BREACH OF CONTRACT: WHY SHELL MUST HONOUR ITS AGREEMENT WITH GLOBAL GAS AND REFINING LTD.

Contracts are the legal instruments that regulate the behaviour of individuals and parties in the corporate world. Developed societies have very high regard for contracts because it builds trust, makes for ease of doing business and reduce risks involved with investments.

Shell Petroleum Development Company (SPDC) is the pioneer leader of the Petroleum industry in Nigeria.

Shell is not only the leading energy company in Nigeria, the company is also a global brand with a presence in the most advanced economies in the world. Shell ought to know better about the sacrality of the contractual agreement and the imperativeness of their demands on implicated parties.

This background is necessary to adequately provide the premise for appraising an ongoing case between Shell Petroleum and Global Gas and Refining Ltd over a clear breach of contract. This case is not only placing Shell’s already questionable reputation at higher risk, but it also directly puts in the balance, her publicised core values of “HONESTY, INTEGRITY AND RESPECT FOR PEOPLE”.

The present crisis further casts doubts over Shell’s intentions for the Nigerian State and the Niger Delta in particular where the company does its businesses.

It is a direct aggressiveness on the Nigeria Oil and Gas Industry Content Development Act, 2010 (NOGICDA) that a company of Shell’s standing would go all out to callously disrespect a legal agreement it entered with an indigenous company.

According to the statement, Shell Nigeria entered a FIRST contract agreement with Global Gas and Refining Ltd, the content of which is for the company to capture all the gas that Shell flares. At the time, Nigeria was said to be responsible for up to 25% of global greenhouse gas emitted into the atmosphere, with Shell being a major contributor to that embarrassing percentage.

On the strength of that agreement, Global Gas and Refining  Ltd got about a hundred and fifty Nigerians to invest in the project. The company also went to the United States, got international investors and partners who provided funds for the project. In all, over half a billion dollars was invested.

A gas processing plant was soon established in preparation for the processing of gas.

All that was required of Shell Nigeria was to allow the company access to the gas they were flaring, for capture and processing to useful forms. This is a gas that is being wasted in the atmosphere while the local people pay heavily for cooking gas.

Global Gas and Refining Ltd got itself well equipped and prepared to capture those gas, channel to their gas processing equipment, and harness it to something useful for the good of Nigerians. But Shell has continued to renegade on its commitment to the company and would rather prefer that the masses suffer while gas continues to be flared. On both moral and legal grounds, there is no justification whatsoever for Shell’s strange and shocking behaviour.

Indeed, Shell’s present attitude seems to be a vindication of the Nigerian people’s opinion over the years that its interest in the area over the past half-century is simply to plunder, waste natural gas through flaring and make profit from their resources without a thought whatsoever for the deteriorating conditions of the people since Shell first stepped into their territory.

Global Gas and Refining Ltd, as part of it’s preparation for the project successfully laid a 24km Pipeline from Cawthorne channel all the way to Offshore Bonny River where there is an FPSO which cost over 68 million dollars to set up then.

The projected number of Nigerians to be employed if the company is at full operations is over 3,000. Yet, Shell has managed to frustrate that vision by its disrespect for the contract.

It is reported that one of the investors in the project is Argos Oil. It is the largest independent oil company in the Netherlands, where Shell is headquartered. The company put in over 200 million dollars in the project then.

According to the reports, before Argos Oil made the investment, they met with Shell at the Hague to ask about the authenticity of the project, to which Shell replied in the affirmative and gave all the assurances. Today, that money is hanging in the balance.

By the agreement, Shell is supposed to send over a hundred and twenty million cubit feet of wasting gas daily for processing by the company. But they would rather starve them of the gas and send just merely 5% or 10% of the expected total.

The company has said with all confidence that the power problem can be solved in Nigeria if the projects were allowed to take off in full capacity. It says Nigeria can generate over 100 megawatts of electricity that can guarantee an uninterrupted power supply for the country.

But Shell, which now appears to be serving the interest of certain cabals and fat cows in the system, would rather channel its gas to NLNG for export out of the country, while power plants and domestic factories are here in the country gasping for gas to function.

It is high time all relevant authorities who purport to be committed to the well-being of this country came hard on Shell and her cronies to do what is right and necessary. Shell must also be made aware that it has over the decades built an impression of distrust and dishonesty among the locals whose environment it has plundered over the years. Shell ought to do everything possible to rebuild confidence and trust among the locals before exiting Nigeria.

Frustrating an indigenous company that not only has a commendable intention of putting an end to gas flaring but also has the added goal of creating jobs for the locals is certainly not one of the ways to build trust and redeem one’s image.

The National Assembly and even the Presidency must now quickly get involved and prevail on Shell to respect its agreement with Global Gas and Refining Ltd.

Zik Gbemre. 

November 6, 2021  

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