THE WALL STREET JOURNAL: Oil Fuels Unrest in Nigeria: “The demonstration forced Royal Dutch/Shell Group to evacuate staff and shut down production for a month, knocking out 10% of the company's oil output in the country.” (ShellNews.net) Posted 22 March 05
Seeking a Voice Ahead of 2007 Election,
Protesters Target Pumps
By SHAI OSTER
DOW JONES NEWSWIRES
March 21, 2005; Page A15
PORT HARCOURT, Nigeria -- Early in December, hundreds of unarmed villagers from the Kula community near here stormed three gleaming-metal flow stations pumping oil from the swamps of the Niger Delta to waiting tankers offshore.
The demonstration forced Royal Dutch/Shell Group to evacuate staff and shut down production for a month, knocking out 10% of the company's oil output in the country.
The organizers of the demonstration said they wanted more jobs, compensation for pollution, better housing and a link to a phone network. But they also were angling for a bigger platform on the national stage ahead of Nigeria's long run-up to elections in 2007.
"Kula was a test case," says Igbe Sara Igbe, a former security and finance adviser to the local governor and a leader of the Kula community. Speaking two months after the protest from a luxurious walled compound in Port Harcourt, Nigeria's oil capital, he says he is mobilizing support for a regionwide oil shutdown to force the government to accept a presidential candidate from the Delta.
Despite a relative calm that has descended on the oil-producing Delta in recent months, some who follow Nigerian politics here warn that presidential polls two years away already may be turning into a catalyst for a fresh round of organized disturbances targeting the oil industry.
Around the country, a form of campaigning is heating up for the country's top post, to be vacated by two-term President Olusegun Obasanjo. No leading candidate has emerged, but influential political and ethnic groups are jockeying for position with local tribes and powerful youth groups, many of them with violent histories.
The Delta region -- home to two-thirds of Nigeria's oil production -- is shaping up to be an early battlefield. Nigeria produces about 3% of the world's oil supply, mostly from the mangrove swamps of the Delta, making it the world's seventh-biggest exporter and an important provider to the U.S.
Nigerian Bonny Light, a grade of oil low in sulfur and easily refined into high-demand products such as gasoline and jet fuel, is among the most valuable grades in the world. A long-term disruption of these supplies could have a huge impact on oil prices and a world economy battered by rising energy costs.
Against this backdrop, U.S. dependence on West African oil is expected to grow because the region is seen as an alternative to the troubled Middle East. A stable Nigeria, sub-Saharan Africa's most populous country and biggest oil producer, is pivotal to that strategy.
All this makes oil-company installations here the perfect target for groups scrambling for more visibility ahead of the election-campaign season. "We are not ready to kill or destroy, but we must shut down the oil. If we do that, Nigeria will discuss with us," Mr. Sara Igbe says.
Trouble isn't new to the area. Long at the heart of the unrest is grinding poverty despite the resource wealth. About 60% of Nigerians live on less than a dollar a day, even as others profit hugely. Billions of dollars of oil revenue went missing under military rule and corruption remains endemic, diplomats and human-rights activists say.
Oil fields were threatened in the first elections after military rule in 1999. Fears of more clashes during the most recent elections in 2003 proved unfounded, but ethnic fighting forced Shell and the country's No. 2 producer, ChevronTexaco Corp., to abandon about 40% of their output that year.
Caught in the cross-fire are the oil companies -- for many Nigerians the closest symbol of authority. Shutting down production is the most effective way to broadcast a grievance. The biggest company here, Shell , pumps about a million barrels a day, half of Nigeria's output.
Some people say the oil companies share blame in the spiral of poverty as oil spills destroyed fishing and farming, and that the companies turn a blind eye to corruption. Oil company executives say they are improving their practices, and the government recently has tried to address some of the problems by steering more development money to the area.
But oil company executives also say much of the recent protesting is grandstanding and has nothing to do with real grievances against the companies themselves. "We're simply being used as a lightning rod to bring the attention of government to some perceived injustice," says Chris Finlayson, head of Shell's Africa operations.
Last year, the federal government sent in troops to quell fresh sectarian violence. A tentative truce agreed to in the autumn is holding sway for the time being, providing relative calm, but oil companies are bracing for more trouble.
---- Vincent Nwanma in Lagos contributed to this article.
Write to Shai Oster at shai.oster@dowjones.com
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