By Xin Li
February 9, 2006
Whenever blood is shed in Nigeria, the global economy feels the pain. On Jan. 11, a militia group calling itself Movement for the Emancipation of the Niger Delta (MEND) seized four Shell engineers and held them hostage for three weeks.
Armed forces attacked a flow station, killed several workers and cut Nigeria's oil exports by 10 percent. Shell removed more than 500 employees from the region.
It was just one among numerous attacks in Nigeria, the fifth-largest exporter of crude oil to the United States. In 1998, a military group from the Ijaw, the largest ethnic tribe in the southern oil-producing Niger Delta, stormed Shell pipelines and platforms, cutting off one-third of the country's oil exports.
Before Nigerian elections in 2003, an ethnic uprising shut off 40 percent of the country's oil exports.
More frequent are the daily incidents of sabotage of pipelines and platforms. From January to September 2004, there were 581 cases of pipeline vandalism in Nigeria, according to the Energy Information Administration, a U.S. agency that provides official statistics.
“We don't see an end to conflicts in the near future,” said Taylor B. Seybolt, an analyst at the U.S. Institute of Peace. “There is a host of problems entangled together, and we expect to see more violence coming.”
International oil companies, however, increase their investments despite the instability, and new players storm in. The China National Offshore Oil Corp. (CNOOC) struck a $2.27 billion deal with Nigeria in mid-January. Last year, companies controlled by South Korea won the auction of Nigeria's most promising oil and gas field.
The Nigerian government aims to increase oil output from 2.5 million barrels per day to 3 million by the end of the year and to 4 million in 2010. Its efforts are joined by the world's oil giants, most of which have operated in the country for decades — Exxon Mobil Corp., Chevron Corp., Total, and Shell Group, which generates nearly 50 percent of the nation's oil exports.
“There is too much profit for those companies to pull out,” Mr. Seybolt said.
The previously unknown MEND has adopted tactics different from the old pattern. It asked Shell to pay $1.5 billion to Bayelsa state, stop all oil exports and expel all foreign workers from the delta. It also demanded that the government release Mujahid Dokubo-Asari, a Niger Delta militia leader arrested in 2003.
“Usually, the oil companies end the attack by hiring several hundred local young people,” said Chris Albin-Lackey, a researcher on Nigeria at Human Rights Watch. “They don't really need these people to do any actual work, just hire the angry youth and pay them.”
Nigeria's government doesn't plan to increase its military presence in the turbulent delta because of its limited capabilities, Brig. Gen. Elias Zamani, commander of a task force charged with security in the region, told Britain's Financial Times newspaper.
Mr. Albin-Lackey, however, said the government is reluctant to push the militias too hard. “It is afraid that cracking down on the militias would ignite bigger conflicts, which would disrupt the country's oil production,” he said.
Nigeria's oil revenue accounts for 40 percent of the nation's gross domestic product and 76 percent of the federal government's revenue. Major violence would not only jeopardize the country's economy, but also shake the international energy market. A civil war in Nigeria could send the global oil price to $98 a barrel, said an investment consultant at the World Economic Forum in Davos last month.
Politics and fast cash
Rampant corruption at all levels also prevents the government from imposing order. Most military units enjoy close relations with federal and state government officials.
“Oil can be stolen on such a large scale that they have to use oil tankers to carry the oil out without people being caught,” Mr. Albin-Lackey said. “They must be connected with people in a position of influence.”
“You don't need to investigate too far to find corruption,” said Dimieari Von Kemedi, a Nigerian and the head of a nongovernmental organization called Our Niger Delta. “After only two or three months in power, officials have already begun their lives of luxury.”
Political figures use the armed forces as a lever of power. The connection provides immunity from punishment to most military leaders, except those criticized by the regime.
Vast proceeds from oil thefts enable militias to buy weapons. Sometimes the guns come from the police, who report such “losses” to the government to obtain replacements.
Additional weapons come from smuggling. Nigeria has become one of the world's busiest weapon-trafficking hubs. The seeds of revolt have been sowed in the public across the oil-producing delta, where resentment over poverty and degradation of the environment has been growing for years.
“Leaders of the militias are those able to motivate the angry youth,” Mr. Albin-Lackey said. “There has long been grievance, and it's totally legitimate.”
“The place can't be described by any word other than beautiful,” said Mr. Von Kemedi, describing Bayelsa, his home state. “It has islands, mango forest, rain forest, natural beaches. But, unfortunately, it has been negatively affected by the oil industry.”
The nine oil-containing states of southern Nigeria have been plagued for years by oil spills and air pollution. After a half-century of drilling, many pipes are leaky. Explosions occur now and then, and the frequent sabotage adds to the spills. Acid rain and toxic water damage fishing and farming, and pose great threats to the health of residents.
“There are high levels of skin rashes, allergies, abscesses and infections,” said George Ayittey, an economics professor at American University.
'Flaming' off the gas
Even as gasoline prices increase in the United States, Nigeria burns oil by-products 24 hours a day. The country lacks the facilities and the market to commercialize its natural gas. The “flaming,” which has lit up the sky for years, is the biggest source of the greenhouse effect in Africa.
The environmental mess comes with an absence of public services from the government. Sitting atop the world's ninth-largest concentration of oil, many ordinary Nigerians don't have basic necessities such as running water, electricity, health clinics and schools. The wealth from oil does not return to the land that produced it.
In Nigeria, which exports oil worth $30 million to $40 million per day, average personal income per year is $390. Poverty is on display alongside lavish spending. On one side of a city, one can't find much infrastructure, while the other side has rows of mansions and the luxury cars of corrupt officials.
The federal government has promised that 13 percent of oil revenues would be returned to the oil states, but most of the money seeps away through various level of officialdom.
“People don't expect the government to change,” Mr. Albin-Lackey said. “The oil companies are closer, easier to target and a more visible symbol of the problems.”
Mr. Ayittey said the government is too powerful for the militias to fight. So they pick the international oil companies as softer targets, which, having to pay royalties, shouldn't be held responsible for the slow local development and the lack of public services.
Shell began drilling in Nigeria in 1956, when it was still a British colony. Over the past 50 years, the company has become an icon of oil wealth to many Nigerians, and for most of the time, a quasi-governmental institution.
Dr. Mobolaji Aluko, an activist from Nigeria, said the oil companies fail to obey international standards of environmental protection and community development.
In 1993, after a massive spill in Ogoni state, local poet and activist Ken Saro-Wiwa began the Movement for the Survival of the Ogoni people and demanded $10 billion from Shell for environmental damage. On Nov. 10, 1995, he and eight Ogoni colleagues were executed by the Nigerian government for campaigning against the devastation of the delta by oil companies, prompting international condemnation.
The crisis prompted Shell to increase compensation and deliver more public services. But lacking any government follow-up, many of the projects fell apart.
“Shell built hospitals, but the government didn't provide doctors. It built schools, but there are no teachers,” Mr. Von Kemedi said.
What the oil companies can do, he said, is provide more employment in the Niger Delta to young people, who are qualified to work in the oil industry but see the jobs taken by people from outside.
“Young people simply want to find a place to work. The Nigerian government didn't invest in other sectors in the region, so jobs are not good in other industries. It's an equation of lack of jobs,” Mr. Von Kemedi said. “That creates an opening for young people to go [stealing oil] and creates the anger that challenges the oil industry.”
THE WASHINGTON TIMES: Oil unrest grips Nigeria