I welcome the opportunity to raise the issue of stability in the Niger delta. Throughout Africa, abject poverty, malnutrition, clean drinking water, education and medical care are important issues, which we must address if we are to resolve Africa's problems. Poverty and terror are linked in a complex process, leading from poverty to frustration, a sense of injustice and bitterness, division and conflict. The Niger delta has experienced all those issues. A stable Niger delta is vital to the stability of Nigeria, just as a stable Nigeria is vital to that of west Africa. Nigeria is an important member of the Commonwealth and the New Partnership for Africa's Development, and in past decades Nigerian troops have been in action in Sierra Leone and Liberia as part of African peacekeeping forces. Nigeria is also likely to be an important contributor to the African peacekeeping initiative announced at the G8 Sea Island summit.
The development and democratisation of the country over the past decade must be applauded. The election of President Obasanjo in 1999, followed by his re-election in 2003, should mark the end of military rule in that country. The beginnings of political stability can be sustained only if ordinary Nigerians see real economic benefits, a reduction in corruption and an end to the violence that has struck many areas of the country.
Nigeria is well placed to act as a stabilising power in the region, and the presidential elections in 2007 will be a further test of the trends. Oil accounts for 80 per cent. of Nigeria's revenues and 98 per cent. of its exports. The Niger delta accounts for 40 per cent. of that oil production, and considerable unexploited gas and hydrocarbon reserves exist. The Nigerian Government rely heavily on the oil industry, and all budgets are linked to its viability. If the oil installations were forced to close or reduce production, for whatever reason, that would have devastating consequences for Nigeria's economy and political and social structure, as well as its very existence as a state and west Africa as a whole.
The current instability in the Niger delta must concern us all in the UK, as an humanitarian concern for the people of Nigeria, as a concern for the development of their country and as a concern for the security of world energy supplies. Nigeria is the sixth largest oil producer in the world, and the decision of Chevron to suspend production following attacks on its workers in the delta earlier this year was partly responsible for the recent hike in oil prices.
Of greater concern to us all should be the report that WAC Global Services prepared for Shell, which accounts for half of oil production in the delta. The report was leaked in mid-June. I discussed the report directly with Shell yesterday, and although it rejects many of the conclusions, and even if the report presents a pessimistic worst-case scenario, we must take it seriously. It pointed to a vicious cycle of violence and corruption, caused by the exploitation of oil in the delta and fed by the theft of crude oil. It indicated that such increasing criminalisation in the region could force an end to onshore production in the delta by 2008. Following my discussions yesterday, I can say that Shell rejects that scenario completely. However, we must register our concern. As I said earlier, the consequences of an end to production would be catastrophic for the Niger delta, Nigeria, west Africa and possibly the UK.
It is worth detailing where the threats to stability come from. Oil has been beneficial to Nigeria as a whole but responsible for many of the problems in the delta. Many residents of the delta feel excluded, marginalised and disfranchised, and youth militia regularly sabotage oil company installations, kidnap personnel and steal vast amounts of oil. Competition for control of wealth and the lucrative relationships with oil companies is fierce, fuelling often dormant anti or inter-ethnic tensions. Military taskforces sent to quell unrest often serve to increase resentment, and actions that have included destruction of whole villages are frequently condemned by international human rights organisations.
The oil industry generates substantial sums of money. According to Shell representatives, the company employs about 5,500 people directly with a further 20,000 employed by contractors. Comparing that employment level with a delta population of between 10 million and 12 million, we can understand that although there are benefits from oil production, mass unemployment creates enormous problems. It is felt that oil money spent locally has had a negative effect, worsening tensions and highlighting differences in wealth. More alarming are the allegations that a lack of transparency in awarding contracts and the use of cash payments have made corruption worse.
As I have said, a particular problem in the Niger delta is that of "bunkering"—the theft of oil. That ranges from local tapping to much more organised systematic theft of oil in bulk. Some industry analysts estimate that up to 100,000 barrels of oil a day are stolen. That oil is sold for approximately $15 a barrel and generates a large amount of cash. Some allege that it may even undermine the whole Nigerian political system. At a local level, one day's worth of illegal oil bunkering in the Niger delta can buy quality weapons for, and sustain, a group of approximately 1,500 youths for two months.
The exploitation of the oil in the Niger delta has also had serious environmental consequences. The flaring of gas, which accompanies oil extraction, occurs for 24 hours a day. I understand from Shell that the oil companies have recently agreed with the Government that that practice will cease by 2008, but I believe that that is more of a hope and a prayer. Avoidance of the flaring is dependent on the Government and private sector investment.
