Greater engagement and information sharing with responsible 
Nigerian environmental NGOs and local communities could 
perhaps help reduce potential opposition to the project. 
 
WAGP Supportive of GON's Fiscal and Environmental Goals 
--------------------------------------------- ----------- 
 
2.  (C)  Mission is responding to OPIC requests for comments 
on possible OPIC insurance to be issued to the West African 
Gas Pipeline Company Limited (WAPCo) for the construction of 
the West Africa Gas Pipeline project.  (Note: U.S. firm 
Chevron Texaco Global Technology Services Company made the 
application to OPIC on behalf of WAPCo.)  Mission notes that 
the GON fully supports the WAGP project, and in fact has a 25 
percent equity stake in the project through the parastatal 
Nigerian National Petroleum Corporation.  We are not aware of 
any widespread public opposition to the project, although one 
NGO described public sentiment towards the project as mixed. 
Mission is not aware of any negative impact on U.S. policy 
and interests of the country, nor concerns regarding the 
integrity of WAPCo.  Mission believes WAGP supports Nigeria's 
stated economic and environmental goals in the gas sector. 
Mission is not aware of any uneconomic use of raw material or 
labor associated with WAGP, or adverse impact on the 
country's balance of payments.  Mission is not aware of 
deleterious worker health and safety impacts to the project. 
 
Possible Negative Publicity due to FOE/ERA Concerns 
--------------------------------------------- ------- 
 
3.  (C)  There could be possible negative publicity 
generated by comments made by international NGO Friends of 
the Earth (FOE).  FOE and its Nigerian affiliate, 
Environmental Rights Action (ERA), have commented negatively 
on WAGP's environmental impacts.  The groups assert that: 
 
--consultations on the environmental impact statement (EIA) 
report were flawed; 
--public presentation of the EIA was not properly carried 
out, as stakeholders had no access to the report at 
designated display centers; 
--the World Bank (WB) Extractive Industry Review restrains 
the WB from new investments in the extractive industries 
until areas of contention are resolved and corrective 
measures put in place; 
--the project is unlikely to reduce gas flaring; and 
--the project threatens the sovereignty of member countries. 
 
WAPCo/Chevron Texaco believe that they have adequately 
responded to concerns raised by the groups. 
 
Public Perception Can Generate Political Risk 
--------------------------------------------- - 
 
4.  (C)  Regardless of the scientific facts concerning the 
environmental impact of WAGP, agitation by FOE/ERA and any 
resulting public perception of WAGP as environmentally or 
socially harmful could generate some political risk for the 
project.  A local newspaper published a lengthy article in 
early November, re-iterating FOE/ERA charges against WAGP. 
Even a small group, whether politically disaffected or 
motivated by possible monetary gain, has the potential to 
disrupt WAGP construction or operations.  Local communities 
that feel their existence or livelihoods may be threatened by 
the pipeline are also a concern.  Agitated local communities 
have been known to impede production activity in the oil 
sector and to occupy oil facilities periodically.  Similar 
actions can take place regarding a pipeline.  Other possible 
risks include physical attacks on WAPCo personnel and 
physical infrastructure.  Mission notes that companies 
operating in the Delta routinely receive extortionate letters 
demanding concessions to the local community, upon threat of 
kidnapping or physical violence.  While WAGP will be 
constructed to the west of Lagos and outside of the volatile 
Delta region, the project, particularly during the 
construction phase of the project, has the potential to 
attract disaffected groups seeking private gain.  As such, 
WAPCo could possibly be subject to some incidents of 
intimidation or threats of violence.  In all likelihood, such 
action would be of a much lesser degree than in the Delta. 
 
Court Case Moving Forward? 
--------------------------- 
 
5.  (U)  Supported by ERA, two private individuals have 
reportedly filed suit in Federal High Court to invalidate the 
WAGP Environmental Impact Statement.  Mission will report on 
the court case septel. 
 
Comments from Other Environmental Groups 
------------------------------------------ 
 
6.  (C)  The Nigerian Conservation Foundation has not yet 
commented on WAGP, maintaining they do not yet have 
sufficient information on the pipeline route to reach a 
conclusion on its impact.  Nigerian NGO Friends of the 
Environment Chairwoman attended three stakeholder meetings on 
WAGP, and found community sentiment toward the project to be 
mixed.  Given the potential gas flaring reduction benefits to 
WAGP, she believes the project should move forward, but did 
recommend the establishment of an independent monitoring 
group to ensure WAGP management met its obligations to local 
community groups. 
 
Comment 
-------- 
 
7.  (C)  Mission believes that greater engagement and 
information sharing with Nigerian environmental NGOs would be 
a prudent course of action to counteract some of the negative 
publicity generated by FOE/ERA.  While some environmental 
groups appear to be cautiously supportive of the project, 
others did not believe that they had sufficient information 
to render a final judgment on the project.  Engaging those 
NGOs who are willing to evaluate WAGP on its technical and 
environmental merits, rather than as a political test case, 
could improve public perception of the project, and hence the 
project's political risk profile. 
 
8.  (U)  This cable has been cleared by Embassy Abuja. 
BROWNE