Houston Chronicle: New Nigerian strife raises uncertainties

'Quasi-permanent state' of violence in oil-rich delta
By LYNN J. COOK and GREGORY KATZ
Copyright 2006 Houston Chronicle
RESOURCES
Countries ranked by net crude oil exports in 2004:
Country Million barrels per day
1. Saudi Arabia 8.73
2. Russia 6.67
3. Norway 2.91
4. Iran 2.55
5. Venezuela 2.36
6. United Arab Emirates 2.33
7. Kuwait 2.20
8. Nigeria 2.19
9. Mexico 1.80
10. Algeria 1.68
Source: Energy Information Administration
A wild card rebel group has emerged from the swampy mangrove thickets of Nigeria's oil-rich delta region.
The Movement for the Emancipation of the Niger Delta has kidnapped oil workers — most recently nine Willbros employees, including three Americans — sabotaged pipelines and hobbled the flow of crude from Africa's top exporting nation. The militants may be new, but violence in Nigeria is not.
As the oil industry attempts to get a handle on what exactly this group wants, some experts are linking the violent streak to domestic political rivalries and jockeying for power as the mid-2007 presidential elections draw closer. Others worry that the militants have given up on the government entirely.
Abby Crawford, a geopolitical analyst in Washington with Strategic Forecasting, said the same spike in violence was seen before the 2003 election in Nigeria.
“It's more of the same in that sense,” she says. “What's uncertain about this period is that this group is an unknown commodity.”
In January the rebels kidnapped four foreign oil workers, including Houston resident Patrick Landry, from a Royal Dutch Shell oil project and held them for almost three weeks before releasing him. That's not much of a track record, though and Crawford says it's tough to determine whether the militants are after “money as usual or are looking for something completely different.”
Nigerian energy consultant Dapo Odesanya has listened for decades as locals complained about corrupt government officials frittering away oil revenues and multinational energy companies wrecking the environment.
“These are old battles, but there is a disturbing element this time,” he said. “I think they're totally disillusioned with the political process. Those involved seem absolutely determined to cause violence and embarrassment to the government as the only way to bring about change.”
Worries about oil supplies were one of the factors why crude oil jumped $1.22 to close at $61.10 per barrel on the New York Mercantile Exchange in the first day the market was open after this weekend's attacks.
New threats
The rebel movement, dubbed MEND, issued new threats this weekend, ranging from shanghaiing a Shell oil tanker and killing everyone on board to assassinating Nigerian President Olusegun Obasanjo if he enters the region.
The group has also called for international mediators to intervene in the current hostage situation, calling the Nigerian “fraudulent,” according to the Associated Press.
MEND also said it would welcome entreaties from the nine captives' families, a classic move kidnappers hope will bring international attention to their cause.
So far, those American families have remained steadfastly silent.
Odesanya laments what he sees as a tremendous step back for Nigeria's oil industry.
“It's tragic. At a time when there's every opportunity for Nigeria to become more prominent in the news as one of the last frontiers for petroleum and natural gas production, this sort of thing is particularly depressing,” he said.
Six months ago Nigeria seemed like a place where companies could finally calculate the risks and begin pouring in capital, said Odesanya, who works in Beijing with Chinese oil companies looking to invest in Africa.
“What's happened in the last three, four, five weeks have set things back a hell of a long way. It's one of those situations where I can't see the benefit for anyone.”
But Robert Mabro, director of the Institute for Energy Studies at Oxford, thinks this round of rebel activity could end as abruptly as it began.

“I see it as a quasi-permanent state of civil strife,” he said. “If there are … more abductions of personnel, one could reach a situation where the oil companies will have to pull out their men, but I don't know if we've reached that yet.”
For better or worse?
Whether oil is a blessing or a curse depends on the nation's population, according to Keith Myers, a fellow at London-based think tank Chatham House.
In a briefing on petroleum, poverty and security in Africa, Myers wrote: “For oil-rich countries with few people, the benefits are enormous,” pointing to rapidly modernizing Middle Eastern nations such as Qatar and the United Arab Emirates.
“For those with less oil but a huge population, such as Nigeria, it is a very different story.”
Put simply, Nigeria's oil wealth does not trickle down.
Few local jobs are created by oil projects while generating a volatile — and ultimately unsustainable — revenue stream for the government, according to Myers.
Toss in rampant smuggling and a government whose modus operandi has been corruption and it's like throwing fuel on the fire of resentment about how oil wealth is taken out of the Niger River Delta and squandered by far-flung politicians, said Manouchehr Takin, an oil analyst at the Center for Global Energy Studies in London.
“For years they had a very corrupt dictator as president, Sani Abacha, and an investigation has shown that billions of dollars were stolen. This has inflamed the situation,” he said, adding that government officials “always promise a more equal distribution of revenue, but they don't do it.”
Obasanjo is barred from seeking a third term in office, but he has hinted to the press in that country that he plans to alter the constitution and run again when the vote is held in mid-2007.
This has angered militiamen who accuse the president of rampant corruption and even raised the ire of some from within Obasanjo's own ranks — the People's Democratic Party.
Multinational energy companies, including Royal Dutch Shell, produce crude oil in Nigeria under joint ventures formed with the federal government. Experts say much of the money generated through these arrangements does, in fact, flow to government coffers, but it's not equitably distributed throughout the country.
“The Nigerian government has a 50 percent interest, and the profits come back in the form of grants to the states, and the state governors wield enormous power because they decide how to use the money,” said Dylan Hendrickson, an analyst with the International Policy Institute at King's College in London. “So many people feel excluded.”
The task of governing is made much more difficult by the incredible ethnic diversity of Nigeria, where more than 200 languages are spoken and tribal rivalries are intense.
The oil companies spend substantial amounts on “development grants” to schools, hospitals or water treatment projects in oil-producing regions, but in reality this money is paid directly to competing groups to try to keep everyone happy so that oil production can proceed, Hendrickson said.
“It's a very complicated balancing act to try to keep the different groups happy. The question is at what point does it stop being financially viable to operate there,” Hendrickson said. “Oil has been central to Nigeria's development, and some people would argue it's been a curse.
“When a poor country suddenly has all this wealth and is unable to use it effectively so that it benefits everyone, you have real problems.”
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Gregory Katz reported from London, while Lynn J. Cook reported from Houston.