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ENERGY TECH
Nigeria faces specter of new oil violence

disclaimer: image is for illustration purposes only
by Staff Writers
Abuja, Nigeria (UPI) Jul 8, 2010
Recent attacks on two cargo ships off Nigeria's oil-rich Niger Delta and a resurgence of kidnappings has stirred fears the oil industry in the south faces a renewed insurgency that has slashed production by one-third.

But the country's new president, Goodluck Jonathan, a southerner himself, is making a determined effort to head off a new explosion of violence in the oil fields at a time when the West African nation faces a cascade of crises.

What happens in Nigeria, Africa's most populous nation and its second largest oil producer, is important not only for the continent, but also to the United States which imports much of Nigeria's oil output.

So how events play out in the oil industry will largely determine where the country is headed.

In May 2005, as the country struggled to find its feet after a 15-year military dictatorship that ended in 1999, there were fears the army might move in again. The CIA warned that a coup could cause the country to collapse and bring down much of West Africa with it.

Nigeria rode out that crisis but it was plunged into political turmoil again by the May 5 death of President Umaru Yar'Adua, a northerner, after a lengthy, and somewhat mysterious, illness. Jonathan, his vice president, succeeded him.

He is now caught up a power struggle between Nigeria's power barons in the overwhelmingly Muslim north and the Christian-dominated south as the country heads for a potentially divisive presidential election in 2011.

But if he can save the oilfields, Nigeria's main source of revenue, from another potentially crippling insurgency in the south through a badly battered peace process launched by Yar'Adua in 2009 he has a chance of being elected.

On Tuesday, the state-owned Nigerian National Petroleum Corp. announced a $25 billion agreement with China to build three oil refineries that will help solve chronic fuel and electricity shortages.

Nigeria, for all its oil wealth, has to import 60 percent of its fuel and refined products because its four existing refineries, with a combined capacity of 445,000 barrels per day, operate at less than 30 percent of that capacity. The new refineries will add capacity of 855,000 bpd.

But the Texas security consultancy Stratfor noted that "constructing new refineries will take several years at a minimum, meaning that substantial new refining capacity will not be brought on line before 2015, even if the deals go through."

Still, that could help Jonathan get elected. He hasn't announced he will run but the string of major public works projects he has unveiled since taking over the presidency indicate he will.

While these projects will take years to complete, ending the 4-year insurgency in the oil zones could produce faster results.

Last week's seaborne attacks, in which one seaman was killed and several briefly held captive, were a grim reminder that a rebel threat to renew and escalate the insurgency cannot be ignored.

Hundreds of oil workers, foreign and local, have been kidnapped for ransom in the delta since 2006. This was later extended to Nigerian politicians and their families.

Abductions have been on the upswing since the peace process collapsed due to Yar'Adua illness.

Oil companies spend millions of dollars a year on security. The wholesale theft of oil from pipelines at one point was so extensive it was costing the state around $1 billion a month in lost revenue.

The main rebel faction is the Movement for the Emancipation of the Niger Delta, which seeks a more equitable share for the region's impoverished Ijaw tribes of the oil wealth that is plundered by a corruption-plagued political establishment.

Mend called off a cease-fire Jan. 30 and threatened to renew the violence if its demands weren't met. Jonathan has fast-tracked the government's amnesty program after deadly car bombings.

Training programs for the thousands of rebels who surrendered their weapons under the amnesty program have been revived. The former insurgents are also being paid government stipends to keep them quiet.

"In addition to his powers of patronage as president, Jonathan can use his credentials as an ethnic Ijaw from the Niger Delta to rein in militants and present a picture of energy stability to domestic and international audiences," Stratfor said.

But time isn't on his side.



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