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Nigeria’s Production Woes Could Worsen


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The Wall Street Journal: Nigeria’s Production Woes Could Worsen

May 10, 2008; Page A6

LONDON — The recent slump in Nigeria’s oil output may have been disastrous for Africa’s largest oil producer, but problems could worsen.

In a recent email to journalists, the Movement for the Emancipation of the Niger Delta — the group that claims credit for most of the attacks on crude-oil facilities in Africa’s largest producing country — said it will step up its campaign against the oil companies. MEND says its action is intended to force the government to remit more centrally controlled oil funds to their impoverished region.

In April, striking Exxon Mobil Corp. workers and a wave of attacks on oil infrastructure by militant groups knocked more than half of the nation’s quota for the Organization of Petroleum Exporting Countries — 2.16-million-barrels-a-day. That contributed to propelling the Nymex light sweet crude-oil contract above $125 a barrel this week.

Attacks have increased significantly in southern Nigeria in recent weeks and damage to pipelines has forced Royal Dutch Shell PLC’s Nigerian joint venture, Shell Petroleum Development Corp., to hold back more than 160,000 barrels a day from its Bonny Light oilfield.

When asked if Shell was concerned about escalation of security issues and the short-term outlook for production from the chief oil producing region, the Niger Delta, Rainer Winzenried, head of global media relations said, “We are engaging government on these issues and we remain hopeful of a quick resolution.” Mr. Winzenried added that despite the challenges, his company continues to explore “how it can conduct its business in a more effective manner thereby contributing more substantially, to the socio-economic development of the country.”

Previously as an emergency measure, state-owned Nigerian National Petroleum Corp. allocated additional monthly cargoes to smaller production facilities to counterbalance lost production from bigger fields such as Bonny.

“What the government is doing is increasing surveillance to try and prevent these attacks,” Odein Ajumogobia, Nigeria’s minister of state for energy, said.

The trial of Henry Okah, the man many believe to have been the leader of MEND, starts in June and is the second potential big threat to production. If found guilty of a treason charge, Mr. Okah faces the death penalty, a verdict that could ignite a new wave of violence.

Mr. Okah, who was arrested in Angola last year is also accused of procuring weapons for militants fighting the government in the Niger Delta, sabotaging oil installations, hostage-taking, piracy and killing foreign personnel, according to court filings.

A human-rights lawyer based in Abuja in Nigeria played down talk of unrest during the trial but said different political factions may seek to influence the verdict.

“Ordinary Nigerians are tired of the violence and this could actually help curb it, because I don’t think [Mr. Okah] has that same popular support as someone like Ateke Tom,” the lawyer said, referring to the leader of a rival militia group who remains at large despite a warrant for his arrest. Mr. Tom’s group, the Niger Delta Vigilante, predates MEND and was previously at the center of discussions with the government on restoring peace to the Niger Delta.

The third factor in the mix is the threat of further industrial action. The Exxon Mobil workers’ strike last month saw 800,000 barrels of crude a day taken out of the market overnight. “I could see the union’s strikes being repeated,” said Thomas Pearmain, analyst at Global Insight, adding that Royal Dutch Shell workers, the biggest group in the Delta, had also staged industrial action in the past.

“Working conditions were one of the main issues [for the Exxon Mobil strike] and if the security situation gets worse and workers feel unsafe doing their jobs, then I don’t think we’ve seen the end of industrial action,” Mr. Pearmain said.

Exxon Mobil declined to comment on the matter.

Write to Angela Henshall at [email protected] and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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