Official figures also show that an average of 300 incidents occur annually, with oil leaks from pipelines releasing on average 2,300 cu m of oil each year. However, unofficial figures indicate that there are many more oil spills than that, which has severe environmental consequences for the region. It is further estimated that bridge and dam building in the region to support the oil industry could lead to the loss of 40 per cent. of the inhabited land of the delta within 30 years.
It is also sad, but true, that the presence of the oil industry has served to worsen ethnic tensions; it has fuelled competition for control of resources. The ethnic groups found in the delta are not those that hold sway in the rest of Nigeria, and therefore oil has given a new side to feelings of exclusion from the political process. The presence of armed youth militias has led to increased violence and instability, and the response of the Nigerian armed forces is regarded as having worsened the situation.
I understand that 13 per cent. of oil revenues are supposed to be redistributed by the Government to local communities. However, at present, the local population sees little benefit from the oil industry. Figures that I have seen show that in the delta only 27 per cent. of households have access to safe drinking water and that there is only one doctor per 130,000 people. Local people strongly believe that they are not sharing in the wealth that is being created from oil production.
I accept that the situation in the Niger delta is complex, with many interlinked problems and no easy solutions. I have spent most of my remarks highlighting the problems, which must be done, but I hope that I have not been too pessimistic. This is one of the first Adjournment debates on the Niger delta, so it is important for us to understand the problems.
I accept that much is being done to bring stability to the region, by the Government, by UK companies and in particular by NGOs such as the International Centre for Reconciliation at Coventry cathedral. As I have said, instability in the Niger delta will have consequences for Africa and for the UK. I hope that our high commission in Nigeria will monitor the situation and examine how best we can assist in resolving some of the problems in the area.
The continuing growth in the UK's overseas aid budget, which is one of this Government's most significant achievements, and the commitments made through the G8 Africa action plan, the New Partnership for Africa's Development and the millennium development goals, give us a real opportunity to have some influence in the delta and to support beneficial work there.
The International Centre for Reconciliation was helpful in briefing me on its work in Nigeria in preparation for this debate. It was quick to contact me once I had secured the debate and provided me with much useful background information.
However, there is much more that can be done. If we are to ensure stability in the delta, the Department for International Development must be involved. I know that it assisted the Nigerian presidency in producing a strategic assessment of the conflict in the delta in October 2002, which made many recommendations, and DFID has recently published its draft country action plan for Nigeria. However, I am slightly disappointed that that does not seem to define a strong role for DFID in the delta. The Foreign Office has sponsored courses for those engaged in civil society projects in the area, which has obviously been helpful and is welcome. As well as the opportunities for direct development aid, the UK should support local development that could bring stability. I hope that the Foreign Office and DFID will look to support more work like that undertaken by the International Centre for Reconciliation. Simply making more money available is not the answer, as Shell agrees. Without tackling the problems caused by the oil industry and breaking down the ethnic tensions, we will not solve the problems in the delta.
To support further work in the region, I hope that there will be better co-ordination between DFID and the Foreign Office. That could be best achieved by having a member of staff at the high commission in Nigeria with special responsibility for monitoring what is happening in the delta and considering how best we can assist. We should also look to implement the recommendations of the 2002 report, which called for greater controls on the transfer of small arms to Nigeria, and consider how greater export controls and the UN small arms survey might play a role in the area.
We also need to consider how to tackle the profits of bunkering and the oil-related kickbacks. I welcome the agreement at the Sea Island summit on a G8-Nigeria compact on transparency and tackling corruption. However, we need to look at what more we can do to tackle money laundering at the UK end, and ensure that there is transparency and that the sources of large sums of money that enter the UK are disclosed. That is a matter on which the UK banks have been particularly weak. When we consider the $1.3 billion channelled through 15 UK banks by the late military dictator General Abacha, we can realise the depth of the problem of money laundering. That has had a significant effect on Nigeria. In 2001, the Financial Services Authority identified banks' reporting mechanisms as the weakest point in the system to prevent money laundering, and it worries me that despite the new regulations passed last year, our system remains heavily dependent on banks reporting any suspect transactions. We must try to strengthen that system.
The UK also needs to look at how we regulate the operation of oil companies based in the UK through international codes of conduct that praise those that are performing well and condemn and crack down on those that are performing poorly. We should discuss with the Nigerian Government what support the UK can provide to the Nigerian armed forces to ensure that they will be a force for good in the delta. That must, however, be balanced by pressure to ensure that the military personnel who have engaged in human rights abuses in the area are brought to justice. At minimum, charges should be sought against those responsible for events in Benue state in 2001 and in Odi in Bayelsa state in 1999. There seems little point in training Nigerian troops to serve as peacekeepers when the situation in the delta is so unstable and the troops there at present seem to have such an extremely bad reputation. We should also consider how that support for the armed forces will work alongside our wider support for security sector reform through the G8 Africa action plan.
