Wednesday, March 22, 2006

The Next Gulf

None of this is really very new, but it's important to keep it all in perspective. Nigeria provides 8% of US oil imports (it's the United States' 5th largest supplier) and is the largest oil producing nation in the Gulf of Guinea. Yet Nigeria's relationship to oil production rapidly careens toward disaster.

The Ogoni people of the Niger Delta, where virtually all of Nigeria's oil production is concentrated, have been in a long-term struggle with the oil companies (particularly Shell and it's Nigerian subsidiary) and with Nigeria's military and civilian governments to exert control over their ancestral land. Their demands have been relatively simple: ecosystem and mineral rights.

This struggle has become increasingly violent -- and sophisticated -- with a very large proportion of Nigeria's oil production lost either in spills or to bunkering (the siphoning of oil from pipelines for sale on the black market -- bunkering is a capital-intensive endeavor that would require the assistance of local and state government officials).

This Monday, the Italian oil group Agip confirmed an attack on its pipeline, leading to the loss of between 65,000 to 75,000 barrels per day. Forbes reports:
"Nigerian Agip Oil Company, a subsidiary of Italy's ENI in Nigeria, confirms that during the night of March 17, 2006 an act of sabotage occurred on the Tebidaba-Brass pipeline in the vicinity of Brass in the Niger Delta," the company said in an official statement.

"Production was immediately shut and the affected pipeline isolated. The situation is under control and operations have commenced to define the extent of the pipeline damage and contain any associated pollution," the text said.

World oil market prices climbed Monday on the news of the incident, but fell later as the markets sought to balance it against high crude stockpiles in the US.

The latest break in production will further dampen Nigeria's oil output, which has already seen a 20 pct slump since attacks started by Nigerian separatist rebels in the restive southern Delta, the country's oil producing heartland.
As of today (March 22), UPI was reporting the following:
Ongoing unrest in Nigeria's Delta State has slashed oil production there by 26 percent.

In 2005 the CIA ranked Nigeria as the world's 12th largest oil producer, pumping 2,451,000 barrels per day and with estimated reserves of 25 billion barrels.

Last weekend an explosion on the Tebidaba-Brass pipeline, owned by Italian multinational Nigeria Agip Oil Company, reduced the country's export capacity by 631,000 barrels a day.

The government subsequently deployed a number of gunboats to the Escravos naval base in Warri, Delta State. A multi-billion dollar Chevron Texaco natural gas project is situated in Escravos, along with a number of oil platforms and wells.

26% is a lot. And it's dangerous to US interests, given that it takes 3 weeks for Nigerian crude to ship to the US, and 8 weeks for it to ship from Saudi Arabia. Perhaps that's why I wasn't surprised to see this in Business in Africa Online:
The visiting Commander of the US Naval Forces in Europe, Admiral Henry "Harry" Ulrich, has pledged more "activity and visibility" by the US Navy in the Gulf of Guinea as a way of firming co-operation between America and nations of the region.

Admiral Ulrich arrived in Nigeria on Monday from Ghana, where he attended a conference between the Gulf of Guinea nations and the US on ways of securing the region, at the Kofi Annan Peacekeeping Institute in Accra.


"We aim to co-operate with the Gulf of Guinea nations on security. We have thousands of ships from the Gulf of Guinea to the US each year. We have interest in what they have and what they carry," Ulrich said.

"Also, a couple of thousands of ships come from the US to the Gulf of Guinea, and across to the Far East. So, all nations have vested interest in knowing the history of ships plying the region and what they carry. We have to work together to share information. We are looking forward to recommendations on the way forward," he added.

Admiral Ulrich also confirmed that the US has two ships in the region - one in Accra, Ghana and the other in Congo - to help the region's navies in "terrorism training". [emphasis mine]
Neither was I surprised when I saw that John Negroponte, the US Intelligence czar, had this to say about President Olusegun Obasanjo's efforts to insert the possibility of a 3rd term in the current round of constitutional reforms (Economist, February 25):
Oil firms and western governments, including the Americans, are watching nervously. This month John Negroponte, the overall head of America's intelligence services, said that if Mr Obasanjo stayed on he might "unleash major turmoil and conflict" that could lead to a "disruption of oil supply, secessionist moves by regional governments, major refugee flows, and instability elsewhere in west Africa". Mr Obasanjo likes to parade himself abroad as a peace-loving democrat and yearns to inherit the mantle of Africa's leading elder statesman, Nelson Mandela. If so, he should promise not to run again.
Authoritarian government, single commodity economy, US dependence on oil, massive local poverty, and the threat of religious extremism. Sounds promising.

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