Shell's new image under fire

04.11.1998

Will Chad become a second Nigeria?

Shell, acting in partnership with Esso and Elf, is on the verge of opening new oilfields in Chad. It is also going to build a 600 miles pipeline through Cameroon's rainforest to reach the Atlantic. Judging by the contract that has been made with the government of Cameroon, the oilcompanies are expecting major trouble with this project. According to the agreement, Shell and partners are granted unlimited power to deal with 'cases of emergency' which 'might threaten the project'. If necesary their private security outfit can count on the assistance of the local police or the army.

The World Bank, which will decide in the very near future whether it will finance grants for the project, harbours concerns. The Environmental Team of the Bank has already made short shrifts of the oil companies's 'Environmental Assessments' of their plans. The impact and consequences for the nature, threatened species, and the indigenous people have been very sketchily chartered, and compensation for the local stakeholders has yet to be worked out. The Commission for Environmental Impact Assessment (which brought out a report on request of the Dutch former development aid minister Jan Pronk) warns of 'attacks and acts of sabotage against the project', given the risks of political instability in the countries. When asked in parliament - in April 1998, whether he felt that Chad may well evolve into a second Nigeria, Dutch finance minister Mr Gerrit Zalm replied with a curt 'yes'.

It is only two years ago that Shell launched its new business principles at its AGM, including a code of conduct regarding human rights and environmental issues. Behind this rather radical shift in policy lies the Brent Spar affair, and also the flak Shell got because of its collusive relationship with Nigeria's military dictatorship. Shell's CEO of the time, Mr Cor Herkstroeter, took the lead in a debate about politically correct entrepreneurship. Openness and dialogue would be henceforth the hallmark of the new strategy. These glowing promises were met with some suspicion by Friends of the Earth in the Netherlands. For years now, environmental movements have supported their colleague organisations in Nigeria in their struggle against Shell. 'The people at Shell have changed a lot in the way they communicate. They are much more careful now', says Irene Bloemink of Friends of the Earth. Profits and Principles, the first entirely reformulated Shell International yearly Report, has only been published in Dutch and in English. That gives an idea of where they think are the people they view as a potential threat to them..'

May be that Shell's good intentions were only a clever PR exercise intended to take the wind out of its criticists' sails.

The question is whether the Oil Major has learned anything from its mistakes in Nigeria. The new project in Chad and Cameroon, in which Shell participates for 40% ( together with Esso and Elf, which are good for respectively 40% and 20% of the remainder), looks like going wrong right from the start. According to Friends of the Earth, the environmental assessments came out too late in the day just at the beginning of this year, where as test drilling has been allready under way, and the contracts signed two years ago. And in March this year, over a hundred civilians were killed in massacres perpetrated for the most part by government troops attempting to regain control over the restive Southern part of Chad. The separatist movement FARF fears that the oil revenues will only benefit the presidential clique of Northerners.

Meanwhile, the environmental movement is no longer alone in being critical of Shell's plans. The Commission for Environmental Impact Assessment evaluated the plans of the oil companies because the Netherlands are sitting on the board of the World Bank and wanted its voice heard in the matter. The team of independent experts was chaired by Professor Dick de Zeeuw, a catholic political stalward and former president of Wageningen Agricultural University.

Their findings were rather clear. The commission's final report states, that essential information is lacking.

'On the basis of these Environmental Assessments the project nor its environmental consequences can be fully overseen.'

The commission furthermore noted that Cameroon and Chad are poor countries with weak government structures which cannot be considered politically and socially stable. The reports should have addressed all possible environmental risks resulting from these circumstances. It is also unclear 'how and where revenues will be used for poverty alleviation and how proper royalty management is guaranteed'. These factors put together result in a situation where 'ingredients are present for attacks and acts of sabotage on the project's infrastructure. Such acts will notably cause considerable environmental and social damage.'

Consultations with local communities, one of Shell's good intentions, do not meet the standards prescribed by the World Bank - on the contrary:

'the public participation took place under military escort while military actions against the rebels were taking place in the region.'

The commission voiced doubts whether 'such circumstances can be qualified as an 'enabling environment' for public participation.' There are even instances where the De Zeeuw commission qualifies Environment Assessments as 'sweatheart statements' and a 'scoping exercise'. The consortium's claims about the project 's alleged economic benefit to the local communities are nowhere buffeted by concrete facts and figures. False hopes have been raised amongst the local populations, the Commission warns.

But this unflattering review is mild stuff compared to what the World Bank itself wrote about the consortium' plans. In 65 points, the Bank's environmental experts demolished the environmental reports on the Chad-Cameroon project. A selection from the report which the Bank intentionaly leaked out this summer:

The Environtal Assessments 'do not provide an adequate basis for Bank project appraisal.'

It remains unclear how the choice was made for the pipeline's corridor. The Bank demands a detailled account of the criteria taken into consideration, and wishes also to know whether a 'no-project alternative' has ever been seriously looked into.

