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[ID:59055 Cable dated:2006-04-03T06:35:00]
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C O N F I D E N T I A L SECTION 01 OF 03 LAGOS 000478

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E.O. 12958: DECL: 03/22/2016
TAGS: EPET, ENERG, ASEC, EAID, NI
SUBJECT: CHEVRON NIGERIA SEEKS LONG-TERM SOLUTION TO DELTA UNREST

Classified By: Ambassador John Campbell for reasons 1.4 (d) and (e).

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Summary
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1. (C) Chevron Nigeria security consultant Hamish MacDonald shared concerns that a large amount of money was paid for the release of the Delta hostages and an industry of hostage-taking may be in the offing. Chevron has managed thus far to stay out of harm’s way, but MacDonald feels the urgent need to expand internationally-supported, long-term development programs. He plans to discuss the matter privately with Delta State Governor Ibori. Chevron will be welcoming a new Managing Director, and, with his arrival, MacDonald expects Chevron to transition from an expansion mode to one of consolidation. End Summary.

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Chevron Worries about Deal Struck to Release Hostages
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2. (C) At a March 29 meeting with the Ambassador, Chevron security consultant Hamish MacDonald said Chevron was “blindsided” by the commitments made to effect the March 26 release of three hostages held by the Movement for the Emancipation of the Niger Delta (MEND). He said company sources indicated “a very large amount” of money had changed hands for this release, far more than in the release of hostages in January, and if true, we might be witnessing the birth of an industry. The Ambassador replied that the USG commitment remained strictly a willingness, at the invitation of the GON, to observe a newly created development commission that might include members of the aggrieved communities which harbor the hostage takers.

3. (C) MacDonald compared MEND to the IRA, noting its small size relative to its demonstrated ability seriously to disrupt oil operations, as well as its facility for manipulating the media. He felt MEND was targeting companies with poor community relations and business practices and, as such, Chevron still enjoyed an uneasy immunity from attacks.
Polcouns observed that both Willbros and Tidex had bad reputations among communities. MacDonald observed that Chevron was consequently rethinking its relationships with various contractors. He admitted that the oil companies did not have a uniform approach to the largest service companies which they all must use.

4. (C) MacDonald did not believe the military yet had the capacity to launch an effective retaliation against the Delta militants, and, he said, control over security forces was fragmented. He said since his arrival in Nigeria in 2003 there had been only very small increases in the military’s operational capacity. He felt National Security Advisor Aliyu Mohammed had his own agenda as well as a large measure of control over security forces. At the same time, MacDonald cherished his relationship with Chief of Army Staff Gen.
Agwai, who is close to the President and commonly believed to have a good handle on the issues behind Delta region unrest.
He said Chevron currently employs Agwai’s daughter through their youth employment program.

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Production Impact Not Yet Critical
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5. (C) MacDonald said that of the country’s 25-30% loss of total oil production, at least 15% could be restored within a couple weeks if the environment were secure. Chevron has so far only suffered one pipeline vandalism at Makaraba, affecting 13,000 barrels per day of production and relatively quick to fix. At the same time, he said, Chevron is still eyeing for the future a more complete resumption of its on-shore production, bringing up to 80,000 bpd back on-line.

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New Managing Director is a Consolidator not an Expander
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6. (C) MacDonald announced Fred Nelson would replace Jay Pryor as Managing Director of Chevron Nigeria by mid-May this year and that there would be a two-week overlap. Nelson was in Nigeria 8 years ago and so has some familiarity with the region. MacDonald called Nelson a “consolidator,” while Pryor had been concerned with growth and expansion. He expected Chevron to augment its relationship with the Federal Government in Abuja by increasing its office size there. As opposed to Shell, Chevron had traditionally maintained a very small presence in Abuja, with the effect of distancing itself from the purely political decision-makers. The Ambassador offered to invite Nelson for a country team briefing on his arrival in country, and MacDonald responded enthusiastically.

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Lack of State and Federal Capacity Hinder Plans for Long-Term Development
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7. (C) MacDonald stressed the importance of the Rivers State development model, spearheaded and partially financed by the State Governor and the Niger Delta Development Commission but with capacity-building support from the USG, HMG and the World Bank. He said state governments, while they did not lack funds for development, did not have the capacity to sustain development programs and would therefore need assistance. He agreed, though, the impetus for these programs had to come from the state governors and indicated Chevron would privately approach Delta State Governor James Ibori to initiate a similar program in his state. MacDonald stressed the private nature of the meeting, intimating Ibori’s reputation with the militants made any direct relationship with Chevron a difficult proposition. (Comment:
In comments to the press during the last hostage crisis, the Presidency likewise stated the Rivers State model, while good, is not enough and must be expanded to other states in the Delta region. End Comment.)

8. (C) MacDonald felt oil companies were being slow to develop a consensus among themselves as to how to respond to the current Delta crisis, and there is a reluctance to formulate a unified solution. The Ambassador noted the potential for the current series of meetings in Washington and London to play a role in such necessary coalition building.

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MacDonald Believes MEND has Impetus from Abuja
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9. (C) MacDonald insinuated Delta unrest had impetus from Abuja, observing that Vice President Atiku had lately appeared more relaxed and free to maneuver. He noted the convenient timing both of the hostage release and the re-capture of Charles Taylor in conjunction President Obasanjo’s visit to Washington. He felt Obasanjo was seeking a closer relationship with former head-of-state and notorious political fixer Ibrahim Babangida (IBB). His sources told him Obasanjo spoke with IBB on the phone for over an hour on March 26 and that IBB’s recent press interview, while bordering on announcing his candidacy for the presidency and opposition to a third term, left his options open.

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Comment
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10. (C) While upper-level management of the oil majors continues publicly to share the GON’s view of MEND and Delta unrest as essentially criminal rather than political in
nature, MacDonald’s view is different. Instead, his
proposed solutions include the immediate expansion of the

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Rivers State development initiative, added pressure on Delta region governors, beginning with Ibori, to follow suit, and improved cooperation and the building of a united front among the oil companies, and reflect his view that the issues are essentially political. End Comment.

11. (U) This cable was cleared by Embassy Abuja.
BROWNE