NEMBE, Nigeria — When Lambert Ogbari learned that the oil giant Shell was selling its local operations to a Nigerian firm, he said he felt hopeful his living conditions would finally improve. But he quickly noticed that maintenance on the oil wells surrounding his village had declined.
Then, one night, Ogbari woke up to a loud bang, followed by the smell of gas. Crude oil was shooting out of a well near his home with such force that people hundreds of yards away could hear the roar.
As the world wrestles with climate change, major oil companies are selling off polluting assets around the globe. Shell, which announced in 2021 that it is looking to exit Nigeria’s onshore market completely, has repeatedly said in annual reports over the past eight years that divestments in Nigeria and elsewhere have played an important role in decreasing the company’s own greenhouse gas emissions. Shell’s withdrawal is part of an exodus by some of the world’s top energy companies from the Niger Delta, which had long made Nigeria the largest oil producer in Africa.
But interviews with residents, local officials and environmental groups show the divestments made in Nigeria over the past decade have had negative consequences for communities that Shell and other international companies leave behind — and for the environment they say they are aiming to protect.
Local companies that have acquired the Niger Delta assets from international firms have failed to respond quickly to oil spills such as the one in Nembe, environmental activists say. Greenhouse gas emissions from gas flaring — the burning off of natural gas, a byproduct of oil extraction — have increased dramatically in multiple cases after Nigerian companies took over, according to data from flare tracker Capterio and reports by the Environmental Defense Fund and Stakeholder Democracy Network. At the same time, according to several analyses by these two groups and others, information about those effects has become scarce, because the local companies tend to make fewer environmental commitments and set fewer reporting standards.
In the Nembe area, where villages emerge from the thick mangrove swamps, oil sprayed for more than a month before the local company stopped the leak, villagers recalled. On a recent afternoon, 15 months after the spill was cleaned up, nearby water was still covered with an oil sheen, and mangrove roots were cloaked in black. Fishermen are still catching just a tiny fraction of what they once were, Ogbari said, his voice raised in anger, and locals say they have seen their already poor health deteriorate.
“We were excited to see our brothers in control,” Ogbari said, referring to the purchase in 2015 of Shell’s local oil license by the Aiteo Group, a Nigerian company. “We thought they would understand our needs. … But it has gone from bad to worse.”
Rethinking Nigeria’s oil
The Niger Delta’s history with oil began in the 1930s, when Shell started exploration here. Shell exported its first barrel of oil in 1958, when Nigeria was still a British colony. Oil giants including ExxonMobil, Chevron, Eni and Total Energies arrived in Nigeria over the years that followed, entering into arrangements with the government that proved extremely lucrative for the state and oil companies but did little for average Nigerians. The Niger Delta, according to the United Nations, became one of the most polluted places on Earth.
The international companies began a first wave of divestments around 2010, according to Etienne Kolly, associate director at S&P Global Commodity Insights. Oil theft by gangs and militants was proving a massive headache, and Nigeria’s government was pushing for more local ownership in the industry.
Shell and other major firms embarked on a more recent wave of sales, Kolly said, amid corporate pledges to reduce their emissions and eventually reach net zero by 2050. Since 2020, divestments in Nigeria have totaled $1.1 billion, according to an analysis by the Britain-based research and consulting firm Wood Mackenzie. A $1.2 billion sale by ExxonMobil to a local company is pending.
If that sale is finalized, domestic companies would for the first time in Nigeria’s history own more oil leases than international ones, according to the Stakeholder Democracy Network, which focuses on the impact of the extractives industry in the Niger Delta. The group reported that 26 major divestments were completed between 2010 and 2021, all but one involving sales from major international companies to local firms. Domestic companies now account for 45 percent of oil licenses, compared with 47 percent for oil majors.
Nigeria’s oil production has been declining since 2020, according to government figures, and hit a three-decade low last year, when the country was overtaken by Angola as the largest producer on the continent. Nigeria’s oil reserves are projected by regulators to last for about another 50 years.
Executives at Shell and other major companies said their divestments have been prompted mainly by unrest and oil theft in Nigeria, where government regulators report that hundreds of thousands of barrels are stolen each day. In a 2021 speech to investors, Shell’s CEO at the time, Ben van Beurden, said the company’s remaining assets “continue to be subject to sabotage and theft despite our efforts to limit and respond to illegal activity.” He said that Shell’s onshore activities in Nigeria were no longer worth the risk and that the company would focus on its offshore oil assets in Nigeria.
Although a company spokesman said the withdrawal from the Niger Delta is not specifically related to the company’s net-zero goals, Shell has repeatedly cited divestments, including in Nigeria, as part of an overall push to reduce the company’s own emissions. In its 2020 Sustainability Report, for instance, Shell said, “Divestments are a key part of our efforts to refresh and upgrade our portfolio as we drive toward our target to become a net-zero emissions energy business by 2050, in step with society.” (Shell also says it is seeking to reduce emissions from the fuel it sells to consumers by trying to develop low and zero-carbon alternatives.)
Gail Anderson, a Wood Mackenzie director focused on sub-Saharan Africa, said selling off assets in Nigeria makes sense because aging infrastructure, gas flaring and rampant oil theft mean the operations tend to emit higher levels of carbon dioxide per barrel than average emissions elsewhere.
