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Worsening security makes restarting Nigerian oil wells risky

The Dallas Morning News

Worsening security makes restarting Nigerian oil wells risky

By Jim Landers 07:44 AM CDT on Tuesday, August 19, 2008 

WASHINGTON – While President Bush has concentrated on getting the Saudis to produce more oil, British Prime Minister Gordon Brown is trying to cool the oil-price fever by getting Nigeria to restart wells caught in a tangle of corruption and insurrection.

Mr. Brown went to Saudi Arabia’s oil summit last month to urge producers to open their markets to foreign investment. He also said Britain would “support Nigeria, Iraq and others seeking to overcome security constraints on increased production.”

Security is improving in Iraq, and oil production is starting to climb. The Iraqi Oil Ministry is negotiating with international companies such as Exxon Mobil Corp. and Royal Dutch Shell PLC about boosting production by a million barrels a day or more over the next couple of years.

Security in Nigeria’s oil sector is getting worse. Just before the Saudi meeting, a group calling itself the Movement for the Emancipation of the Niger Delta (MEND) attacked a Royal Dutch Shell floating production and storage vessel 65 miles off the Nigerian coast and knocked 200,000 barrels a day offline for five days.

That episode brought the total disruption in Nigerian production in June close to a million barrels a day, which analysts say is a big reason crude prices climbed above $145 a barrel.

Mr. Brown is planning to meet in London on July 17 with Nigerian President Umaru Yar’Adua, and British press reports say oilfield security will top the agenda.

The Nigerian leader appealed Monday to the G-8 leaders meeting in Japan, including Mr. Bush and Mr. Brown, to help his country dry up the multibillion-dollar trade in stolen oil. Mr. Yar’Adua compared such thefts to the traffic in “blood diamonds” that fed bloody civil wars in Sierra Leone and Liberia.

“Stolen crude should be treated like stolen diamonds because they both generate blood money,” he said.

Some critics say this “blood oil” is the reason Nigeria’s giant offshore oil fields are now facing attack.

“It’s a job for the Nigerian navy, and that’s the problem,” said Princeton Lyman, a former U.S. ambassador to Nigeria who is now with the Council on Foreign Relations. “The problem for the Nigerians is that there are too many people involved in the stealing of oil.”

Mr. Yar’Adua is trying to bring MEND and other parties to a truce table, but the rebel group is demanding the release of one of its leaders, who is about to go on trial for treason and gunrunning.

Militants have fought the government and the big oil companies in southern Nigeria for more than five years, ostensibly to get a better deal for Niger Delta residents who have seen little improvement in their quality of life despite the region’s abundant oil and natural gas production.

Greed has dissipated much of this revolutionary ardor. Many of the same people involved in kidnapping Western oil workers and blowing up pipelines are also running oil-theft rings.

“The corruption of the militias so that they’re in effect not rebels for their people but oil thieves cutting deals with local officials makes it extremely difficult to get the parties together to talk about a settlement,” Mr. Lyman said.

From a consumer’s perspective, it doesn’t much matter if both the rebels and the government are corrupted by oil money, as long as the oil reaches the global market.

But blood oil breeds violence.

The money finances arms purchases, and the competition between gangs for a piece of the action feeds oil-production sabotage. And these days, that weighs on the entire world oil market.

http://www.dallasnews.com/sharedcontent/dws/news/washington/jlanders/stories/DN-landers_08bus.ART0.State.Edition1.4d80ba1.html

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