News Analysis: The  Deep Offshore Act and Its Historical Parallel

News Analysis: The  Deep Offshore Act and Its Historical Parallel

Thursday, November 7, 2019 12:55 pm

Bonga oil field in Nigeria

By Ademola Adegbamigbe

The event took place in London on Monday, 4 November. The two major individuals at the centre were President Mohammadu Buhari and  the Chief of Staff, Abba Kyari. Event of the day was Buhari’s signing of  the Offshore (and Inland Basin Production Sharing Contract) Bill into law. The new development, according to the Presidency, would make Nigeria to earn $500m in additional revenues in 2020, and over $1bn from 2021. This has actually put a stop to the propensity of the International Oil Companies (OIC)  to make undue profit at the expence of Nigeria that sits atop the oil. For the past months, Minister of Justice, Abubakar Malami, has feverishly been working to “recover over $62 billion from them as arrears of revenues that should have accrued to Nigeria over the years that oil sold above $20 a barrel.” He actually accused the IOCs of “frustrating efforts in the past for the government to negotiate the review of the PSC.”

President Buhari signing the bill into law in London. With him the Chief of Staff, Abba Kyari

It beats the imagination of discerning Nigerians that whenever the West wants to do business with Africa in general and Nigeria in particular, this part of the Atlantic always rues the day it enters into such partnership. In other words, Nigerians are left with bones while the West would skitter off with meat and tendons. This is actually one of the ways Europe underdeveloped Africa, to borrow the title of Walter Rodney’s classic. The Buhari government has, however, with the signing of the document, simply put its foot down, with emphatic knocks on the lectern that the era of Tobman Goldie is gone.


Historical parallel

That the Muhammadu Buhari government doggedly got its right from the oil multinationals reminds every analyst of the unequal palm oil trade relationship instituted by Sir Dashwood Tobman Goldie, the big boss of the Royal Niger Company in the colonial era against the local chiefs and merchants of Niger Delta. The interest of the West to trade in this part of the world can be categorized into three. In all, African chiefs and traders were short changed.

First, there was the slave trade through which by 1490, more than 3,000 slaves a year were transported to Portugal and Spain from Africa. As stated by Toyin Falola and Saheed Aderinto in Nigeria, Nationalism, and Writing History and Paul Lovejoy in Transformations in Slavery: The History of Slavery in Black Africa: “With the European expansion and colonization of the West Indies and America, what was a small market in ivory, gold, and slaves transformed into a massive, global trade. From the last third of the 16th century to the early 19th centuries, Portuguese, then Dutch, then French and English merchants greedily expanded the African slave trade internationally. Enormous profits were made, mostly by Europeans, but a small number of Africans also benefited economically, mostly along the southwestern coast of Nigeria. Over this period of trade, more than 3.5 million slaves were shipped from Nigeria to North and South America and the Caribbean colonies. A smaller trade also existed to Europe and other regions.”

George Tobman Goldie

The article, entitled The Transatlantic Slave Trade and published by Harvard School of Divinity further states that in using local brokers to provide captives, the slave trade degraded preexisting social, political, and religious structures and destroyed longstanding trading patterns, turning markets along the trans-Saharan trade routes into slave raiding stations. Competition among local tribes in the slave trade was intense and spurred internal wars to provide a steady stream of slave captives. The scholars added: “The British outlawed the slave trade in 1807, a decision which was both cultural and economic in nature… The second cause for abolition was the rise of the Industrial Revolution and the decline in plantation economies. Slaves were both industrial laborers as well as poor customers for British products. The British pushed the concept of ‘legitimate commerce’ as a replacement for slavery, particularly the production of palm oil, which was sought after in Europe”

Then since combined harvesters and tractors had replaced slave labour on the plantations, trading in human beings gave way to palm oil. Still, our people were made to hold on to the shorter end of the stick!  For effective capture of the palm oil trade, Goldie, in 1879, formed the United African Company which enabled him to take charge of the Lower Niger River. According to Cheta Nwanze in an article, entitled, “Who sold Nigeria to the British for £865k in 1899?” published in, by 1884, Goldie’s company had 30 trading posts along the Lower Niger. This monopoly gave the British a strong hand against the French and Germans in the 1884 Berlin Conference. The British got the area that the UAC operated in, included in their sphere of influence after the Berlin Conference.”

