The Impact of Nigerian International Petroleum Contracts on Environmental and Human Rights of Indigenous Communities

Pages345-377
Published date01 October 2013
DOI10.3366/ajicl.2013.0068
Date01 October 2013
INTRODUCTION

The use of international petroleum contracts in petroleum development has become a contemporary trend throughout the world.1

See D. Bishop, ‘International Arbitration of Petroleum Disputes: The Development of a Lex Petrolea?’, 23 Year Book of Commercial Arbitration (1998): 1,131; A. Alkholy, ‘Arbitration in Energy Disputes’, 2 Journal of Arab Arbitration (2000): 46.

In practice, petroleum development has been determined by these contracts,2

Bishop, ibid.; Alkholy, ibid.

and multinational companies involved in petroleum development have entered into a lot of these contracts, which have caused them to carry out petroleum development in regions inhabited by indigenous communities.3

It is a known fact that international oil companies explore oil and gas in regions that are inhabited by indigenous communities. For instance, a lot of exploration activities take place in the South American Amazon region inhabited by indigenous communities.

These indigenous communities include the communities in the Niger Delta of Nigeria.4

See generally UN Development Programme – Nigeria, Niger Delta Human Development Report, UNDP (2006), pp. 78–120.

These communities see such development as a threat leading to the infringement of their traditional rights related to the use and management of lands and natural resources that they perceive as theirs by way of tradition and usage.5

Ogoni Bill of Rights (1990), available at http://www.waado.org/nigerdelta/RightsDeclaration/Ogoni.html (accessed 12 June 2013); Kaiama Declaration (1998), available at http://www.unitedijaw.com/kaiama.htm (accessed 12 June 2013).

Accordingly, this projected development of traditional lands has generated traditional rights concerns that have caused conflicts in the Niger Delta region of Nigeria.6

UN Development Programme – Nigeria, Niger Delta Human Development Report, supra note 4.

The Niger Delta, with an estimated area of about 75,000 km2, is estimated to be the world's largest wetland, with the most extensive freshwater swamps inhabited by various communities.7

Ibid., p. 19.

The region is also rich in biological diversity, and specifically marine life on which the communities depend for their food and sustenance.8

Ibid.

Replete with large oil and gas deposits, the bulk of Nigeria's revenue is attributable to oil extracted from the region.9

Ibid., p. 73.

This has led to environmental degradation, general neglect and impoverishment of these communities.10

Ibid. Also, Shell has recently admitted liability for massive oil spills in the Niger Delta region of Nigeria that have destroyed livelihoods in the region. For detailed information, see J. Vidal, ‘Nowhere and No One Has Escaped: The Shell Oil Spills that Ruined Nigerian Lives’, The Guardian, 3 August 2011, p. 18.

The problem may be exacerbated by the fact that there is a clear absence of a rights-based approach towards tackling these issues. Since we acknowledge the problem associated with the region as a result of the unsustainable petroleum development, a reassessment of the situation is therefore imperative. The concerns initially raised by the communities of the delta region is that they are indigenous communities, and have through non-violent protests, which have now turned into violent armed conflicts, requested effective participation in decision making concerning the development of oil and resource control in order to stem the tide of restiveness in these communities.11

UN Development Programme – Nigeria, Niger Delta Human Development Report, supra note 4, pp. 111–20.

A thorough examination of these questions and a search for possible answers constitute the driving forces behind the research presented in this article

The fact is that the plight and movement of communities in the Niger Delta is similar to the movement of indigenous peoples to claim their rights to land and natural resources, and the tide of international opinion and law favours the involvement of indigenous peoples in decisions that relate to their rights to land and natural resources. These developments show why the right of indigenous peoples in international law to land and natural resources is seminal to the discussion in this article.

