Nembe oil spill: Aiteo’s business operations threatened

By AYOOLA OLAOLUWA

The future operations of Nigeria’s leading indigenous oil prospecting company, AITEO Eastern Exploration and Production Company, is threatened, with experts warning that the huge cleanup and compensation bill the company is expected to incur as a result of the blowout of its wellhead in Nembe, Bayelsa State, will drain the firm of cash and hamper its future operations.

Multiple sources in the legal and oil and gas industry told BusinessHallmark that by the time the dust settled on the matter, the embattled company could pay out billions of naira in compensation and cleaning up cost.

It would be recalled that the Wellhead of OML 29 in the Santa Barbara South field in Bassambiri, Nembe Local Government, Bayelsa State, had blown up on November 3, 2021, spewing poisonous gas and crude oil into the air and surrounding lands and waters, going as far as Kula, a coastal community in Rivers State.

Despite spirited efforts by oil well disaster management companies assembled from around the world, including Halliburton’s Boots and Coots from the U.S who have fought valiantly to stop the flow by injecting cement and other chemicals into it, the well has continued to discharge oil and gas unabated, polluting farm lands and rivers, as well as killing natural habitats and destroying means of livelihood of local in the the area.

Though, the company queried the figure, regulatory authorities are calling the spill the worst environmental disaster in Nigeria’s history.

Sources in government put the amount of crude oil spilled into the river, polluting the flora and fauna of the area at two million barrels.

However, while speaking during a tour of the affected areas with journalists on Friday, the Global Group Director/Coordinator of Aiteo, Andrew Oru, said the spill was of a special type – a gas blowout involved 80 per cent gas and 20 per cent oil.

“The talk of two million barrels of oil spilling from the well is spurious. Two million barrels is about two supertankers; the oil would have spread over the entire country. The reserve of the well itself is nowhere near two million barrels.

“This spill is a special type. It is not just an oil spill; it’s a gas blowout, for whatever reason. There are two stages in containing it. The first one is to stop the gas leakage. The second is to fill the well.

“It is the gas leakage that engenders and creates room for some droplets of oil to escape with gas.

“The well is a gas well, 80 per cent gas and about 20 per cent oil; that is why it is relatively easy for us to contain the amount of oil that spills out.

“Ordinarily, if what is coming out now were oil, I can imagine that we’ll be needing Noah’s Ark by now.

“In one or two days maximum, I believe we will proceed further to begin the well kill process,” Oru assured, while noting that the heavy vegetation of the area has also help to absorb gaseous emissions.

Speaking during a visit to the explosion site on Wednesday, the Bayelsa State Governor, Senator Douye Diri, described the spill as the worst he had seen in his life.

A visibly downcast Diri said the continuous spillage of oil and gas would not only endanger the lives of people of Nembe in Bayelsa State, but that of the entire Niger Delta region.

“Today happens to be a very dark day for me. What we have seen, I believe, is worse than what happened in the Gulf of Mexico. In all my life, I have not seen such magnitude of oil spillage.

“Our people are endangered. Our people’s source of livelihood is endangered. I empathise and sympathise with the people of Nembe on behalf of the government and people of Bayelsa State.

“I like to give you hope that we will stand shoulder to shoulder with you. Your government will activate every constitutional means to arrest and redress this magnitude of oil spill.

“I therefore call on the Federal Government, the operators of the oil field, NNPC and AITEO to immediately look for a superior technical know-how to contain and stop the spread of the oil.

“For Bayelsa, the only thing we know how to do best is fishing. Today, our own fishing route is endangered. I equally call on the Federal Government to immediately react and ensure that our fishing route is safe”, the governor had pleaded.

Also during a visit to the site, the Minister of State of Environment, Sharon Ikeazor, described the scene of the spill as a war zone.

“What I saw in terms of the pollution is devastating. The devastation of the Niger Delta is massive. As we are cleaning up, what we are cleaning up is minute compared to the devastation going on. It was like a Hiroshima site,” the minister lamented after visiting the site.

In its reaction, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), while assuring that it was closely monitoring the oil spill at the Santa Barbara Well 1, said there was no life lost as a result of the spill.