But even if this helps large companies reduce their own emissions, she said, asset sales can be risky for the environment because the purchasers tend to be private firms, which are less transparent and often less accountable to investors.
Shell says it conducts due diligence on the companies it sells to, including the use of outside consultants to assess the purchasers’ environmental and social standards.
Shell’s divestment of its remaining onshore Nigeria assets is currently on hold; the Nigerian Supreme Court has said the company must wait for the outcome of a lawsuit alleging it was responsible for an oil spill in 2019. A lower court ordered Shell to pay $1.95 billion to local communities. The company, which says it did not cause the spill, is appealing.
The threat of spills
The well explosion in Nembe did not surprise local villagers. While Shell had not been perfect, Ogbari and other villagers said the company had conducted annual inspections and maintenance on its infrastructure, including the well closest to their village.
When Aiteo took over, villagers said, the company seemed to focus exclusively on production — the firm’s Nigerian billionaire owner reported that production grew threefold its first full year in operation — and maintenance had declined.
After the explosion, when oil started spewing into the Santa Barbara River, it took more than a month for Aiteo to stop the spill.
There’s no official estimate of its size, but experts, including Rick Steiner, a former marine conservation professor at the University of Alaska, say that at least 500,000 barrels of oil and gas were spilled. Aiteo and Nigeria’s national regulators have blamed sabotage, while residents, local officials and Nigerian environmental groups say it was caused by faulty infrastructure.
Villagers in Nembe said they went hungry in the weeks after the spill because it had killed or poisoned the fish they rely on. Attangari Omini, a 70-year-old widow, said she now paddles her boat for hours each day to catch sardines that were once plentiful nearby.
According to data from the Stakeholder Democracy Network, local Nigerian companies spill 35 percent more oil relative to their production than do international ones.
Aiteo did not respond to requests for comment for this article. The company, which does not disclose its emissions or publish specific environmental commitments on its website, described the operation to stop the spill as “a remarkable testament to the capabilities that exist within indigenous players when faced with incidents of such magnitude” and said that the “well-being of the communities remains the paramount consideration.”
Increase in flaring
On a recent afternoon, an open flame roared above an empty green field near the delta community of Umuechem. The local oil company was flaring natural gas — and a cocktail of carbon dioxide, methane and black soot was billowing into the smoggy sky.
Many oil companies, both global majors and domestic firms, use gas flaring to burn off the excess natural gas that comes with oil production. International agencies have urged the elimination of gas flaring as a way to reduce greenhouse gas emissions.
In annual shareholder reports, Shell has trumpeted its progress in reducing flaring, and in the five years before it sold its operation in Umuechem in January 2021, there had been little to no flaring here, according to the Environmental Defense Fund report, which used Capterio data. But the year after the Nigerian firm Heirs Holdings bought the oil license, flaring increased more than eightfold, according to Capterio’s FlareIntel tracker, producing the equivalent emissions of at least 18,000 cars in 2021.
Heirs Holdings said it wanted to triple oil production. And increased production means more flaring, unless companies take mitigation steps such as transporting the gas through pipelines to be processed for power generation and injecting the gas back into existing oil and gas reservoirs.
A spokeswoman for Heirs Holdings said the company is committed to ending flaring at Umuechem by 2025 and does not routinely flare gas at the firm’s four other locations.
Even when measured per barrel of oil, Nigerian companies tend to flare much more gas on average than do international ones, according to data collected by Stakeholder Democracy. The data showed that domestic companies flare more than 10 times as much gas per barrel of oil produced. If the two highest-flaring companies are excluded, local firms still flare nearly five times as much.
At the Nembe operation, which Aiteo purchased from Shell in 2015, Capterio’s data shows that flaring increased nearly threefold between 2014 and 2016. And at Eruemukohwarien, which Nigerian companies purchased from Shell at the end of 2012, the amount of flaring has doubled over the past decade, and a massive flare at that site now emits the equivalent emissions of 48,000 cars daily, according to Capterio’s data.
‘The communities are orphans’
Looking ahead, Nigerian activist Ken Henshaw can imagine Shell and the rest of the world moving on with their green future while the Niger Delta remains stuck. The oil company’s red and yellow logo might be replaced with something green and leafy, he said, and a few environmental activists might sit on its board. But in the delta, oil spills and gas flaring would continue unabated, just with even less international accountability.
The solution, Henshaw said, is simple, if financially unpalatable: “If you’re really going green,” he said, “decommission.”
Short of decommissioning — which would involve shuttering oil operations rather than selling them — activists say there are other ways to limit the harm that follows divestments. The Nigerian government, for instance, could more rigorously evaluate prospective buyers to ensure they have high environmental and social standards.
But poor regulation and corruption at all levels of the Nigerian government make such an approach unlikely, Nigerian lawyers and environmental activists say.
Iniruo Wills, an environmental lawyer from Nembe, said local communities have been failed by everyone, from government officials to executives at Shell and domestic companies. “In the final calculus,” he said, “the communities are orphans.”
Ogbari, the fisherman in Nembe, said he now prays for something he never imagined. Pointing toward plantain trees that are dead or dying in the aftermath of the well explosion and oil spill, he said: “Aiteo has finished us. Let Shell come back and operate.”
Tife Owolabi in the Niger Delta and Ope Adetayo in Lagos contributed to this report.
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