Nigeria Oil Clashes Threaten Production in Challenge to Jonathan

A surge of violence in Nigeria’s delta region is threatening output in Africa’s biggest oil producer and may thwart President Goodluck Jonathan’s ambition to win next year’s election.

A year after thousands of fighters laid down their arms under a government amnesty program, militants this month struck an Exxon Mobil Corp. offshore platform, Afren Plc’s shallow water field and a pipeline supplying crude to two refineries. They also clashed with government troops and vowed more raids.

“Any increase in violence is likely to affect oil output,” Mark Schroeder, director of Africa analysis at Strategic Forecasting Inc., an Austin, Texas-based global intelligence group, said in a telephone interview. “And the impact of that is felt not only in the country but globally in terms of higher oil prices, even here in the U.S.”

The attacks have undermined the ability of Jonathan, 53, the nation’s first leader from the Niger River delta, to guarantee security for an industry that is the fifth-biggest source of U.S. crude imports and provides 80 percent of government revenue. Total SA, Europe’s third-largest oil company, said it may consider quitting the region if the violence worsens.

“The easiest solution is to say that each time we are confronted with a security problem we should leave, but then there won’t be any more oil,” Total Chief Executive Officer Christophe de Margerie said at an investor conference in Paris on Nov. 19. “If it gets worse, we may have to leave.”

Photographer: Andrew Harrer/Bloomberg

A surge of violence in Nigeria ’s delta region is threatening output in Africa’s biggest oil producer and may thwart President Goodluck Jonathan’s ambition to win next year’s election. Close

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Photographer: Andrew Harrer/Bloomberg

A surge of violence in Nigeria ’s delta region is threatening output in Africa’s biggest oil producer and may thwart President Goodluck Jonathan’s ambition to win next year’s election.

OPEC Producer

More than 90 percent of the country’s oil is pumped by Irving, Texas-based Exxon Mobil, The Hague-based Royal Dutch Shell Plc, Chevron Corp. of San Ramon, California, Total and Rome’s Eni SpA in joint ventures with state-owned Nigerian National Petroleum Corp. in Abuja, according to the Petroleum Ministry. Afren, a U.K. oil and gas explorer focused on West Africa, is based in London.

Nigeria was the seventh-biggest producer in the Organization of Petroleum Exporting Countries as of October, with output of about 2.05 million barrels a day.

Shell doesn’t “speculate or comment on security issues,” said spokesman Precious Okolobo by phone in Lagos.

This month’s attacks were claimed by the Movement for the Emancipation of the Niger Delta (MEND), the main group responsible for Nigeria’s oil output being cut by more than 28 percent between 2006 and 2009. The organization says the region’s resources should be exclusively controlled by the people of the delta, who would then pay taxes to the national government.

‘Major Operation’

“In the coming weeks, MEND will launch a major operation that will simultaneously affect oil facilities across the Niger Delta,” MEND spokesman Jomo Gbomo said in a Nov. 16 e-mailed statement.

Jonathan, an ethnic Ijaw like most of MEND’s fighters, responded by ordering the army to take the offensive. The military task force in charge of security in the region raided rebel camps on Nov. 17 and freed 19 hostages, including two Americans, two French nationals, two Indonesians and a Canadian, and 12 Nigerians seized in the recent attacks. The military said it arrested 60 militants responsible for the abductions.

MEND announced its return to violence with two bomb blasts that killed 12 people in the capital, Abuja, on Oct. 1, as Nigeria celebrated 50 years of independence from the U.K. A day later, South African police arrested Henry Okah, whom the Nigerian government says is the leader of the militant group.

‘Extreme Deprivation’

The political ascent of Jonathan, a southern Christian, was partly spurred by the insurrection in the delta, according to Schroeder. The Ijaws and other ethnic minorities in the area say they are oppressed by central governments working with international oil companies in a region that the United Nations Development Programme said suffers from “extreme deprivation.”

“In many cases, the conditions of rural communities where crude oil is produced are deplorable, with severe environmental degradation, and no access to safe drinking water, electricity and roads,” UNDP said in a 2006 report. “The results have been disillusionment, frustration about their increasing deprivation and deep-rooted mistrust.”

Jonathan, who was chosen as vice president in 2007, became president after his predecessor, northern Muslim Umaru Yar’Adua, died in May. His decision to run for the presidency is contrary to an unwritten agreement in the ruling People’s Democratic Party to rotate the office between the mainly Muslim north and the predominantly Christian south.

Northern Opposition

Opposition to his candidacy by party members from the north prompted the choice of former Vice President Atiku Abubakar to run against Jonathan in the PDP party primaries next year.

Jonathan can’t “afford to be seen to be weak,” Bergen Risk Solutions, a Fantoft, Norway-based risk adviser specializing in Nigeria’s oil region, said in a Nov. 24 note to clients. “These factors undoubtedly shaped Jonathan’s decision to unleash” the military “on his ethnic brethren in the delta.”

Jonathan had assumed that since he is from the Niger delta, his presidency would assuage grievances in the region, Anyakwee Nsirimovu, a member of a government committee that recommended amnesty for militants, said by phone from Port Harcourt.

“Jonathan is confusing his presidency with the solution to the Niger delta problem,” he said.

Nigerian presidency spokesman Ima Niboro didn’t answer calls on his mobile phone seeking comment.

The government has put more emphasis on giving fighters money to lay down their arms, known as “settling” in Nigeria, than tackling the development problems and the social crises that sparked the unrest, Godwin Ojo, a director of Environmental Rights Action, the Nigerian affiliate of Friends of the Earth, said by phone from the southern city of Benin.

“People will always be left out and they will surely fight to be settled, they will fight to be recognized,” he said. “That’s what is happening now.”

To contact the reporter on this story: Dulue Mbachu in Abuja at dmbachu@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.

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