NIGERIA OIL PRODUCTION NEEDS PEACE AND STABILITY

Militants bombed a state-run oil pipeline in southern Nigeria Monday causing massive spills, in the latest attack on the country’s oil infrastructure. “The pipeline is operated by the Pipelines and Products Marketing Company (PPMC) at Batan near Warri. It was blown up early yesterday as reported by the AFP early today. PPMC is a subsidiary of the Nigerian National Petroleum Corporation, which runs a joint venture with Shell, Chevron and Exxon, Italy’s Eni and France’s Total. Nigeria’s oil-producing Niger delta is sliding back into turmoil, with profound ramifications for national cohesion.

AFP reports that the pipeline was repaired only recently after it was bombed last month. The latest attack had caused “massive spills of crude in the area”, said the AFP who called on the authorities to launch a clean-up.

NNPC has no comments so far and our contacts in Nigeria were not able to comment. We can assume that the Niger Delta Avengers (NDA) is probably responsible as they have claimed a wave of bombings of oil and gas facilities since the beginning of the year.

These repetitive attacks have reduced output at a time when Nigeria is struggling with low global crude prices which have hammered government revenues, weakening the country’s naira currency and pushing up inflation to near 11-year highs. The militants want oil majors to leave the Niger delta, blaming them for contributing to widespread poverty and under-development of the region. The group also wants self-determination for the oil-producing states in the delta region and political autonomy. NDA insurgent group has succeeded in cutting oil production by between a quarter and a third for much of this year according to FGE (https://www.fgenergy.com/) .

This is the latest incident of a conflict that has flared regularly for the past 20 years. Militants demand a greater share of revenues for the region that produces the oil.

The 2016 incidents could have major repercussions for Nigeria because of a combination of problems:

low price environment that does destabilized the overall economy of Nigeria that rely on oil to supply two-thirds of government revenue. The country needs every drop now, while it makes the transition to a more productive economy, less dependent on crude.

Africa’s largest economy is already in the midst of its worst crisis in generations. The treasury has lost half its revenues to the falling price. Further cuts as a result of oil production losses threaten the state, raising questions not only about the government’s ability to finance infrastructure plans but also to face ongoing operations.

In the North, the Nigerian army is fighting Boko Haram extremists in the north, arbitrate tribal violence in the center and now fighting the “Niger Delta Avengers” in the south. This is too much for a State fighting to get out of poverty.

Mistrust is growing toward President Muhammadu Buhari government and this is not good news. Ultimately, Nigeria’s economy needs to be restructured. In the past 50 years, the federal government has obtained its funding from in drilling in what of the poorest region and use the money to share around the rest. The Government is now facing a revolt and they need to find a solution.

the Niger delta needs a viable economic master plan with a real accountability from the Government and not mere promises that are not always respected.

In addition, with repetitive major oil spills and several environmental disasters due to oil production, a real environmental strategy is urgent. Nigeria needs help and quickly.

The United Nations need to negotiate a deal and monitor implementation to establish a new climate of trust and confidence before the large oil companies leave and abandon the region.