Nigeria: MEND Dismiss Chinese Oil Bidders as “Locusts”

Yesterday, the Financial Times rocked the oil world with a story about how the Chinese state-owned oil company, CNOC, was in talks with the Nigerian Government to buy large stakes in some of the country’s key oil blocks.

The story was so compelling, because if it is accurate, it puts the Chinese in direct competition with the established western oil companies – such as Shell, Chevron, Total and ExxonMobil that have controlled Nigerian oil production for so long. 

Many of the blocks under discussion are predominantly held by Shell.

The stakes are huge – 23 blocks are up for discussion that are currently partly or wholly operated by the oil majors, with sixteen licences are up for renewal. In total, CNOC trying to gain access to 6bn barrels of oil with an offer to the Nigerians of between $30 to $50 billion.

A leaked letter from the Nigerians acquired by the paper said that, although the Chinese offer was not currently acceptable, “Your interest in all the listed blocks will be considered if your revised offer is favourable.”

A spokesman for Mr Yar’Adua told the Financial Times: “Negotiations are ongoing not only with Sunrise/CNOOC but also with all other stakeholders in the industry. The federal government has not taken any final position on the issue.”

By leaking the letter, the Nigerians are putting pressure on Shell and the others who they are currently at loggerheads with over planned reforms of the energy sector, which is partially paralysed by violent unrest, bunkering and community protests.

The Chinese are said to be offering better terms than the oil majors, and so their offer strengthens the hands of the Nigerians.

But if the Chinese thought that their plans would get a warm response they are wrong. The Delta’s largest rebel group MEND have called the new investors “locusts”. The rebel group argues that the record of Chinese companies in other African counties suggested “an entry into the oil industry in Nigeria will be a disaster for the oil-bearing communities”.

The worrying thing for the Delta communities is that the Chinese offer may give Shell a “get out of jail free” card for some of its more volatile producing blocks. It could give the oil company the chance to justify leaving. So Shell gets the Chinese to tidy up the mess.

The Telegraph today talks about how the Chinese bid could be a “silver lining” for Shell. “Shell looks increasingly fed up with the security situation in Nigeria and is already selling some acreage in the country. With a willing buyer, it may be keen to sell more.”

What could be worse for the communities is that the Chinese buy into the blocks and form partners with the oil majors. The Chinese are less likely to be receptive to any complaints by the communities than, say, Shell.

So the vortex of violence will continue. And may even become worse ..