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Financial Times: Nigerian militants win oil drilling licence

Nigerian militants win oil drilling licence

By Dino Mahtani in Lagos
Published: May 19 2006 17:59 | Last updated: May 19 2006 17:59

Nigeria auctioned 17 new oil drilling licenses on Friday to companies from China, India, Britain and Nigeria, reserving one oil bloc for a company linked to militant activists in the turbulent delta region.


The auction is intended to follow up on a 2005 bidding round in the world’s eighth largest oil exporter that saw many winners default due to funding problems. Nigeria raised about $1.2bn in preliminary signing fees last year, less than half of what was originally promised, and a fraction of what is expected to be invested in the blocks.

A consortium of India’s ONGC and Mittal Steel should pay at least $100m in signature fees or down payments for two lucrative deep offshore blocs, while China’s CNPC secured four oil blocks – two of which are in the less explored Lake Chad basin – for $16m. Other bloc winners included Britain’s BG and Transcorp, a Nigerian conglomerate close to Olusegun Obasanjo, Nigeria’s president.

Both China and India won preferential rights on blocs in exchange for commitments to invest billions in Nigerian power plants, railway and refineries. Asian countries have thus been muscling in on Nigerian oil acreage, which up until now has mainly been the preserve of western multinationals.

Niger Delta United Ltd, a little known company senior oil ministry officials said was linked to “youth leaders” from the delta region, won one bloc in the delta region for $11m in return for promising to invest in local development. The term youth is a euphemism for militants in Nigeria where militant attacks this year against oil facilities belonging to Nigeria’s largest oil producer Shell have cut oil output by a fifth.

“This is resource control,” said Tony Chukwueke, director of Nigeria’s department of petroleum resources which organised the bidding round. “It is for economic emancipation and development to overcome this long outstanding complaint of neglect coming from the delta.”

Mr Chukwueke said that the company was backed by “youths” from the delta who attended a recent peace and security meeting with President Obasanjo in the capital Abuja. The meeting included members of FNDIC, a delta militant outfit that mobilised a bloody ethnic uprising in 2003 that shut 40 percent of Nigeria’s oil.

But the oil bloc could complicate the delta’s complex political environment. The Movement for the Emancipation of the Niger Delta (Mend), an opaque group claiming responsibility for this year’s attacks, has said the oil bloc “will help no one”.

FNDIC officials, meanwhile, have received oil servicing contracts from Shell.

Mend, which poses as a liberation movement for the delta’s majority tribe, the Ijaw, has been trying to urge local militant activists in the delta not to sell out to oil companies or the government. Shell officials are positive they will soon start repair operations on facilities destroyed this year, which are located mainly around communities loyal to FNDIC.

FNDIC have denied it is directly linked to the oil bloc. “It’s a good development but will not reflect the interests of the true agitators,” said Kingsley Otuaro, the group’s secretary general.

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