Issue 144 - 1 August 2008

Stability in the Niger Delta holds the key to so many people’s problems

It was not just his much-vaunted commitment to African development that led Gordon Brown to offer already overstretched UK forces’ support for President Umaru Musa Yar’Adua’s efforts to stabilise the Niger Delta. Brown signalled that he might provide at least the sort of military training commitment that his predecessor Tony Blair used to such good effect in Sierra Leone. UK Ministry of Defence sources made clear their displeasure at the prospect of a new Nigerian involvement, but Brown seemed determined to participate in finding a solution to one of Africa’s – and the global oil market’s – most intractable problems.

Whitehall sources told African Energy that a beleaguered Brown returned more ashen-faced than ever from the 22 June International Energy Conference of petroleum producers and consumers, convened in Jeddah by King Abdullah Bin Abdelaziz Al-Saud, having realised that Saudi Arabia and other ‘allies’ were not going to significantly raise output to force down oil prices. The British PM – ever a hands-on workaholic – set officials to work finding solutions to help bring down prices: bringing the Niger Delta’s 500,000 b/d-plus of shut-in output back on stream would make a major contribution.

Yar’Adua needs help to tackle the Delta, and asked London for support during his official visit earlier this month, notably for the introduction of a biomarker system to crack down on smuggling and the profiteers of what is now called “blood oil”. It is claimed that over 100,000 b/d of smuggled crude goes to the Movement for the Emancipation of the Niger Delta (MEND) and other elements to finance their hold on the Delta. But for a president that many Nigerians believe is ill and out of touch, it is questionable how well a British troop deployment, however benign, would go down in the Nation.

What Yar’Adua really needs is to convert his oft-stated commitment to resolving Niger Delta issues into reality. Already, he has lost his Delta negotiator appointed soon after Yar’Adua became president in May 2007. Vice President Goodluck Jonathan has the right Delta connections, but the former Bayelsa State governor has little traction in senior political circles. Jonathan is unlikely to deliver a deal, or indeed enjoy great political longevity. Abuja power-brokers have made it clear that Jonathan would not succeed were Yar’Adua’s term to end early. New political players are emerging in the Delta, such as Rivers State politician Annkio Opurum Briggs, who is working to convert young Ijaw militants into registered security consultants who might work for Shell rather than attacking it. But the region’s protagonists need structures and genuine goodwill to make things happen.

Meanwhile attacks continue. Royal Dutch Shell on 29 July declared force majeure on its July-September Bonny Light crude exports following an attack the previous day on its SPDC venture’s 130,000 b/d Nembe Creek trunk pipeline. Shell had only recently lifted its force majeure on the 225,000 b/d Bonga FPSO, whose attack by MEND showed the militants could now be a potent force in the deep water, as well as in the Delta’s creeks and swamps.

Nigeria’s ambitions to become a world-scale producer are hobbled by such incidents. Already, plans to raise crude output to 2.02m b/d by September have been put back, although output is rising again having slumped to around 1.2m b/d; Nigeria’s OPEC quota is 2.2m b/d. But it’s not all bad news, especially in the deep water. As Shell Nigeria was taking stock of its latest attack, operator Chevron said it expected the first oil from its much anticipated Agbami project finally to be dispatched in September. Chevron expects Agbami’s output to peak at 250,000 b/d.

Other major projects are coming on stream: ExxonMobil affiliate Mobil Producing Nigeria Unlimited on 29 July said its $1.3bn East Area Natural Gas Liquids II project was now recovering NGLs from OMLs 67, 68 and 70. Such projects can solve a lot of people’s energy problems, provided Abuja and its unhappy subjects in the Delta can broker a workable and sustainable political deal, with or without British military trainers.