Oil Pirates Threaten Nigeria’s Move Toward Reform

The hardline anti-terror and anti-corruption stance of Nigeria’s new government, led by the recently elected Muhammadu Buhari, may be setting the stage for the resurgence of oil terrorism by another group of Nigeria’s internal enemies.

Oil terrorism precedes the rise of the radical Islamist group Boko Haram, and in the early 2000s focused on cashing in on Nigeria’s oil-rich Niger Delta at the state’s expense.

Groups such as the Movement for the Emancipation of the Niger Delta (or MEND) sequestered important oil refineries, reducing Nigeria’s petroleum output by half and cutting deeply into needed state revenues.

As a result, the Nigerian government granted amnesty to MEND in 2009 and started making regular payoffs, in exchange for cooperation and the ability to continue extracting and selling from Nigeria’s plentiful oil reserves.

Now, however, with resources allocated elsewhere, analysts warn that Nigeria may be due for another serious run-in with the oil pirates.

With its investment in counterinsurgency operations against Boko Haram, Nigeria may no longer be able to keep up payments to hold the oil pirates at bay.

Moreover, Buhari has made anti-corruption reform a leitmotiv of his administration, and critics are scrutinizing his every move to make sure he makes good on his promises. Payoffs to disreputable crooks assailing oil production would hardly be a positive sign for the regime.

Some analysts, such as RBC Capital Markets’ global head of commodity strategy Helima Croft, have cautioned investors that Nigeria’s oil industry might be hanging in the balance.

Croft said recently that the Buhari administration is currently “poised for a head-on collision” with some of the most notorious ex-leaders of MEND, while the security situation in the Niger Delta has taken a turn for the worse.

The Lagos High Court issued an arrest warrant for Nigeria’s former “most wanted man,” the ex-leader of MEND named Government Tompolo, after which the Nigerian military reported a string of attacks in the Niger Delta by “heavily armed assailants.”

At the same time, Nigeria is considering reclaiming block OPL 245 from Shell Oil and Italian Eni, which could put some 9 billion barrels of crude oil at risk.

The move is being proposed as part of an anticorruption crackdown, with Nigerian Justice Minister and Attorney General Abubakar Malami suggesting that Shell and Eni originally landed the block in an underhanded way.

If President Buhari accepts Malami’s recommendation, Shell and Eni could face billions of dollars in fines for allegedly bribing corrupt public officials as well as private citizens.

Follow Thomas D. Williams on Twitter @tdwilliamsrome


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