Press Statement – 12th June, 2023, Dakar, Senegal
DROP EXXON AND SHELL FROM EITI BOARD!
We write to express our utter displeasure and opposition to the nomination of two international oil giants, ExxonMobil and Shell, to the International Board of the Extractive Industries Transparency Initiative (EITI). We call on the Companies’ constituency and the EITI Board to stand down these nominations.
Our organisation, Policy Alert, works on the front-lines of campaigns for more transparent and accountable extractive sector governance in Nigeria. We are active in our country’s EITI process and are represented on the Civil Society and Communications Steering Committee of the Nigeria Extractive Industries Transparency Initiative (NEITI). We have strong programming presence and experience at the community level across the Niger Delta region where both companies have left a terrible legacy of economic, social, and ecological devastation over at least six decades of oil and gas extraction. In the last 18 months or so, we repurposed our #WetinWeGain campaign to utilise the provisions of Nigeria’s Petroleum Industry Act (PIA) 2021 to create linkages between the legacy impacts of fossil fuel extraction, the unregulated divestment frenzy by companies such as Shell and ExxonMobil from the region, and the rights of Niger Delta communities to a transparent, accountable, restorative, and just fossil fuel phase-out.
It is therefore safe to say that we know exactly where the shoe pinches and can authoritatively call out both companies as unqualified, morally and procedurally, to occupy seats on the Board of the world’s super-watchdog on extractive sector governance, the EITI.
ExxonMobil is a founding member of the EITI and has been a member of its Board for years, but the company has continued to fight against the most basic idea at the heart of the EITI by frustrating efforts of civil society organisations and communities to access timely project-level payment information with which to hold government and companies accountable.
In February 2020, our organisation wrote to the US Securities and Exchange Commission (SEC), lending our voice to calls for passage of a strong version of the Dodd Frank Wall Street Reform and Consumer Protection Act Section 1504 rule. We particularly pointed out that the version of the Act proposed at the time risked promoting further opacity and increasing corruption in Nigeria’s extractive industry and called for the rules to, among other things, i) disallow aggregation of payments at major subnational jurisdiction level, as that would effectively roll back gains already made with project-level reporting especially as it concerns affected local host communities, and ii) not exempt smaller issuers and growth companies, which could allow smaller companies inheriting divested assets (such as those almost recently offloaded by ExxonMobil’s Nigerian subsidiary to Seplat) to escape stronger disclosure requirements should they in future issue securities in SEC-regulated markets.
Rather than work to strengthen these amendments as an EITI member, Exxon actively lobbied against them, succesfully ensuring that the final version of the rule was watered-down to require less disclosure. This was sufficient grounds for the company to lose its seat on the Board but it stayed on. A subsequent assessment of companies’ compliance with the EITI’s Company Expectations revealed that Exxon did not measure up, but members of the Companies Constituency, including fellow Board members who themselves are not found wanting on such disclosures, have re-nominated Exxon to the Board.
As the energy transition gathers momentum and the EITI moves into a new era of optimizing transparency for a cleaner energy future, resource-rich but poor communities in Nigeria and elsewhere will have to face a double jeopardy. Not only are they dealing with the legacy impacts of Shell’s fossil fuel extraction on their livelihoods and environment, they also have to plan their future in the dark, as it were, without access to exit plans by divesting companies such as Shell, who have cited the energy transition as reason for their exit. In fact, Shell is selling off almost $3bn in assets in Nigeria. The company began exploiting these assets decades ago without the consent of communities and is now casually packing its bags to leave, again without as much as a word with the communities.
We see Shell’s programme of divesting its assets in the region as an escape from its Decommissioning and Abandonment (D&A) obligations as provided in the Petroleum Industry Act 2021, and from the responsibility to pay for the audit and restoration of the social and environmental costs that communities have borne as a result of the company’s operations over the years.
Shell is selling off assets without placing the true state of those assets on the books, leaving less competent domestic oil companies to deal with liabilities. Many of the structures and facilities have long passed the end of their productive life, and by international standards should be decommissioned, but Shell is offloading them for profit. This came to the fore clearly in the 2021 case of Santa Babara wellhead blowout at Nembe, Bayelsa State, a disaster inherited along with assets by Aiteo from Shell, and for which has forced the smaller company to now seeking legal redress for, among other things, Shell’s incomplete disclosure on retirement obligations.
For a company sitting on the Board of the EITI, which prioritises environmental disclosures and ctitizen engagement, Shell has built for itself an unenviable track record of denying liability for oil spills, manipulating evidence to avoid clean up, and outrightly lying about its clean up efforts and community engagement in the Niger Delta. Across Ogoniland and elsewhere in the Niger Delta, evidence abounds that several of the company’s oil spill sites remained oil-drenched and contaminated, years after Shell had claimed to have cleaned them up. Shell has also frequently lied about the cause of its spills and has denied communities compensation even in cases where there are court verdicts ordering such compensation. Shell’s weak energy transition strategy and pussyfooting response to the climate emergency is a slap on our communities who have taken a beating from the company’s fossil fuel investments and have been left with the shorter end of the stick. The company deceives the public shamelessly about its investments in renewables while luxuriating in huge profits (like its $4obn record posting in 2022) while withholding the evidence that our government’s need to project risks and opportunities of the energy transition! It is sad the EITI has on its Board a company that actively works to undermine progress on the energy transition.
Allowing ExxonMobil and Shell continue on the Board of the EITI is a slap on the principles of the EITI. Doing this would be akin to handing the examinations grading scheme and answer sheets to a student who is notorious for cheating ahead of a class test. Granted, the EITI is currently undergoing a period of unprecedented tests to its credibility and continued relevance in a world threatened by climate change and new geo-political tensions. But it would indeed be sad that the Initiative should be seen to buckle under the least complicated of those tests, one that is not external, and could be easily addressed by invoking its own rule book and guiding principles. It completely ridicules the essence of the EITI. One of our biggest learnings over the years has been that opacity and corporate impunity are siamese twins, and if the former is allowed to thrive the latter is reinforced.
We call on the Companies Constituency to rethink this nomination and to immediately replace Exxon and Shell with other companies that do not carry such anti-EITI baggage!