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The Times: Rich pickings for the poor of Nigeria

October 28, 2006
By Carl Mortished

Pipeline oil thefts, kidnappings and now the seizure of Shell’s pumping stations … just another crisis 
 
IS IT extortion or just everyday business? Youths from two villages in the eastern Niger Delta were yesterday occupying several oil pumping stations belonging to Shell Petroleum Development Company (SPDC). The protesters at Akulama and Belema want a contract to supply food to the oil platforms that operate in the adjacent swamps.

Negotiations continue and in the meantime, some 47,000 barrels per day of high-quality Nigerian crude is not flowing. That represents some $2.8 million per day in revenue forgone, a headache for Shell and, more importantly, a big loss for the Nigerian Government, which owns 55 per cent of SPDC and takes the lion’s share of the income from each barrel. 
 
This is a minor disturbance for Shell, compared with the violence that has shut down operations in the Western Delta for most of this year. Shell evacuated all its field staff and contractors after an armed uprising and a series of hostage-takings in which two contractors were killed.

Yet, the dispute over the contract contains the seeds of most of the problems experienced by Shell. A population of 27 million live in 3,000 communities in the wetlands of the Delta, surviving on fishing, subsistence farming and what they can extract from the oil industry. There is no other significant economic activity and the population is very young: some reckon half are under the age of 25.

The Nigerian Government has promised to step up investment in the Delta. After the death of the dictator Sani Abacha and the transition to democracy, the Government earmarked 13 per cent of oil reveneus for investment in the Delta region in an effort to make amends for decades of neglect. However, the Niger Delta Development Corporation has invested little infrastructure in the swamps, in part because it is difficult to build in the wetlands environment.

Frustration has erupted into violence and a rebel army, the Movement for the Emancipation of the Niger Delta, launched a campaign of sabotage and hostage-taking, forcing Shell to shut down the Forcados terminal earlier this year.

Shell responds with development projects, spending $32 million (£16.9 million) in the region on over a hundred schemes — education and training projects, micro-credit institutions, fish farms and youth schemes. However, it can be no more than a drop of good intention in an ocean of official mismanagement and corruption.

It is the daily struggle to generate cash that is insidious, the squabbling for supply contracts and the thieving of oil from pipelines, a practice known as bunkering, which reached a peak in 2004 when organised gangs were stealing 60,000 barrels per day, siphoning crude into barges and transferring it offshore to tankers for export.

In Nigeria, foreign oil companies have become their own victims, a mine or well in which local people dig or drill, until someone comes up with a better idea.
 
http://www.timesonline.co.uk/article/0,,5-2425383.html

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