from Africa in Transition

Recovery of Nigeria’s Oil Production Under Threat

October 27, 2016

Blog Post

More on:

Sub-Saharan Africa

Nigeria

Corruption

Wars and Conflict

Economics

According to the Nigeria National Petroleum Corporation (the state-owned oil company) Nigeria has the capacity to produce 2.5 million barrels of oil per day (bpd). At the beginning of the year, production stood at 2.2 million bpd. Under insurgent attacks on oil production infrastructure, it fell to 1.3 million bpd. With a pause in delta insurgent attacks on oil infrastructure, the administration now claims that oil production has recovered to 1.9 million bpd.

Oil production plays a crucial role in state finance, as more than 70 percent of government revenue comes from it. Nigeria is in an economic recession, in large part because of the fall in international oil and gas prices. Yet, the country faces enormous costs for the reconstruction of much of the northeast, where the security services have been fighting a war against the radical extremist movement Boko Haram. President Muhammadu Buhari has pleaded many times for the delta insurgents not to “destroy Nigeria” by attacking oil production. However, the insurgents are highly fragmented. All of the groups feed on the region’s desire for a greater share of the revenue its oil produces (the federal government disperses oil revenue to the states, most of which comes from production in the delta). But, insurgent groups are also criminal or quasi-criminal and battle each other for turf and influence. The Umaru Yar’Adua and Goodluck Jonathan administrations bought-off the insurgents by an “amnesty” that, among other things, included payments to war lords and foot soldiers. However, the amnesty established a dangerous precedent: new groups are encouraged to attack oil infrastructure unless, or until, they too benefit from federal government largess.

President Buhari is scheduled to meet with an umbrella of groups called the Pan-Niger Delta Forum (PANDEF) to start to address the region’s long standing grievances. PANDEF is led by Chief Edwin Clark, an old-line politician who has been federal commissioner for information. However, the Niger Delta Avengers (NDA) on October 23, threatened to resume its campaign against oil production should the president meet with PANDEF. Another group, the Urhobo Common Cause (UCC), also rejects PANDEF and accuses it of “internal colonialism perpetrated by the leadership” of Chief Clark. On the other hand, the Movement for the Emancipation of the Niger Delta (MEND), a major beneficiary of the amnesty endorses the dialogue between the president and PANDEF.

History (real or distorted) plays a role. A NDA spokesman said, “it is disgusting for President Muhammadu Buhari and his tribesmen to equate the revenue priorities of the Niger Delta region with regional comparisons to development in Nigeria. For crying out loud, since 1914 our resources have been the essence of this union called Nigeria before crude oil was discovered. The amalgamation of southern and northern Nigeria was for administrative convenience because the north was not viable economically.” (Buhari is a Muslim Hausa-Fulani from the north; most delta residents are Christians and are ethnically diverse.) Another NDA spokesman said that “no amount of military action would stop it from halting the flow of the oil from the region to sustain Nigeria,” according to media.

Hence, there is a real possibility that strikes on oil infrastructure will resume soon.

More on:

Sub-Saharan Africa

Nigeria

Corruption

Wars and Conflict

Economics

Up
Close