VZCZCXRO9956
PP RUEHPA
DE RUEHOS #0478/01 0930635
ZNY CCCCC ZZH
P 030635Z APR 06
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC PRIORITY 6905
INFO RUEHZK/ECOWAS COLLECTIVE PRIORITY
RUEHUJA/AMEMBASSY ABUJA PRIORITY 7109
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEAIIA/CIA WASHINGTON DC PRIORITY
RHEFDIA/DIA WASHINGTON DC PRIORITY
RUFOADA/JAC MOLESWORTH AFB UK PRIORITY
RUEKJCS/SECDEF WASHINGTON DC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 03 LAGOS 000478 
 
SIPDIS 
 
SIPDIS 
 
STATE PASS DOE FOR GPERSON AND CGAY 
TREASURY FOR ASEVERENS AND SRENENDER 
COMMERCE FOR KBURRESS 
STATE PASS TRANSPORTATION FOR MARAD 
STATE PASS USTR FOR ASST USTR SLISER 
STATE PASS USAID FOR GWEYNAND AND SLAWAETZ 
 
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. 
 
--------------------------------------------- -------- 
Chevron Worries about Deal Struck to Release Hostages 
--------------------------------------------- -------- 
 
¶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. 
 
---------------------------------- 
Production Impact Not Yet Critical 
---------------------------------- 
 
¶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. 
 
 
LAGOS 00000478  002 OF 003 
 
 
--------------------------------------------- ---------- 
New Managing Director is a Consolidator not an Expander 
--------------------------------------------- ---------- 
 
¶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. 
 
--------------------------------------------- -- 
Lack of State and Federal Capacity Hinder Plans 
for Long-Term Development 
--------------------------------------------- -- 
 
¶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. 
 
--------------------------------------------- - 
MacDonald Believes MEND has Impetus from Abuja 
--------------------------------------------- - 
 
¶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 
 
LAGOS 00000478  003 OF 003 
 
 
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