The Bank also wonders whether the consequences of building a pipeline in a direct line towards the Atlantic Ocean have ever been properly considered, this with regard to the indigenous Pygmee population, the archeological heritage, and the bio-diversity of the rain-forest. The oil project will cause a 'pull' on job-seekers from outside in a region where even a limited influx could have a significant impact on the lifestyles of indigenous and local people. And: 'The report does not spell out the critical treshholds for eligibility for involuntary resettlement assistance.' says the World Bank. 'Resettlement entitlements for affected people in case they choose the alternatives to resettlement need to be specifically defined.' The plan needs to be much more specific, to prevent major problems. Will the people be given sufficient time to arrive at a decision? Where the monies for compensation will come from and what the exact nature is of the promised 'assistance' will be remains obscure.

Furthermore, the oil consortium has convened a panel of independant observers who will 'advise' the Chad government in the event of problems arising from the resettlement scheme. 'This seems to imply the absense of any accountability on the part of the consortium for solving problems in project implementation' notes the Bank dryly, and goes on to demand that 'the respective responsabilities of the Government of Chad and the consortium be clearly agreed and detailled in the plan.'

For the oil companies, the importance of a loan by the World Bank is mostly political. It represents only a fraction of the funds that need to be mobilised to finance such a project. But with the World Bank's fiat it becomes far easier to interest other investors. The World Bank's decision has already been postponed a number of times. And at the last Bank's meeting, in September in Washington, environmental groups were staging protests outside, while the oil companies had marshalled a team of no less than hundred lobbyists to convince the Bank of their good intentions.

The oil consortium does not really care about the environmentalists' concerns. Friends of the Earth' Irene Bloemink:

'Elf keeps totally mum. Esso says it will only react when the definitive Environmental Assessments are out. But in the meanwhile, all other players are being bombarded with preliminary versions of key documents.'

Shell is an even more special case. The open dialogue between the company and Friends of the Earth in the Netherlands has gone on the backburner since this summer. Whereas in April, Shell's CEO for Chad had told Friends of the Earth that 'the project in Chad is in accordance with the World Bank's conditions.', adding: 'but if you find things you're not happy with, come and tell us', now that the environment movement is getting support from independant quarters, the dialogue has trickled down to polite letters of aknowledgements for forwarded material.

In Chad, a member of parliament opposed to the oil project was arrested early June. Ngarledgy Yorongar lost his parliamentary imunity and has in the meantime been condemned to three years in prison for 'defamation of the state'. Since they were denied access to the relevant documents his lawyers refused in protest to conduct his defense. In Cameroon also, notes the Commission De Zeeuw, opposition against the oil project was silenced as it would have been explained as opposition against the national interest.

Until recently, few details were known about the contract between the oil companies and the government of both countries. Through allied NGO's however Friends of the Earth discovered recently that the official agreement has reached the status of law in both Chad and Cameroon (it has been published as such in the Statue Book, the Official Gazette - Cameroon Law no. 97-16).

The consortium has, for all practical purposes, obtained carte blanche. The section in the agreement in which Shell and partners are granted permission to operate as a para-military outfit is convoluted in formulation but explicit in its purpose. The consortium is granted full authority to investigate any situation that might cause 'immediate danger' to the project. The oil-police is allowed 'under its sole responsibilty and without previous authorisation, to have access to any private or public land' in order to put an end to the threat. If necessary, it can count on the assistance of the local police, the army or other security services.

Further definitions of the terms like 'investigate' and 'immediate danger' are not provided.

In the very next future World Bank's president, Mr Wolfensohn must decide what the Bank's standpoint will be with regard to the pipeline project. The overall decision about the whole project is expected early next year. Realistically it would take at least two years to sort out and answer the questions put forward by the Banks own environmental assessment team. Irene Bloemink explains why the clout of the World Bank would have major consequences. Even though a World Bank's loan has only been applied for the pipeline and the exploitation of a single oil field in Southern Chad, it would appear from both the proposed duration of the contract and the estimates about the amounts of oil to be drilled, that more oil fields will be opened in the region. This was also one of the findings of the CEIA. Irene Bloemink:

'The cumulative consequences of the potential pollution in a much larger area have not yet been researched at all.'

Going by its new business principles Shell nowadays expects a degree of responsability towards society at large from its employees. Beside endorsing basic human rights and values, this also includes:

'taking account of the standards for public health, safety procedures, and security measures which are in accordance with the intent to contribute to sustainable development.'

Whether this is just public relations or not will show quite soon. Friends of the Earth has started an international campaign with the motto 'Don't let Chad become a second Nigeria.' The Progressive Green Party in the Netherlands has already tabled questions in parliament about the rather extensive powers enjoyed by the consortium on foreign soil. But for the time being Shell deflects all awkward questions towards its partner Esso. Esso's issue manager has no formal position on the wide critisisms. 'The consortium is trying to answer the World Bank's questions by providing new information, this is an ongoing proces'.

Translated from Dutch by Patrice Riemens

Related article: The Brent Spar Syndrome

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