The New York Times: Renewed Violence Limits Oil Production in Nigerian Region

By JAD MOUAWAD
Published: May 14, 2007

The violence that has gripped Nigeria’s main oil region for the last year is again on the rise after weeks of an uneasy truce.

Tensions have flared up in the Niger Delta, the site of much of the country’s oil production, after deeply flawed presidential elections last month. Dozens of foreign oil workers have since been kidnapped, at least three pipelines blown up, several supply vessels attacked and oil production curtailed.

Chevron, one of the biggest producers in Nigeria, has begun evacuating hundreds of workers and suspending nonessential offshore activities in the after four workers were seized from a construction vessel last week. The company called the evacuations “a precautionary measure.”

Earlier in the week, Chevron shut down its Ebite flow station, which produces 42,000 barrels a day in the western part of the delta, and the Funiwa oil field, which produces 15,000 barrels a day, after six workers were abducted. Chevron pumps about 360,000 barrels a day in Nigeria, about 15 percent of the country’s capacity.

Chevron made its announcement as attacks on oil companies picked up again in the delta. The region had been quiet in recent weeks as Nigeria focused on presidential and gubernatorial elections. But according to international observers, the polls were marred by widespread irregularities, vote rigging and fraud. Ballot boxes were stolen, political activists killed and opposition leaders threatened.

Now, rebels are putting new pressure on the government, two weeks before the transfer of power on May 29 from President Olusegun Obasanjo to his handpicked successor, President-elect Umaru Yar’Adua.

In a separate incident, the Italian energy giant Eni declared a state of force majeure — an uncontrollable event that releases one from fulfilling a contractual obligation — for oil exports from its Brass terminal last week. Simultaneous attacks on its pipelines had forced the company to shut down 98,000 barrels a day of production.

About a quarter of Nigeria’s oil output, which typically totals about 2.5 million barrels a day, has been out since January 2006. Local armed groups have demanded that a bigger share of the country’s oil wealth be distributed to the Nigerian states where the oil is in fact produced.

The attacks, along with kidnappings of a nonpolitical nature, have helped force up world oil prices at a time when global supplies are constrained. Nigeria, the leading producer in Africa, is one of the largest suppliers of crude oil to the United States.

On Friday, next-month crude oil futures settled on the New York Mercantile Exchange at $62.37 a barrel, up nearly 1 percent.

The increase in violence could jeopardize plans by Royal Dutch Shell, the biggest oil producer in Nigeria, to restart production from its fields in the western part of the delta, which have been down for more than a year.

A leading rebel group, the Movement for the Emancipation of the Niger Delta, has pledged that it would renew attacks against pipelines, platforms and workers to halt oil exports.

“We promised to give the present Nigerian administration a shameful sendoff,” the group said in a statement on May 1 after a series of coordinated attacks on oil installations. “It is also a warning to the incoming government, which we view as an extension of the present. We will continue with our struggle for justice until we achieve all our goals without exception.”

The Nigerian government was also criticized last week for starting a new auction round for oil-exploration licenses, granting preferential rights to Chinese and Indian companies. The auctions have come under fire from advocates of corporate transparency who are critical of attempts to hand over politically favorable licenses shortly before Mr. Obasanjo leaves office.

The violence forced oil companies to bolster security and oil workers to hunker down in fortified compounds in the delta. But the measures seem to have had little effect.

So far this year, 93 foreigners have been kidnapped, including nearly 30 since the elections on April 21. The number of kidnapped workers already exceeds last year’s, when 80 foreigners were seized in the region. Most are released unharmed in exchange for ransom payments.

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