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Financial Times: Besieged oil industry has little hope Nigerian elections will bring relief

By Dino Mahtani in Abuja
Published: April 20 2007 03:00 | Last updated: April 20 2007 03:00

From where a group of haggard western oil workers are sitting in the gloomy environs of a half-empty bar in Port Harcourt, tomorrow’s presidential elections in Nigeria look unlikely to make life much safer.

For the last year they have lived with constant reports of gun-toting gangs kidnapping their colleagues for ransom and holding them in the surrounding swamps. Locked into gated compounds, they have also had to digest news of car-bomb attacks and a spate of violent robberies.

While oil companies have to pay ever higher premiums to man their operations in Nigeria, they are not about to leave. Many have been investing offshore, where installations are more secure. But for Royal Dutch Shell – traditionally Nigeria’s biggest producer, and also the most frequent victim of militant attacks – reserves onshore in the troubled delta region support its global share price.

While few expatriate oil workers have been killed, the steady collapse of law and order in Nigeria’s oil-producing delta has placed the industry under a state of virtual siege.

The country is preparing for what should be the first transfer of power from one civilian president to another. But as it does so, the vexed relationship between the government, the oil industry and the aggrieved communities from where oil is pumped is among the most pressing issues for Nigeria – and one of the most troubling for the US, which hopes to source 25 per cent of its oil imports from west Africa by 2015.

“None of us sees anything getting better . . . after elections,” says one contractor to a multinational oil company. “What we need”, he adds, “is a government of businessmen backed by a mercenary army.”

Many people in the region believe that is exactly what they already have. Young men have been taking up arms in growing numbers over the last decade in their own attempts to secure a share of the oil wealth they accuse federal government officials of embezzling.

Official and industry inquiries into the troubled zone have blamed local politicians for arming the region’s youth, and some members of the security forces for colluding with militia groups in the theft of crude oil from wellheads and pipelines.

While some of the militants believe they are fighting 50 years of underdevelopment and neglect, many more now do so to win relevance in Nigeria’s venal political system and simply escape from poverty and unemployment.

There were fears that the militants would use the election period to ramp up attacks on oil installations.

Early last year militant attacks shut down almost a quarter of the output in Africa’s top oil producer, shaking world oil markets and causing companies to evacuate hundreds of workers. But there have been no big attacks in recent months, although kidnappings have continued.

This is partly because officials from the ruling People’s Democratic party (PDP) have farmed out cash and contracts to leaders of local gangs in a bid to calm the area, militant leaders and security officials in the area have told the FT.

And militant bosses have used some of those cash handouts to consolidate their armouries, which include machine guns, rocket launchers and powerful boats.

“The boys may not attack now, but it’s not like they are disappearing. Either they are settled with constant cash payouts, or they start posing problems again,” says one oil industry security official.

The PDP won control of the delta in state elections last weekend that were marred by widespread rigging and intimidation.

Umaru Yar’Adua, a Muslim from Nigeria’s north and the PDP’s candidate to succeed Olusegun Obasanjo, outgoing president, has promised a “Marshall plan” to develop the region. Eight years ago Mr Obasanjo promised something similar.

But party insiders say perhaps more indicative of how an incoming PDP government might attempt to stabilise the area was the appointment as Mr Yar’ Adua’s running mate of Goodluck Jonathan. He is the outgoing governor of the oil-producing Bayelsa state and a member of the Ijaw, the delta’s principal ethnic group. Patronage, not the Marshall plan, may play the greater role in government policy in the delta.

Copyright The Financial Times Limited 2007

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