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Shell Oil Slowly Resumes Production in Nigeria

The Anglo-Dutch oil company, Shell, is slowly resuming production at several flow stations in Nigeria that were recently shut down by angry villagers. Oil industry analysts in Nigeria say little is being done to prevent such protests from recurring.

Officials from Shell say repairs are ongoing at several of the flow stations vandalized during the recent protests near the southern fishing village of Kula, and that full production will not be reached before next week.

They say cargoes to be loaded at export terminals will continue to run more than one-week late throughout the month.

A Lagos-based oil industry researcher, Bismarck Rewane, says the protest, which began December fifth and also targeted U.S. giant Chevron, proved the vulnerability of oil companies.

"What has happened here is that if Shell has shut down 100,000 barrels a day for some time and Chevron shut down 20,000 barrels of oil for some time,” he said. “ Nobody wants to do that. If I can shut you down for one week today, what makes you think, I cannot shut you down for one month next time? You can adopt the approach of buying time and say, ‘OK we have gotten away with it.’ How are you sure you will get away with it in the future?"

Mr. Rewane says that unlike most attacks on oil interests in Nigeria, this was not an ethnically-based struggle over local political power, but simply a community trying to have their grievances heard.

"These clashes are symptoms of a much more fundamental problem,” he noted. “And as we go further in this democratic experiment we are going to have more of these clashes until the fundamental issues are addressed, these symptoms are going to continue to erupt."

Mr. Rewane says issues include the poor sharing of national oil wealth as communities near drilling areas have fewer roads, hospitals, and schools than areas where there is no oil. He also says because local elections are controlled by armed militias, there is little government accountability.

Leaders of the Kula fishing community said their protest, thousands of villagers storming several flow stations, were staged to seek micro-credit programs, protection for their fishing waters and better infrastructure. They decided to completely end their protest earlier this week after being promised formal negotiations on their demands.

Officials from Shell refused to disclose details of any deal, saying a memorandum of understanding was signed between the community and the Rivers State government, which intervened in the crisis.

Another Lagos-based industry analyst, Bode Olufemi, says the Kula community should not be too hopeful about progress.

"We are not in any way excited because going by the antecedents of the oil companies in Nigeria they are known to breach agreements,” he said. “They never keep agreements. They operate in a way by which they do not want to respect the local communities. All they are concerned with is profit, profit and oil."

Mr. Olufemi says communities are confronted with environmental hazards that would not be accepted elsewhere, such as continual gas flares, even throughout the night, forcing many villagers to be uprooted.

"Because here, they can always lobby the politicians, the people in government and they keep on shifting dates to end gas flaring,” he added. “Elsewhere in the world, particularly in the developed parts of the world, particularly in the U.S. and Europe, they do not do that. You do not just go to a community in the developed parts of the world and you chase them away and tell them that you have signed agreements with the government and that nothing is done to rehabilitate these communities."

Oil companies deny they mistreat villagers, saying they bring jobs and economic activity to production areas.

The Niger Delta where the Kula village is located accounts for nearly all of Nigeria's two-point-five-million barrels of daily exports. Nigeria ranks among the world's top-10 oil exporters, with most of its crude oil going to the United States.