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In the heart of the Niger Delta at Oloibiri there is an oil well – now rusting, with a steel cap screwed tightly over its head – that changed history. Oloibiri, in present day Bayelsa State, is the place where the Shell-British Petroleum consortium struck oil in 1956 after half a century of trying.
Two years later, Nigeria’s first oil field came on-stream, gushing out 5,000 barrels per day. Within a couple of decades, the country was producing 2m barrels a day. In many ways, Oloibiri symbolises what went wrong with Nigeria’s oil and gas industry. Today, the place has shrunk back into obscurity. A promise by oil companies and the central government to build a museum there has never been honoured.
More importantly, the living conditions of many people around Oloibiri have scarcely improved although an industry that has generated more than $1trn started life in their community. Worse still, pollution caused by oil leaking into the creeks and swamplands has hobbled farming and fishing. That combination of stolen riches and environmental despoliation has haunted the people of the Niger Delta.
With gas reserves of 18trn cubic feet, about a third of Nigeria’s total, and producing about a fifth of its oil, Bayelsa should be one of Africa’s growth poles, but politics has held it back. It comes down to a matter of resource control, insists Bayelsa’s governor, Henry Seriake Dickson: “We who have the resources are not in control. Some guy sitting in Abuja decides what happens to our resources and what we can do with them.”
Frustrated by these contradictions over decades, angry youth confronted oil companies and government officials.
Like many of its neighbours in the Niger Delta, Bayelsa was drawn into a low-level conflict pitting militants against police, soldiers and private security outfits.
Repairing the damage
To a great extent, the state government in Yenagoa has put those times behind it since Dickson took power in 2012. Instead, technocrats, civil servants and officials have been piecing together a strategy to bring sustainable economic growth to the region as well as repair much of the environmental damage. That strategy has to work within the current constitutional rules which, much to Dickson’s frustration, limit the capacity of a state to launch its own resource based projects.
While the authorities in Abuja have repeatedly shelved Bayelsa’s plan for a liquefied natural gas (LNG) plant near the Brass River, the national oil company has more than doubled production at the Onne LNG plant over the past two decades in neighbouring Rivers State. More than 50% of the gas feeding the Onne plant comes from Bayelsa.
“If we had control over our mineral rights, our resources, I would be in a position to lead the charge,” Dickson tells The Africa Report. “I would be advertising for investors in Brass [the LNG project] and we would have delivered three or four times over.” Lacking that control over the multibillion-dollar resource projects, Dickson’s government has focused on diversifying the economy and investing in services and logistics.
Key to that is a trio of new projects:
- an eco-industrial city;
- a deep seaport at Agge on the Atlantic Ocean;
- and a gas-fired power hub.
With an estimated cost of $100m, Bayelsa Eco-Industrial City is growing up on a 400ha plot in the state capital. Working with private service providers offering continuous power and water, the state government is looking for companies to invest in manufacturing and processing, preferably using local raw materials.
New projects include an eco-industrial city, a deep seaport on the Atlantic Ocean and a gas-fired power hub
At the heart of the city would be a group of public-private ventures like a gas-gathering company and a power company. The city’s success will depend on how quickly the state government can navigate the federal bureaucracy to obtain the necessary licences and permits.
It will also have to secure federal backing to use local gas production as feedstock for the city’s power company. Funkazi Koroye-Crooks, Bayelsa’s commissioner for trade and industry, says there has been a very positive investor response to the project.
Gas flare solution
There is some way to go, as the main construction on the site will not start until all the regulatory approvals are in and a “robust financial model” has been finalised, says Koroye-Crooks. The logic of the power hub project to be built at Gbarantoru, whose first phase should generate some 1,200MW, is its location just 1km away from Shell’s gasgathering facility at Gbaran Ubie.
That facility supplies gas to the LNG export plant at Onne and is also reducing the vast amount of gas flared in the region. Flaring both wastes energy and damages the environment. Building the power hub so close to the gas facility obviates the need for a long and expensive pipeline. Work has already started on the Agge port, which is in the vast estuary of the River Niger, the second-longest river in Africa which curls into the West African hinterland.
Engineers from the Nigerian army and navy have surveyed the area, and have begun building a facility to provide security for the port. The Agge port will have a wharf, shipyard, back-up stock yard and oil storage tanks, as well as several multipurpose berths for fitting out ships, engineering work and general repairs. It will be the deepest port in the country.
With ports at Apapa, Calabar and Port Harcourt overstretched, the government wants to develop Agge into the country’s most modern service centre for the oil and gas industry. French contractor Bolloré has joined discussions about the project, which could take two years to build. Duate Iyabi, an economic adviser to Dickson, says the state is now on an accelerated growth path.
“Ten years ago, the state wasn’t connected to the national grid, the roads were few and far between, big areas were accessible only by the creeks.” There are still complaints. Soibomari Dagana, a young fashion entrepreneur, explains: “The government is doing its best, but there are still the usual challenges with light [supply] and roads. […] I have seen light in my studio maybe five times this year.”
Planning and determination are going to be critical in the next few years, says Iyabi. “We have to deliver on those three big projects, but we also have to get the climate right.” By that, Iyabi means politics and security.
‘Less anger’
Bayelsa is growing out of its reputation for instability and bad governance. According to Boma Spero-Jack, security adviser to Dickson, dealing with the crime and political unrest has gone handin- hand with the new investments in education and health. “There are more opportunities and better public services, so less anger,” says Spero-Jack. “But we have a lot of catching up to do. Many companies left the state during the years of criminality and conflict.”
Although state governments cannot run their own police forces, they can set up small security units such as Spero-Jack’s Doo Akpo force.
- This unit, which bought 12 patrol boats and hundreds of fourwheel-drive vehicles, claims to have arrested more than 8,500 crime suspects and answered 39,000 distress calls since it was founded in 2012, when Dickson came in.
However necessary such a unit may be, the question of security reform is ever more urgent. Many officials in states such as Bayelsa resent the diktats on security from the centre, particularly the imposition of police chiefs.
Claiming there has been a marked fall-off in oil theft, Spero- Jack concludes that a security strategy without political vision will not work. “We had to persuade our people that we were serious about development and investment […] and it’s beginning to work.”
