Day of decision for Shell on Nigeria project

NICHOLAS SCHOON

and Reuter

A decision on whether to go ahead with a huge gas project in Nigeria will be made by Shell and its partners in Lagos today, as the international uproar continues over the executions of Ken Saro-Wiwa and eight other campaigners for the Ogoni people.

European Union officials drew up plans for an arms embargo and other steps to punish Nigeria's military rulers. They held back from suggesting trade sanctions, although some countries suggested curbing oil exports. The proposals could be adopted by the EU Council of Ministers on Friday.

Friends of the Earth, Greenpeace, Amnesty International and others are planning a day of protest actions this weekend against Shell and the Nigerian government.

Yesterday, senior Shell executives said they wanted to press on with the pounds 2.5bn liquefied natural gas project, which would be the biggest single industrial investment in sub- Saharan Africa. Brian Anderson, managing director of Shell Nigeria, said yesterday that it "remains firmly committed to the long term future of the country and its people."

The plant's four-year construction would create 6,000 jobs in the oil- producing Niger delta region, where poverty and unemployment are high. It would also cut the huge wastage of natural gas, which is flared off in giant burners dotted around the delta region, by up to 45 per cent. The gas would be liquefied and then carried by tanker ships to Italy, France, Spain and Turkey.

The project is backed by a joint venture company, Nigerian LNG Ltd. The largest shareholder is the Nigerian government, which owns just under half the shares. Next comes Shell, followed by French and Italian oil companies. The World Bank has pulled out of its small involvement because of the executions.

Shell said it could not postpone a decision on whether to go ahead because it had already accepted a bid from a consortium of construction firms to build the plant. This bid will expire at the year's end. "It's now or never", a Shell source said. "Delaying the decision would put the whole thing back by at least five years."

However, the Nigerian government may be tempted to pull out of the project. It has already committed $1bn (pounds 660m), placed in an escrow account which, if the plant was cancelled, it could then use towards paying off its vast debts.

The project presents a dilemma for environmental groups. It should curb the gas flaring, which contributes to the environmental destruction that oil production has caused in the delta. But the investment could be seen as helping the military regime.

Nigeria's military government yesterday launched a campaign to improve the country's image. "All the evil propaganda against Nigeria is 'Not in our character'," Lieutenant-General Jeremiah Useni said, preceding the launch in the capital on Friday of books and films bearing that title.

Nigeria blamed Britain for its suspension from the Commonwealth. "About five months ago, a British cabinet minister, Lynda Chalker [minister of state for overseas development], threw all diplomatic niceties to the winds by publicly declaring that Nigeria might be barred from the Commonwealth conference," state-owned radio said.