What's really at stake?

2009-12-21 11:17

Lagos - Nigerian militants said on Saturday they had carried out their first attack on an oil pipeline since an amnesty period ended in October because the absence of President Umaru Yar'Adua was delaying peace talks.

The Movement for the Emancipation of the Niger Delta (Mend) said its fighters, armed with rocket launchers and machineguns, carried out a "warning strike" against a Royal Dutch Shell or Chevron pipeline in Abonemma, Rivers state.

There was no independent confirmation of any attack from the military, oil firms or security contractors working in Africa's biggest oil and gas industry.

Following are some questions and answers on the Niger Delta.

What is at stake?

Politically, the amnesty programme and resulting lull in violence in the Niger Delta is seen in as one of relatively few significant achievements of President Umaru Yar'Adua's two and a half year-old administration.

Central Bank Governor Lamido Sanusi has said growth in sub-Saharan Africa's second biggest economy hinged largely on a solution being found to the unrest in the region.

The violence, which had included kidnappings, pipeline bombings and oilfield raids, was costing $1bn a month in lost oil revenues, the central bank has said.

The unrest over the past three years has prevented the OPEC member from pumping much above two thirds of its 3 million barrels per day installed capacity.

The insecurity has been a major deterrent to new investment.

Hundreds of foreign workers have been kidnapped, prompting companies in sectors ranging from energy to telecommunications and construction to withdraw non-essential staff.

Why is the Niger important for oil markets?

The Niger Delta, a network of thousands of shallow creeks opening into the Gulf of Guinea, is the heartland of Africa's biggest oil and gas industry.

The region's light crude oil is popular among US and European refineries as it can be easily processed into fuel products.

The US, the world's top energy consumer, has said it wants the Gulf of Guinea to supply a quarter of its crude oil imports by the middle of the next decade. China depends on Africa for some 30% of its oil imports.

Nigeria also holds the world's seventh largest proven gas reserves and supplies 10% of global liquefied natural gas.

Attacks on Nigeria's oil and gas infrastructure last year helped lift oil prices to record highs near $150 a barrel.

Which foreign oil companies operate in the Niger Delta?

US oil majors Exxon Mobil and Chevron, Royal Dutch Shell, Italy's Agip, and France's Total run major oil and gas operations with Nigeria's state-run NNPC in the Niger Delta.

Insecurity in the region had forced companies to shut down about 800 000 barrels a day of crude oil production.

Gas supplies have also been affected. Shell's Soku gas plant had been shut down for about a year before reopening in October, but closed again this week due to a pipeline leak.

Who are the militants?

The Movement for the Emancipation of the Niger Delta (Mend) is a nebulous group which emerged in late 2005 and has been responsible for pipeline bombings and kidnapping oil workers. It says it is fighting for greater local control of oil resources.

Mend launched a series of attacks in September 2008, dubbed a six-day "oil war", and carried out a raid on Royal Dutch Shell's Bonga platform 120 km offshore in June 2008.

But it has failed to carry out any attacks as spectacular as those of early 2006 when it knocked out almost a quarter of Nigerian output in a matter of weeks.

Its presumed leader, Henry Okah, accepted a presidential offer of amnesty in July after gun-running and treason charges against him were dropped and he was freed.

All the group's other known top field commanders also accepted amnesty by the October deadline, significantly weakening its operational capacity.

- Reuters