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Financial Times: Energy groups caught in delta conflict

By Dino Mahtani in Lagos
Published: January 31 2006 02:00 | Last updated: January 31 2006 02:00
An escalation of violence in Nigeria's turbulent oil-producing delta region has left multinational oil companies wondering how sustainable their presence is in Africa's biggest oil producer.
In spite of the release of four foreign hostages who were abducted this month from an offshore field operated by Royal Dutch Shell, Nigeria's largest producer, industry officials and security analysts fear more attacks on oil facilities.
A group calling itself the Movement for the Emancipation of the Niger Delta (MEND) has claimed credit for several operations since December. They include the abductions and attacks on export pipelines and other oil facilities, which forced Shell to cut a 10th of Nigeria's oil production. MEND has promised more attacks, in spite of the hostage releases.
Nigeria deployed thousands of soldiers to the Niger Delta after an uprising by the delta's majority ethnic group, the Ijaw, forced a 40 per cent cut in the country's oil production in the run-up to elections in 2003.
Oil facilities are already guarded by police specifically seconded to the multinationals that have ploughed billions of dollars into joint venture agreements with the Nigerian government. Additional troops were intended to beef up security on critical export terminals as well as prevent the illegal theft of crude oil from pipelines and oil wells.
But Nigeria's taskforce is underequipped to guarantee the safety of the waterways. Nowa Omoigui, who lectures at the National War College, says at least 200 patrol boats are needed to patrol the delta's 112,000 sq km effectively. Nigeria has barely 25 boats that are appropriate for use in the delta.
This month's attacks against Shell facilities in the western delta was also accompanied by attacks on an oil platform belonging to Italy's Agip and a seemingly opportunistic raid on the company's corporate offices in the eastern delta.
“It would take a massive deployment of resources and manpower to secure the entire delta. As well as this, hostage rescue capacity is just not there. It's not difficult to sabotage the system,” says Dr Omoigui.
The military's lack of grip over the delta is compounded by the uneasy alliances it has to forge with local armed gangs. Many of the gangs were armed during Nigeria's military rule to act as local strong men, and again by politicians looking to rig elections in 1999 and 2003.
Meanwhile, many such armed groups operate as cartels in the illegal theft of crude oil from pipelines, alongside international criminal syndicates. Some industry estimates say up to 100,000 barrels a day is stolen.
Some estimates put conflict in the delta on par with Chechnya and Colombia. But analysts say improvements to Nigeria's military capabilities would have to be introduced in tandem with political change to avoid the “high-intensity conflict” that could force multinationals offshore by 2008, as predicted by a report commissioned by Shell and leaked in 2004.
Ijaw leaders say the government has failed to tackle poverty among their people who straddle the oil wealth that is pumped from their tribal lands. Resentment against the government is intertwined with ill-feeling against oil companies whose land acquisition and hiring policies often fuel local conflict.
With many delta constituents still talking of rigging by security forces during the 2003 elections, oil companies are watching closely to see how Nigeria's ruling party handles its internal divisions in the run-up to polls in 2007.
A UK parliamentary committee that visited the delta late last year said the delta's “simmering tensions are likely to explode unless steps are taken to rectify the deep-seated causes of conflict”.

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