Then the British shifted to gear two; they directed their attention to the African chiefs by reneging on the earlier agreements they had with them not to operate beyond the coast. The white men moved inwards. They made the local chiefs and merchants to sign agreements written in English and which they could not read, an exercise of hoodwinking a set of people to sign their own death warrant! Later, the company’s name, according Nwanze, changed to “Royal Niger Company” and was, “granted a royal charter, giving it the right to administer the Niger Delta and all lands around the banks of the Benue and Niger Rivers.”

King Jaja of Opobo

King Jaja of Opobo who wanted to act independent of the Europeans by exporting palm oil directly to Europe was “accused of obstructing commerce and was forced into exile.” The next was Koko Mingi VIII of Nembe, who was not satisfied with the activities of the British. Nwanze narrated that on 29 January 1895, Koko led an attack on the Royal Niger Company’s headquarters, which was in Akassa in today’s Bayelsa state. “The pre-dawn raid had more than a thousand men involved. King Koko’s attack succeeded in capturing the base. Losing 40 of his men, King Koko captured 60 white men as hostages, as well as a lot of goods, ammunition and a Maxim gun. Koko then attempted to negotiate a release of the hostages in exchange for being allowed to chose his trading partners. The British refused to negotiate with Koko, and he had forty of the hostages killed. A British report claimed that the Nembe people ate them. On 20 February 1895, Britain’s Royal Navy, under Admiral Beford, attacked Brass, and burned it to the ground. Many Nembe people died and smallpox finished off a lot of others.”

By April 1895, Nwaze wrote that business had returned to “normal”, normal being the conditions that the British wanted, and King Koko was on the run. Brass was fined £500 by the British, £26,825 in today’s money, and the looted weapons were returned as well as the surviving prisoners. “After a British Parliamentary Commission sat, King Koko was offered terms of settlement by the British, which he rejected and disappeared. The British promptly declared him an outlaw and offered a reward of £200 (£10,730 today) for him. He committed suicide in exile in 1898.”

The third epoch was (and still is) crude oil which was discovered at Oloibiri, now in Bayelsa, in 1956 by Shell-BP. This put Nigeria on the world map among countries that determine the swing of international trade. In fact, National Petroleum Investment Management Service (NAPIMS), said Nigeria “has risen very fast and steadily to host the world’s 10th largest reserves at about 25 billion barrels. Also, the country’s natural gas reserves is put at more than 166 TSCF (trillion standard cubic feet), with her current gas production put at 12 billion scf, which is the associated gas (AG) produced in the course of crude oil production.”

Federal Government Puts Its Foot Down

Nigeria, with the new Law, therefore, has every reason to be happy, having been short changed for long. This is more so that, as an independent country, it has every right to say no to cheating, a disposition which was not possible under Tobman Goldie’s gun boat diplomacy. As Presdient Buhari said with enthusiasm, “Today I signed into law the amended Deep Offshore Act. Nigeria will now receive its fair, rightful and equitable share of income from our own natural resources for the first time since 2003.In that year oil prices began a steep increase to double –and at times –triple over the following decade. All this time Nigeria has failed to secure its equitable share of the proceeds of oil production, for all attempts to amend the law on the distribution of income have failed. That is, until today. Rapid reductions in the cost of exploration, extraction and maintenance of oil fields had occurred over these 25 years, at the same time as sales prices have risen. A combination of complicity by Nigerian politicians and feet-dragging by oil companies has, for more than a quarter-century, conspired to keep taxes to the barest minimum above $20 per barrel – even as now the price is some three times the value.”

He added: “Today this changes. For the first time under our amended law, 200 million Nigerians will start to receive a fair return on the surfeit of resources of our lands. Increased income will allow for new hospitals, schools, infrastructure and jobs. Today marks a new and beneficial relationship with our oil company partners: one that benefits all – starting with the Nigerian people.”

Details of the amended law

“Royalties shall be calculated on a field basis and shall be at rate per centum of the chargeable volume of crude oil and condensates produced from the relevant period as follows: In deep offshore: greater than 200m water depth – 10 per cent, and in frontier/inland basin – 7.5 per cent.”

“The royalty rates shall be based on increase that exceeds $20 per barrel, and shall be determined separately for crude oil and condensate as follows: From $ 0 and up to $20 per barrel – 0 per cent; Above $20 and up to $60 per barrel – 2.5 per cent; Above $60 and up to $ 100 per barrel – 4per cent; Above $100 and up to $150 per barrel – 8 per cent and Above $150 – 10per cent.”

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