Such concerns have arisen because of the tide of Nigerian international petroleum investment contracts, which has given the State and multinational companies full rights and control over petroleum resources, without providing for stringent measures in these contracts for protecting the environment of the communities of the delta region during petroleum development, thus depriving the communities their rights to their petroleum resources and threatening the rights and survival of the communities where these resources are found. Having said that, it is pertinent to note that the strong investment protection in the contracts portrays neo-liberal values in that they do not consider other competing issues such as environmental and human rights,12

See M. Sornarajah, ‘Mutations of Neo-Liberalism in International Investment Law’, 3(1) Trade, Law and Development (2011): 203.

which may arise as a result of foreign investment activities in the petroleum sector. Therefore, with the aim of avoiding this type of concern, this article embarks on the quest for a broader, more inclusive approach in terms of law and legal process through public international standards on the rights of indigenous peoples to land and natural resources to challenge the neo-liberal model in order to enhance environmental and human rights interests of the oil regions in the delta region of Nigeria

This article therefore examines indigenous peoples’ rights to land and natural resources as an instrument in dealing with the petroleum development concerns in the Niger Delta region of Nigeria. Before analysing the indigenous peoples’ rights concept, this article necessarily examines the human rights and environmental impact of contracts on the communities of the Niger Delta of Nigeria, as well as the contract system. In so doing, the approach that will be adopted here is primarily to consider, on the one hand, the extent to which the Nigerian international petroleum investment contracts contribute to depriving these communities during petroleum development of the enjoyment and use of their natural resources, and their right to a satisfactory environment. It frames the impact in terms of several provisions in the contracts in the view of neo-liberalism, and draws on concrete examples from (1) the Operating Agreement between the Nigerian National Petroleum Corporation and Texaco, and (2) the Participation Agreement dated 12 January 2005 for Oil Mining Lease No. 113 among Yinka Folawiyo Petroleum Company Limited, Syntroleum Limited, Lindin Petroleum BV, Palace Exploration Company, Challenger Minerals Inc., Providence Resources PLC and Howard Energy Co. Inc.

Next, this article deals with the way forward in terms of the practicability of using the rights of indigenous peoples to land and natural resources to enhance the situation of these communities, which will bring about sustainable development. In other words, the neo-liberals views present in the contract will be confronted in order to have a more balanced contract. This article concludes that international law principles on the rights of indigenous peoples to land and natural resources are mechanisms that could be employed to deal with the particular concerns in the Niger Delta region. It also argues that these principles can be used for standard setting in overcoming the dominant viewpoint of neo-liberalism expressed in the Nigerian international petroleum investment contracts.

THE CONTRACT SYSTEM AND PETROLEUM OWNERSHIP

It is pertinent to note that in Nigeria, leases for the exploration and exploitation of petroleum are granted by the Nigerian government and that the government's State-owned oil company (Nigerian National Petroleum Corporation, NNPC) has reserved the rights to the exploration and production of petroleum within Nigerian territory.13

‘Operating Agreement between Nigerian National Petroleum Corporation and TOPCON Company (Texaco Overseas) 1988’, in Barrows Company (ed.), North African Oil Law and Concession Contracts, vol. 1, Petroleum Legislation, Inc. (1959) (on file with author).

However, it is also pertinent to note that the Nigerian government can also reserve these rights for private Nigerian oil companies. An example of this can be seen in the Participation Agreement dated January 2005, where the government reserved this right for Yinka Folawiyo Petroleum Company Limited.14

‘Participation Agreement dated 12 January 2005 for Oil Mining Lease No. 113 among Yinka Folawiyo Petroleum Company Limited, Syntroleum Limited, Lundin Petroleum BV, Palace Exploration Company, Challenger Minerals, Inc., Providence Resources PLC and Howard Energy Co., Inc. January 12, 2005’, in Barrows Company, ibid., (on file with author).

As a result, either the NNPC or a private oil company in Nigeria has the right, power and authority to enter into international petroleum investment contracts for the exploitation of petroleum under a lease for the development of petroleum.15

Ibid., at preamble.

In furtherance of this power, the NNPC or a private Nigerian oil company has entered into several international petroleum investment contracts with international oil companies. This information is based on the agreements which we are going to analyse in this article. What is important here is the assertion (a) that these agreements constitute the means by which petroleum rights are acquired by international oil companies, (b) that they establish the rights and responsibilities of the private and public parties, including the formulas necessary to calculate the amount of the revenues shared with the Nigerian government or its State-owned oil company, and (c) that they govern the operations under the lease. The truth of this assertion can only be determined after an
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