NUPRC’s Chief Executive of NUPRC, Engineer Gbenga Komolafe, said the commission was working closely with the operator of the well to stop the spill and begin a clean up of the area.

“Our preliminary investigations have revealed that there were no fatalities in the incident. However, crude oil and gas were seen gushing out from valves close to the top of the wellhead at high pressure but without any associated fire.

The water surrounding the wellhead was polluted with oil. The affected well had been previously shut-in and therefore not producing at the time of incident.

“The commission will continue to monitor the site situation and guide the operator until the spill and its attendant problems are completely addressed.

“This includes but is not limited to implementing all effective physical and engineering solutions to the incident, managing the safety of the response providers and people in the neighbouring communities and educating the general public on the site situation periodically.

“In specific terms, the commission will ensure that the pressure from the well is stopped to put an end to the oil release; the already released oil is appropriately contained and skimmed off as it is being released; a joint investigation visit (JIV) is conducted as soon as it is safe to do so, cleanup and restorative actions are done immediately after the spill is stopped and compensation paid to affected communities timeously and in accordance with the law,” the NUPRC boss assured.

Some environmental experts and lawyers, who spoke with our correspondent at the weekend, said the spill could result in one of the world’s largest ever environmental trials.

“Aiteo will have to compensate affected communities for the spills from the Nembe oil well. And it will run into billions of dollars in payouts.

“Even if Aiteo is not going to pay any fine as the oil well is jointly owned by it and the Federal Government, it may, like the British Petroleum which sold off several assets after facing billions of dollars of damages in fines and claims over the Gulf of Mexico oil spill of April 20, 2010 that lasted five months, need to carry out massive disposals of some of its assets to defray the cost.

“BP paid dearly for the reckless corporate culture of cost-cutting and excessive risk-taking that caused the spill. In fact, available records showed that BP paid more than US$60 billion in criminal and civil penalties, natural resource damages, economic claims and cleanup costs”, said a lawyer who did not want his identity revealed.

Another environmentalist who is also a lawyer from the Niger Delta, informed BH that several legal firms from Europe and America had approached him and other representatives of communities affected by the Nembe oil spill, demanding that they should be given the power to institute suits abroad against Aiteo on their behalf.

“This development portends grave danger to Aiteo as it would have to honour any judgment passed against it in European and American courts, or risk having its assets abroad confiscated and sold to offset any judgment debt.

“Though, I don’t expect Aiteo to cough out that much since the nation’s legal system is highly compromised, there is no way it could escape a massive payout, say around $500 million to $2billion if the company and the Federal Government do not settle the matter amicably with affected communities and foolishly allow them to take their case abroad for adjudication.

“You will recall that oil major, Shell, recently coughed out N45.9 billion ($111.68 million) to settle a case over an oil spill that took place more than 50 years ago at Ejama-Ebubu, an Ogoni community in Rivers State after it lost at the Supreme Court.

“Several courts, including a court in the Netherlands, have also ruled against Shell, asking it to pay hundreds of millions of dollars in damages to affected communities for oil spills occasioned by its oil exploration activities.

“Indeed, from a legal standpoint, the legacy of the Gulf of Mexico oil spill and its sheer size of payout has ushered in an era of multibillion dollar criminal and civil penalties for environmental and other corporate crimes. I don’t see Aiteo escaping it”, said the environmentalist.

Meanwhile, Aiteo has begun a massive trouble shooting campaign by dispatching five truckloads of palliatives, including food and medical supplies to the affected communities.

The items, which include 10 cows, 500 bags of rice, 500 cartons of noodles, 500 cartons of water, 500 tubers of yam, 200 cartons of toilet rolls, 200 cartons of milk, 200 bags of garri, 200 cartons of tin tomatoes, 100 cartons of beverages and 100 cartons of vegetable oil,100 packets of Knorr season cubes, 100 bags of salt, 100 bags of Ariel soaps, Jerry cans of palm oil, six digital thermometers, four blood pressure machines, two sugar testing kits, 150 packs of Coartem for malaria, five packs of PCM, five cartons of Dettol, 40 mosquito nets, Vitamin C and fully equipped first aid boxes were received by the community’s leaders at the Opu Nembe Town Hall.