How HQs Relocation may put IOCs, Communities on War Path

-By Fred Ojeigbe

The controversy over whether international oil companies (IOCs) operating in the Niger Delta region should relocate their head offices to the region was rekindled recently by the deputy president of the Senate, Ovie Omo-Agege, who at his home, Orogun, in Ughelli North Local Government Area of Delta state called on oil companies operating in the Niger Delta to relocate their headquarters to the region.

Sen. Omo-Agege said the relocation of the headquarters of oil multinational companies to the Niger Delta would speed up development of the area, create job opportunities for youth and reinforce the atmosphere of peace in the region.

VauleChain reports that the debate over the need for IOCs to relocate their headquarters to their host communities has been on for a while now.

In March 2017, Vice President Yemi Osinbajo during a visit to Akwa Ibom state, was reported to have directed then Minister of State for Petroleum Resources, Ibe Kachikwu, “to engage” the IOCs on the way forward in the wake of the repeated calls for the relocation of their head offices to the states where they explore and exploit crude.

Prof. Osinbajo, who was responding to the requests made by various interest groups in the state during a townhall meeting said the federal government was proposing a new vision for the people of oil producing communities.

The directive by the Vice President was sequel to calls by stakeholders and groups in the Niger Delta for the IOCs such as Chevron and ExxonMobil to relocate their head offices to the region.

ValueChain findings showed that most of the IOCs in Nigeria have their headquarters in Lagos, South West of the country, and hundreds of kilometers away from the oil-rich Niger Delta region.

Before now many of these companies were said to have had their headquarters in the oil producing states of the Niger Delta, but increased militancy forced these companies out, as only skeletal administrative activities take place in the region.

The Niger Delta people have long complained that while oil exploration activities have polluted their environment, the IOCs were paying taxes and other benefits to other states.

They argued that with the relative peace which has now returned to the Niger Delta, these IOCs should not continue to operate outside their host communities.

Reaping the Fruits of our Land
Those who have thrown their weight behind the agitation for the companies’ relocation including immediate past Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, expressed support for the calls on the grounds that these major oil companies carry out exploration and production activities in those areas.

“I totally support that we need to look at the new model. But there is a need to provide the requisite security environment,” Kachikwu said at the Nigeria Oil and Gas Opportunity Fair 2017 in Uyo, Akwa Ibom State.

Others who have made compelling arguments for the headquarters of the IOCs to be moved to the oil producing communities, said doing so would make the IOCs more responsive to the problems of “pollution, environmental hazards, degradation and under development” of the areas.

They believe Nigeria can learn from the experiences of oil companies in other climes where the advantages of domiciliation of IOCs in oil producing states are obvious.

Cases like in USA, Canada, the Nordic countries and even Saudi Arabia were cited as places where IOCs are situated near their operational bases.

The move would boost the economy of the region because the oil firms will pay taxes and their corporate social responsibility will become more visible.

Some of the governors of states in the region who have spoken on the issue were unanimous in their demand for the oil companies to return their head offices to the oil rich region.

For instance, Bayelsa State governor Seriake Dickson said anyone who is opposed to the relocation was clearly against the peace and stability of the region.

Rivers State Governor, Nyesom Wike, who has also asked the IOCs to relocate their headquarters to the Niger Delta region, said it was unfair that oil multinationals drill oil in the Niger Delta, only to pay taxes in other states.

Wike while speaking at the 60th anniversary of Shell Petroleum Development Company (SPDC) in Port Harcourt, the state capital last year said, “You find this region comfortable to drill oil and generate revenue which sustains the entire country. But when it comes to the location of your headquarters, very many excuses emerge.

“Those who talk about insecurity in the Niger Delta forget that they are secure enough to work on oil fields in different communities.

“This level of injustice is not good for any country. I hear that majority of your workers receive their salaries in Lagos and Abuja, with their taxes deducted at those locations. We want you to return to our states and energize our communities with your presence.

“I am interested in the revenue that will accrue to this state and the other Niger Delta States by the presence of your headquarters.”

Various Niger Delta groups who have flayed the IOCs for their failure to return their operational headquarters to the region despite several directives from the Federal Government, said the rejection was not only unpatriotic, but also vexatious and provocative as such is capable of fanning the embers of unrest and discord in the region.

One of the groups, the Ijaw Youth Council (IYC) in one of its ultimatums to the IOCs said that the relocation has become necessary in order to foster sustainable development in the oil rich region.

“We want to state it categorically that irrespective of some security challenges, this region is the safest in the country for business. There is nowhere in the country without pockets of criminal activities, but unlike the forgone past, our [Niger Delta] states are safe and very conducive for business.

“We therefore once again call on the companies to, as matter of urgency, return to our area for the interest of all stakeholders.

“We cannot continue to pay the price of having our land suffer from oil exploration activities, while other states benefit from the taxes that are due to us,” the group said.

Relocation Unnecessary?
Those who kick against the agitation based their criticism on the fact that it is absolutely unnecessary.

On the part of the IOCs, the issue of relocating their headquarters to the Niger Delta region, does not arise, as they already have offices and operations in the area.

Some of the arguments the oil firms put forward were that their external communications and business networks were more efficient in Lagos, the nation’s commercial nerve centre and that the sector’s regulator the Department of Petroleum Resources (DPR) and National Petroleum Investment Management Services (NAPIMS), are in Lagos.

Executive Secretary of the Nigeria Content Development and Monitoring Board (NCDMB) Engr. Simbi Wabote when recently asked what the thinking of the Board was concerning the calls for IOCs relocation, said the issue was more political.

He said for instance, Shell’s Nigerian unit, Shell Petroleum Development Company of Nigeria (SPDC) has always had its headquarters in Port Harcourt because the organisation’s catchment areas are in Delta, Bayelsa, Rivers, Imo and Abia, hence the location of its head office in the Niger Delta years back.

ExxonMobil in a response to a similar demand on it some 12 years ago, reportedly said that the relocation of its head office to Akwa Ibom wouldn’t have “a significant impact” on the state, and also that such movement “was not practical for a number of reasons”

The company said that one reason why they wouldn’t relocate their head office was that their “primary federal government contacts in Nigeria” were based in Lagos.

The company said that Akwa Ibom was still getting huge benefits from its operations, despite the company’s head office being in Lagos.

“The majority of MPN’s business activity is centered in Akwa Ibom. MPN’s operational headquarters are in QIT, Ibeno, where about 80 percent of MPN employees are based,” an ExxonMobil representative said in the letter.

“MPN also has a liaison office in Uyo, the capital of Akwa Ibom, to facilitate interactions with the state government.

“Additionally, the majority of our community assistance is focused on Akwa Ibom.

“Another consideration is that MPN participates in a joint venture in which the Nigerian National Petroleum Company (NNPC) has a 60 percent interest. Hence, the majority of any relocation cost would be primarily borne by NNPC.”

Following the uproar that the controversy over the relocation generated, the House of Representatives considered a motion on it which was eventually rejected.

The motion was shot down by those who think that it would be setting a dangerous precedent to tell IOCs and any other business outfits where to locate their head offices.