The Independent: Nigeria's oil rebels fuel fears of global shortage: “…the oil world is in crisis. And Nigeria is no exception.”: “A Shell official, who asked not to be named, said essential supplies were being airlifted to staff still in the area.”: "The battle for oil has commenced in Nigeria. Many other countries are looking on nervously." (ShellNews.net)

A revolt in the African state is threatening to disrupt the country's most important export. Christian Allen Purefoy reports from Lagos on the latest conflict driving up the price of crude

Posted 30 September 2004

Scattered across the wetland, massive chimneys burn the natural gas emitted as a by-product of the Niger Delta's oil. Day and night since 1964 the black towers have spat bright orange flames 30m high.

They should be totems of prosperity; indicators that this chunk of Nigeria, by virtue of geographic good fortune, has tapped into a global industry that one might expect rewards producers of black gold with wealth and political stability.

Yet the oil world is in crisis. And Nigeria is no exception. The rebel Niger Delta People's Volunteer Force has threatened "all-out war on the Nigerian state" and ordered oil companies to shut operations by Friday, Nigeria's independence day. Foreign workers will be targeted, the rebel leader, Alhaji Mujahid Dukobo-Asari, has warned.

It is a bleak picture. Yet the cloud of doom also overshadows oil operations from Central America to the Caucasus. This week, after the murder of a Frenchman in Saudi Arabia, the world's largest oil producer, and the deteriorating situation in Nigeria, oil prices nudged record highs, past the $50-a-barrel mark. The gift of black gold, so prized by the United States in particular, is, for many in the Third World, becoming a curse.

With huge potential markets in China and India, there remains a deep thirst for oil, but present levels of production are thought to be sustainable for only 20 years, at most. A desperate scramble for an increasingly scarce resource threatens to become more explosive.

In Nigeria, a guerrilla war between rival gangs and government troops has been steadily gaining pace, now spilling on to the streets of Africa's oil capital, Port Harcourt. Amnesty International says more than 500 people have been killed in the past month.

Armed gangs, using the 3,000-odd rivers and creeks to manoeuvre and hide, are demanding more local control over resources. More local control means more wealth for the gang leaders, many of whom use cults and black magic to maintain support and fear.

The recent violence is their answer to a military crackdown on the gangs and has forced Shell to evacuate 250 non-essential staff from Soku and Ekulama, 30 miles from Port Harcourt. A Shell official, who asked not to be named, said essential supplies were being airlifted to staff still in the area. Production, he added, has not been affected, although Reuters reports that Shell has lost 30,000 to 40,000 barrels a day from the normal supply of a million barrels a day. A Shell spokeswoman, Precious Omuku, said: "The Santa Barbara flow-station, producing 28,000 barrels per day, has been shut because we are unable to get staff to rectify a technical problem."

The state spokesman Emma Okah said, with the army guarding the oil facilities, Dukobo-Asari "does not have the ability to do what he is promising", and that his "true intentions" are the oil thefts commonly known as "bunkering", and smuggling oil.

Last year, Shell reported 88 oil thefts, with about nine million barrels stolen; in 2002, only six million barrels were stolen. The unnamed Shell official described 2003 as "particularly bad year". Shell handles more than half of Nigeria's daily oil supply of about 2.5 million barrels. Rusted oil pipes snake through the third largest wetland in the world, which covers an area the size of Ireland. Where one had burst, the oil gushed several metres high, turning the river a thick brown colour. "Don't drink it and don't swim in it," Ken Clary, managing director of a new water treatment project, said. Further up the road, villagers were washing in the creek.

Beneath the rivers and mud, the Niger Delta accounts for oil reserves of 30 billion barrels of oil and 160 thousand billion cubic feet of gas. The light, "sweet" Nigerian crude oil is especially important to the US because it is easier to turn into petrol, making Nigeria the fifth-largest supplier of oil to the US. Estimates put 10 per cent of the UK's natural gas coming from the region in the next few years. The Energy Information Association (EIA) has recently put Nigeria as the third-highest revenue earner in Opec with $27bn in 2004, after Saudi Arabia and Iran.

The recent fighting is primarily between the government and Dukobo-Asari. He is demanding independence for the region's largest ethnic group, the Ijaws, who make up 70 per cent of the local population and have their own militias. But Captain Ogbonna Kanu, spokesman for the military, said the militias are simply "armed-gangsters fighting amongst themselves" for control of stolen oil.

Amnesty has linked these cults and terrorists, and called on the attention of "America and Britain, as the leading agents in the fight against terrorism, [to] the presence of advanced terrorists in Nigeria". Nigeria's Amnesty secretary, John Lar-Wisa, said the Nigerian government should clamp down on what he called communal violence by ethnic militia groups to prevent a worse security threat.

Last year, more than 1,000 people were killed in fighting between Ijaw militias, traditionally fishermen, and Itsekiri farmers through the region. During the worst of the violence in March, oil supply was cut by 40 per cent. Oil installations up to 30 miles offshore were evacuated with an estimated loss of $20m a day.

During the national elections last year, the two groups were fighting for control of the local government and its influence over the oil. With the military backing the Itsekiri, Dukobo-Asari accused President Olusegun Obasanjo of rigging the elections. The situation calmed, but for the past 18 months in the Warri region, militias have closed wells producing 140,000 barrels of oil a day. Could that happen in Port Harcourt? The battle for oil has commenced in Nigeria. Many other countries are looking on nervously.