Eye on Africa

The happenings in the Middle East are not the only factors aggravating the ever-increasing costs of petroleum. Problems in Nigeria are also having an impact.It’s the classic African story. There is a country that is generally poor but resource rich. Foreign companies collude with the government to turn resources into cash. That cash becomes a great benefit, but only for a few. Those who were generally poor become even poorer as the cost of living rises. Decades pass, business is still booming, yet very little changes for the average person.

Within the past month, The Movement for the Emancipation of the Niger Delta (MEND), a militant activist group, has been actively expressing the frustration that vast numbers of Nigerians feel.

In April, MEND claimed to have blown up four pipelines in the span of a week. Shell, the largest oil producer in Nigeria, confirmed that it was the victim of three of those attacks. The company also reportedly stated that as a result it may not be able to immediately meet its production obligations. Following these incidents crude prices broke a record.

Last week was another busy one for Nigerian militants. They attacked an oil ship off the coast of Nigeria and took two hostages, one was American and one was Nigerian. They bombed oil wells belonging to Anglo-Dutch and they bombed a flow station in Bayelsa.

The result of MEND’s actions is that about ¼ of the 2million+ barrels per day have been eliminated from the world market. This has contributed to increasing prices around the globe.

MEND is not only sending a message to the international oil companies, it is also sending a message to the government. The Nigerian National Petroleum Company (NNPC), Nigeria’s state owned oil company, is the largest shareholder in joint petroleum ventures in the country. In the case of Shell, NNPC owns 55% of the company and Shell owns 30%.

MEND wants increased community control and revenue share of the oil industry and reparations for environmental damages and pollution. In the oil rich Niger Delta region, many people are not just living in poverty; they are living in abject poverty, without running water, electricity, or telephones.

However, militants are not the only people who have issues with Nigeria’s oil industry. At a conference yesterday, the Niger Delta Development Commission and the Nigeria Bar Association stated that communities should own and control both onshore and offshore oil deposits. The two organizations also believe that “there should be a review of all oil and gas laws, regulations and the Land Use Act as they affect ownership and participation.”

On April 26, a worker’s strike was planned at Exxon Mobile. Apparently, workers do not feel that they are getting their fair share either. Due to talks between the company and the union representing the workers, the strike did not take place but the possibility still looms, which produces fear that effects prices.

Oil accounts for 95% of Nigeria’s export revenue. Over 40% of oil produced in Nigeria is sold to the United States.

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