I have talked mainly about the Government's role, but I shall briefly touch on the role that UK companies can play alongside that. As I have said, I yesterday met representatives from Shell who briefed me on the work that they are doing to limit the consequences of oil exploration. I was encouraged by the range of projects that they are helping with and their real interest in assisting the communities in the delta. I understand that they have built 29 cottage hospitals, which must be a wonderful boost for the people there. That said, all companies that operate in the region could do more.
I shall highlight three fields in which that is the case. First, companies should introduce tougher environmental standards. Secondly, they should provide greater transparency over payments to local contractors and other local payments made, although Shell has said that it is working on that at present. Thirdly, all companies need to consider the ways in which they can funnel money into the region to assist both traditional aid and development projects, and to support civil society and capacity building projects such as the work of the International Centre for Reconciliation, which is absolutely vital. I hope that the Government will find opportunities to encourage and work alongside business in that way.
Overall, much work is being done that can be applauded. However, there is still much more that can be done. I have outlined the problems, but I am optimistic that solutions can be found. I hope that the debate has been constructive and helpful; I hope something has been achieved simply by highlighting the issue. None of us wants the Niger delta to become more unstable; I am sure the Minister will share many of my concerns and respond positively to these proposals.
I congratulate my hon. Friend Mr. Tynan on raising this important issue. I apologise on behalf of my hon. Friend Mr. Mullin who is the Foreign Office Minister responsible for Africa. He would have replied to this debate had he not been in Ethiopia.
I begin by explaining why Nigeria matters so much to Britain, and why the British people should care about the issues raised by my hon. Friend the Member for Hamilton, South. Twenty-five per cent. of all African people live in Nigeria; it is estimated that 180 million will live there by 2015, a figure that is projected to rise to 250 million by 2030. If Nigeria does not meet its millennium development goals, Africa cannot meet them.
Nigeria is a functioning democracy, however imperfect, indeed sometimes corrupt, the process. Success for Africa's largest democracy sends a message to the other democracies in the developing world, and failure for Nigeria sends them a bad message. Britain has substantial commercial interests in Nigeria, and is the major holder of Nigerian debt. Nigeria is a force for stability in west Africa, both through its extensive peacekeeping efforts and its economic standing as a magnet for economic activity in the region, and in terms of its own relative political stability.
It is stability that concerns us today, for stability in the Niger delta has an impact on stability across Nigeria, and a direct impact on the wealth and economic development of the country as a whole. The delta is an oil-rich zone on the south coast of Nigeria. It is large—about 70,000 sq km, the size of Scotland—and is home to 20 million people, but they are a complex mix of at least 40 different ethnic groups, speaking 250 dialects, across 3,000 different communities.
The problems of the delta are a microcosm of the many problems that Nigeria faces. It has high levels of poverty—75 per cent. of Nigerians subsist on less than a dollar a day—high unemployment, and a lack of access to basic needs; and the 3,000 different communities often mean a rash of ethnic strife. Added to that is the endemic corruption in the area, which is a problem that Nigeria as a whole faces. I take no pleasure in noting that Nigeria came 132nd out of the 133 countries in the 2003 Transparency International corruption perception index.
The Niger delta adds to that cocktail some specific problems of its own. It is without doubt the most unstable region in Nigeria. As my hon. Friend said, the vast oil reserves have led to equally vast oil thefts. There are no accurate statistics, for obvious reasons, but relatively reliable figures suggest that an average of 100,000 barrels a day are stolen, which is an enormous quantity. Again, we guess that that theft makes the thieves and those who support them very rich indeed. We guess that the profit from oil theft is about half a billion—yes, billion—dollars a year. Theft and corruption mean that those involved in ethnic clashes can gain access to more than just sticks and stones.
The Minister will agree that my hon. Friend Mr. Tynan made an excellent speech. He was able to focus on a point that I trust will be considered by the Commission for Africa, which is that, alongside poverty, malnutrition, HIV/AIDS and other scourges, there is rich mineral wealth. If that were properly shared with the many and not the few, many of those terrible problems that people experience could be removed. I trust, too, that that is very much in the Minister's mind.
My right hon. Friend is right. Wealth in the midst of poverty is a real problem in that part of Africa. It is one issue that no doubt the Commission for Africa will examine.
We must also examine the fact that such wealth, because of its unequal distribution, sometimes falls into the hands of rich and corrupt people who use poorer people in order to access weapons to get involved in ethnic strife. Small arms are proliferating across the region and they are increasingly sophisticated and available. Unemployed youngsters are easy to hire.
