Nigerian Official: Oil Cos Should Pay Compensation

A Nigerian official said Monday that oil companies should be obliged to pay compensation for degradation resulting from their exploration and production activities, particularly in the oil-rich Niger Delta region.

"The companies have an obligation beyond their exploration and production to restore degraded land to its original state," junior petroleum minister Odein Ajumogobia told a conference on 50 years of discovery of oil in Nigeria.

Oil was discovered in Nigeria in 1956 at Oloibiri in the Niger Delta state of Bayelsa but the first shipment to the international market was in 1958.

"They have an obligation to pay compensation for damaged property in the area," Ajumogobia said, without giving any figure or percentage, in reaction to a comment by Shell Country Chairman Basil Omiyi, who said Niger Delta development wasn't the role of the oil companies.

"It's not the role of the companies to develop the Niger Delta. It's the role of the government to develop the Niger delta. It's not the responsibility of the private sector to play the role of the government," Omiyi said in his presentation at the conference.

"I recognize that the oil companies could have some responsibilities toward their neighbours. It is the primary role of government to do development because they receive money for doing so," Omiyi said.

The governor of Bayelsa State, Timipre Sylva, lamented the plight of the host communities and described as unfortunate the state of development in Oloibiri in particular.

"Today, if you go back to Oloibiri, all of you here will be ashamed of this oil industry because Oloibiri still remains one of the most underdeveloped communities in Nigeria today and maybe in the whole world," Sylva said.

Nigeria Vice President Goodluck Jonathan criticised Shell for failing to organise a similar conference two years ago to mark the 50 years of oil discovery as the pioneer company that made the discovery.

"There is a sense in which it can be said that today's occasion is coming late," Jonathan said.

"One would have expected that Shell would have marked the 50th anniversary of the discovery of oil two years ago with a landmark event backed by a program of action clearly designed to set a path for a new beginning. But this did not happen," Jonathan said.

Jonathan said the "government has given serious thought as to how best to bring about "a win-win situation on the matter of the Niger Delta."

"There are value and orientation issues and we have taken them to the door steps of the communities. There are compelling corporate responsibility obligations and corporations doing business in the area are being sensitised and told to do what is right," Jonathan said.

Copyright (c) 2008 Dow Jones & Company, Inc.


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