Shell to go ahead with Nigerian gas plant

NICHOLAS SCHOON

Shell and the Nigerian government yesterday decided to go ahead with a huge gas project in the troubled and environmentally damaged Niger delta.

The board of the joint-venture company planning the pounds 2.5 bn liquefied natural-gas plant made the decision in Lagos yesterday. Shell, which has the second-largest shareholding after the Nigerian government, said it expected final contracts to be signed with construction firms and gas purchasers by the end of the year.

There had been pressure on the company to abandon or delay the project after the executions of Ken Saro-Wiwa and eight other men from Ogoniland. Critics said approval would lend support to the military regime which hanged them. But Dick van den Broek, a Shell International director, said last night: ''You have to be clear about who would be hurt. You don't necessarily affect the present Nigerian government because the revenues will not start flowing on this project until early next century.''

John Major said on Sunday that the Government would be holding urgent talks with Shell to discuss the project, the largest single investment in sub-Saharan Africa.

A meeting took place between senior Shell executives and Foreign Office officials on Monday, but both sides now say there was no question of the Government putting any pressure on the multinational oil company to end its involvement in the gas plant.

''It's their money, and it's up to them and their European partners to explain their decisions to the public,'' said a Foreign Office spokesman.

Neslon Mandela said that he and the New Zealand Prime Minister Jim Bolger spoke to Mr Major yesterday. "Mr. Major is the person who can actually tighten the squeeze around Nigeria by adopting oil sanctions," said Mr Mandela. "We are examining those issues. I didn't pressure him very much, but I wanted him to examine the option." Mr Mandela said he had also tried to contact President Bill Clinton to ask him about the possibility of applying oil sanctions against Nigeria. "The only countries with trade relations of any significance with Nigeria are Britain and the USA, and perhaps the European Union. They are the people who can actually bring the type of pressure which [Nigerian military ruler] General Abacha is not likely to resist," Mr Mandela said.

Lord Melchett, chairman of Greenpeace UK, said: ''We think Shell should stop oil production in Nigeria altogether. Going ahead with this plant sends completely the wrong signal to the regime - that it's business as usual.'' But the director of Friends of the Earth (FoE), Charles Secrett, would not condemn the investment decision. ''We think that if Shell intends to carry on operating in Nigeria as it has in the past, then it should get out right now. It has to recognise its social and environmental obligations.''

The problem for Shell's many critics is that its participation in the gas plant may reflect such a recognition, as well as the pursuit of profits. Eventually it would cut the environmentally-damaging flaring-off and wastage of Nigerian gas by 45 per cent, says Shell.

It would also bring thousands of construction jobs to an impoverished region of an impoverished country.

A World Bank subsidiary, the International Finance Corporation, pulled out of the project in protest hours after the nine executions. But since it was only expected to take a 2 per cent shareholding and loan $100m, its withdrawal dealt only a minor blow.