The picture, as my hon. Friend has painted it, is very challenging. It would be easy to conclude that there is no solution, but the delta matters to the UK. It is the engine of the Nigerian economy, producing 75 per cent. of Nigeria's crude oil production, 90 per cent. of its oil export revenue and more than 50 per cent. of its Government's own revenue. It is specifically vital to British commercial interests. As my hon. Friend said, the delta has been described as the jewel in Shell's upstream crown. The Shell Nigeria joint venture produces 1.3 million barrels per day.
There is also the British interest at a purely human level. We have about 1,000 UK nationals resident and working in the Niger delta at any one time, and we have a responsibility to do all we can to ensure their safety. Delta violence makes life even more difficult for them, and we have been involved in several kidnapping cases over the past 18 months—each of which, I am pleased to say, has been brought to a satisfactory conclusion.
It is estimated that Shell's operations cover about half of Nigeria's onshore and offshore oil reserves. Its operations in the Niger delta are widespread and complex. Shell has always recognised the need to be involved in community development programmes. My hon. Friend has already praised them. Those programmes have made some difference, though Shell would be the first to accept that to date the programmes have not made enough of a lasting impact on the ground.
Shell is searching for ways in which to promote stability and increase opportunity. For example, it is co-funding projects with the World Bank, Africare, the United Nations Development Programme and the United States Agency for International Development at community level in the delta. I would like to commend, as my hon. Friend has, the work of Coventry cathedral's International Centre for Reconciliation. He was right to identify its work as a model for other work. The centre has undertaken work deserving of great praise in Nembe.
The prime responsibility for the delta, however, lies of course with the Nigerian Government at state and national level. I recognise the efforts of the Nigerian Government's Operation Restore Hope—a joint navy, army and mobile police operation with the aim of cracking down on armed militancy. Nigeria's resources are limited, however, and there have been examples of armed gangs outgunning Nigerian forces. We are also conscious of allegations of human rights abuses by some in the Nigerian forces in the delta in the past. They have a fine balance to strike between establishing effective law and order in the delta and behaving in a way that is appropriate to Africa's biggest democracy. Sometimes that balance is struck well; sometimes, regrettably, it is not.
Could the British Government do more? Our starting point is that there is no quick fix. We need to build consensus with other Governments working closely in the delta—for example the US and the Dutch—and with the broader donor community, the oil majors, and the Nigerian Government themselves, at both state and federal level. Our current efforts concentrate on a number of strands. President Obasanjo's endorsement of a home-grown extractive industry transparency initiative, or EITI, offers an opportunity to increase the transparency and accountability of Government at all levels on the flow and use of oil revenue. The Nigerian Government have made a commitment to include back accounting of the Nigerian National Petroleum Company account. If undertaken effectively, that will be a major step towards tracing the somewhat opaque trail of oil revenue.
We have been working with major oil companies engaged in the delta, as well as NGOs, to try to ensure that measures to protect the security of oil companies do not give rise to human rights abuses. They have adopted a set of voluntary principles on human rights and security, which are now core to the working practices of many of the companies concerned, although more needs to be done to strengthen their effectiveness in the Niger delta.
We are using our position with both the federal and state Governments and the oil majors to press for effective and comprehensive measures to re-establish stability in the region. We are further strengthening our consular protection and response to incidents involving British nationals in the delta, such as kidnappings. We have appointed an honorary consul in Warri and maintain our full-time consular office in Port Harcourt. We have overhauled our consular links with the oil majors and the British community and set up a rapid response team under the direction of the deputy high commissioner in Lagos to deal with problems as they arise.
We are considering how we can best help build NGO and civil society capacity to engage on energy and governance issues with the Nigerian authorities. We aim to support NGOs, academics, the media, faith-based organisations and the national and state assemblies to improve accountability, deal with corruption and make effective use of resources. We are also strengthening the hand of Nigeria's anti-corruption agencies. In particular, we are providing equipment for the Economic and Financial Crimes Commission and we are exploring support for the Independent Corrupt Practices and Other Related Offences Commission.
I am grateful to my hon. Friend for raising what is an enormously important issue not only for Nigeria but for Britain and the wider international community. It has given us an opportunity to focus on a problem that is, as he said, important for the future prosperity of Nigeria and for the future health of British interests there. There is no silver bullet, but the Government are committed to long and patient consensus building to reverse the terrible waste of resources and human effort in the delta region.
The problem of oil wealth among poor regions can be addressed if we bring together the various groups—oil majors, Governments and NGOs—that are interested in helping the delta to revive. In that way we can start to improve the situation. The British Government are committed to our part in the process, but success is dependent on others playing their part. We hope and believe that it is possible for them to do so, and I am grateful to my hon. Friend for raising the matter.
Question put and agreed to.
Adjourned accordingly at twenty-nine minutes past Four o'clock.