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AP Worldstream: Major oil firms in Nigeria for the long haul, despite rising unrest

DANIEL BALINT-KURTI
Jan 30, 2006
Oil giants are likely to continue investing billions of dollars in Nigeria, even though a rash of recent militia attacks and kidnappings could mean violence is on the rise.
The past two months have seen militias blow up oil pipelines and launch attacks on two oil platforms run by Nigeria's main crude producer Royal Dutch Shell. Armed gangs also robbed two oil companies last week, making their getaway in speedboats.
Four foreign oil workers were kidnapped and held for nearly three weeks until their release Monday. It was the second-longest kidnapping during over a decade of unrest in the Niger delta area, where poor local communities complain they get little benefit from the oil riches flowing from their land.
Much of the violence, though, appears less political than criminal. Gangs who tap into pipelines steal tens of thousands of barrels a crude a day. The oil thieves may be getting bolder as their illicit wealth allows them to buy more and more weapons.
Rights campaigner Demieari Von Kemedi in the delta city of Port Harcourt says top Nigerian power brokers and security forces collaborate with the oil thieves. Although the Nigerian government has denied allegations of collaboration, two top navy officials were court-martialed last year for involvement in oil theft.
Another reason for the recent upsurge in attacks may be reaction to renewed government determination to quell unrest. Nigerian President Olusegun Obasanjo has declared that “stability will be returned to the oil region.”
The arrest in September on treason charges of Mujahid Dokubo-Asari, the delta's most prominent militia leader, marked the start of a new crackdown on breakaway groups. Dokubo-Asari's campaign for independence for the over 8 million Ijaws that dominate the Niger delta is fueled in part by complaints that southerners see too little benefit from oil.
Another prominent Ijaw, Diepreye Alamieyeseigha, also was recently jailed. Alamieyeseigha is a former Bayelsa state governor who fled money laundering charges in Britain in November before being arrested in Nigeria. Alamieyeseigha is a member of Obasanjo's ruling party, but had increasingly found himself at odds with the president over demands that the Ijaw get a greater share of oil revenues.
Dokubo-Asari and Alamieyeseigha both were seen as conduits of funds to militant groups. Their arrests may have dried up the flow of cash, angering militants.
The recent attacks forced Shell to shut down nearly 10 percent of the OPEC member nation's 2.5 million barrels-per-day oil output and evacuate over 300 workers. However, company spokesman Andy Corrigan said that Shell “expects to continue to be a major player in Nigeria in the years to come.”
Unrest here, together with worries over the nuclear standoff in Iran, have been pressuring world oil prices upward. At a time of high prices and diminishing reserves, Nigerian oil blocks remain attractive, said Antony Goldman, Africa analyst at London-based oil consultancy Clearwater Research.
“Nigeria, for all its difficulties, offers quite a bit,” Goldman said, citing the country's expanding oil production capacity and the rapid growth of the natural gas industry.
Nigeria has the world's seventh largest proven reserves of natural gas. It is the fifth largest provider of crude to the United States.
The major investments now are in deep offshore fields, considered much safer than the onshore facilities currently accounting for the bulk of Nigeria's oil. The newer projects are much further from the coast and harder for militants to reach.
Multi-billion-dollar investments by Anglo-Dutch Shell and ExxonMobil of the United States and others are likely to raise oil exports from just under 2.5 million barrels per day now to over 3 million by mid-2007, security conditions permitting, Goldman said. The Nigerian government aims to increase oil production to 4 million barrels per day by 2010.
Nontraditional partners, including China and India, have been striking huge deals in Nigeria's petroleum sector. Earlier this month, the China National Offshore Oil Corporation announced a US$2.27 billion acquisition of a share in an oil block.
Chronic poverty and oil pollution have stoked the delta's regular violence over the past decade. Peaceful dialogue took a blow in 1995, when writer Ken Saro-Wiwa and eight other activists from his Ogoni tribe were executed under the brutal regime of the late dictator Gen. Sani Abacha. They were hanged for the murder of four political rivals, but Saro-Wiwa's supporters say he was really targeted because he led protests against environmental damage by Shell.
Since then, there have been countless local community protests.
Abel Oshevire, a spokesman for the regional Delta state government, says that local authorities are trying to find a permanent solution by tackling key issues such as poverty and education. But the regional government needs to be given control of oil resources, and to have much more money, says Oshevire.
Critics say that, with 13 percent of oil revenues flowing back to them, oil-producing states have plenty of money, but that governors squander or steal it.
Rights campaigner Von Kemedi said he is worried the military may eventually step in. On previous occasions, the army has responded to the killing of security forces or government officials with “punitive raids,” in which villages are razed and dozens, even hundreds, massacred. Concern for the hostages most likely prevented a major crackdown this time around.

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