West Africa’s reputation as a place to work in has never been that high in the eyes of many offshore oil and gas workers, particularly Nigeria. After a period of relative calm, recent events have put oil firms in Nigeria back on high alert.
A group, calling itself the Niger Delta Avengers, has claimed to be behind attacks on onshore and offshore infrastructure, as part of its aim to “liberate the Niger Delta people.” The moves have helped plunge Nigerian oil output to below 1.7 MMb/d for the first time since 1994.
Image: Shell's Bonga facility.
The group has called for the region to become a separate state and has says it has resorted to attacking oil and gas infrastructure to “zero” the Nigerian economy in a bid to make itself heard.
June 6, after the second attack on Forcados, when Shell was attempting to repair the damage done first time around, Shell said it will halt repair efforts due to the security threat posed.
On 18 May, Nigeria's oil minister Emmanuel Ibe Kachikwu reported that production had fallen 40% from 2.2 MMb/d to 1.4 MMb/d, the lowest level since the mid-1990s.
Another previously unknown group, the Red Egbesu Water Lions, issued its own seven-day ultimatum on 18 May, shortly after blowing up an Agip pipeline in Bayelsa, and also pledged allegiance to the NDA, says PGI.
The Niger Delta Avengers has threatened to attack Shell’s Bonga floating production facility and says anyone returning to damaged facilities to make repairs “does so at their own detriment.” The recent violence led Shell to evacuate non-essential staff from its offshore Eja facility this week. Chevron has also evacuated non-essential staff from several facilities across the region.
Samuel Stratford, a researcher at risk mitigation and crisis management firm AKE International, says the attack on Forcados was well planned and reportedly used military grade explosives and targeted a part of the pipe that is particularly hard to repair.
PGI Intelligence says the attack on the Forcados pipeline "demonstrated a high degree of technical capacity, given that it occurred at some distance from the shoreline and required deep-sea divers and sophisticated explosives."
What is happening? Stratford says: “In the 2000s, militancy paralyzed the Niger Delta region and, at times, cut Nigeria’s oil output by 50% and claimed over 1000 lives a year. Militancy was ended by a Presidential Amnesty Programme in 2009, which gave monthly stipends to former militants, as well as employment protecting oil pipelines and in some cases, schooling overseas. There have been infrequent incidents since (although oil theft has remained a huge issue), but the region started bubbling again around the previous election.”
The success of President Muhammadu Buhari, a northern Muslim, in March’s presidential election fueled growing tensions in the Christian-majority Delta. Former Movement for the Emancipation of the Niger Delta (MEND) and Niger Delta’s People’s Volunteer Force militants threatened to take up arms if their favored candidate Goodluck Jonathan was not re-elected, says Stratford. “Amid a growing economic crisis (low oil prices – oil accounts for 2/3 government revenue and around 90% of foreign exchange earnings) some amnesty payments were not met and there were some low-level attacks on oil facilities in 2015.
“Buhari came to power on an anti-corruption platform and soon affirmed his commitment to eradicating the Delta’s militancy and oil theft problems (in 2014 oil theft still caused a loss of upwards of US$200 million in spite of the programs and supposed peace),” continues Stratford. “Buhari also saw the amnesty program as a potential vehicle for corruption and a perverse incentive for militants to take up arms.”
Buhari created an exit plan for the program through gradual cuts that would culminate in a cessation of payments in 2018, says Straford. Cuts have already begun and while monthly payments are reportedly unaffected, some of the lucrative pipeline protection contracts have been cut. There is some confusion over the specifics of what has and hasn’t been cut, but adjustments have been made, says Stratford.
“Overall, however, the program was merely treating the symptoms rather than the illness,” he says. “It successfully bought some degree of peace without bringing socio-economic development to the region. Thus, the same grievances (economic neglect, underdevelopment, infrastructure shortages, a multitude of oil spills – some caused by business, others by pipeline vandalism and oil theft – continue to fuel discontent.
“Other motivations for violence have stemmed from allegations Buhari’s anti-corruption drive is unfairly targeting people from the region as well as the issuing of an arrest warrant for former militant commander Tompolo at the beginning of the year. However, Tompolo, along with a lot of other former militants, has himself distanced himself from the latest attacks and says violence isn’t a way forward.
“Whether this is to distance themselves to safeguard their own payments, or avoid incurring the wrath of the authorities (Tompolo, a former commander, is one such example of this I imagine), or just because they have had a change of heart, is up for debate and I would say there is a mixture and probably additional reasons.”
More attacks are almost a certainty, says Stratford. Buhari has promised to crush the militants and a heavy handed response is likely. Nigeria’s military has said it would “crush” the rebels, according to Bloomberg, a move that could serve to exacerbate tensions and almost certainly induce more violence, in turn likely leading to criticism of the Nigerian army’s actions, says Stratford.
PGI Intelligence agrees. It says Nigerian oil output will remain subject to major outages for at least the next 12 months. Its says the emergence of the Niger Delta Avengers, of which is little known, could indicate a new generation of militants in the Niger Delta, "with potentially long-term implications for Nigeria's oil and gas industry."
“Some groups in the region have sensibly warned against a heavy deployment of military personnel (the Ijaw Youth Council),” he says. “As a result of the army’s increasing involvement we could see violence shift from more targeted attacks on oil facilities (although these will still happen) to low-level clashes between militants and the army.”
The Niger Delta Avengers have also said they are prepared to extend their bombing campaign to Lagos and Abuja. However, it is unlikely that they have the capacity (or in reality the desire) to wage their guerrilla-style campaign beyond the Delta region, says Stratford.
Cities in the region may be targeted, however (the group has identified Port Harcourt), and guerrilla-style attacks within the region will likely persist over the coming year. But, it will be a priority for the government to bring the situation under some sort of control, given oil output is currently cut to at least a nine-year low, if not more, says Stratford.
Bloomberg says production is at a 20-year low, putting what was Africa’s largest oil producer behind Angola in terms of output. Bloomberg's data shows Nigerian oil production has fallen below 1.7 MMb/d for the first time since 1994.
The International Energy Agency estimated last month that Nigeria could lose an estimated $1 billion in revenue by May, when it expects repairs on Forcados to be completed.
“Low oil output will exacerbate the country’s financial crisis by reducing exports and thus foreign exchange earnings (dollar scarcity is already a major issue),” says Stratford. “Efforts to defeat the group, however, will be difficult as the army is currently stretched thin dealing with Boko Haram and the Fulani Herdsmen."
The Nigerian army said on 16 May it had arrested five members of the group in Tompolo’s home region of Gbaramatu, although it is unclear what evidence the arrests were based on, said PGI.
“Overall, the problems of the Niger Delta region will always be there until grievances are addressed through socio-economic development. However, given the country’s current economic malaise this is unlikely anytime soon.”
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