The Niger Delta's oil curse

Dec 17, 2004 01:00 AM

by Dudley Althaus

With sweat-drenched gym pants and T-shirt clinging to his bear-like body, one of the newer threats to world oil markets stood in the heart of this Nigerian slum, preaching rebellion to a receptive crowd.
"Why should you be suffering when there is so much money on this land?" asked Alhaji Mujahid Asari Dokubo, 40, the warlord of the moment in Nigeria's violence-racked oil patch. "This government is made up of thieves and liars and wicked people," he said in slow, precise English. "You are the weapon that God has lifted up against them."

Many people stay poor while a few take the wealth pumped from beneath, the warlord, called Asari, told the gathering. Pollution fouls the water, air and soil, he said, because neither the oil companies nor Nigeria's rulers wish it otherwise. It's time to change things, Asari said, with bloodshed if necessary.
In late September, Asari declared "total war" against oil workers, who are often caught in the cross hairs of local clashes. Thousands of foreigners, including Americans, toil in Nigeria. At least 300 Houston-area companies do business in the country, including 24 with Nigerian subsidiaries.

Although Asari did not follow through with the threat, agreeing instead to hold talks with Nigeria's president, oil prices spiked to more than $ 50 a barrel. In other times, in a different place, a man like Asari might remain irrelevant to the wider world. He commands probably a few hundred young fighters in a small patch of Niger Delta swampland.
But those coastal wetlands hold much of Nigeria's oil. And planners in Washington, London and Houston consider Nigeria a key to the world's future petroleum supplies. The problem is, instability plagues Nigeria. Systemic corruption and violence rooted in ethnic, religious and political conflicts continue to roil the country.
Nigeria "has never found a way to put all the pieces together in a fashion that would produce stability," said Marina Ottaway, an analyst with the Carnegie Endowment for International Peace in Washington, DC, who studies African politics.

With global oil supplies barely meeting demand and many oil-producing nations mired in crises, markets convulse at the slightest bad news. The Asaris of the world, appealing to local grudges, injustices and resentments, wield influence as seldom before.
An OPEC member, Nigeria is the world's seventh-largest oil producer.
Estimates of Nigeria's proved oil reserves: -- 25 bn barrels-35.2 bn barrels (OPEC)

Major customers(2003)
-- United States
-- Brazil
-- Spain
-- Indonesia
-- India
--Fifth-largest supplier of crude oil to US behind Saudi Arabia, Mexico, Canada, Venezuela

Crude oil exports
-- $ 20.9 bn (2003)
-- $ 16.5 bn (2002)

Corporations
The largest Houston-area companies operating in Nigeria include:
-- ConocoPhillips
-- Halliburton
-- Baker Hughes
-- BJ Services
-- Noble Corp.

Sources: US Energy Information Administration (DOE); CIA;
World Bank; UN Development Program; Oil and Gas Journal;
OPEC

"If the Niger Delta blows up, everybody suffers," said Judith Asuni, the US-born director of AA-PeaceWorks, an organization that helped broker the talks between Asari and the government. "While it looks like a local conflict, you have all these vested interests all over the world."
Multinational oil companies -- Shell, ChevronTexaco and ExxonMobil among them -- together have pumped billions of barrels of oil from the area since production began in 1957. Large new discoveries offshore and the still-abundant reserves of the delta mean Nigeria should be exporting petroleum for at least another 40 years.

Though it comprises about one-tenth of Nigeria's territory and population, the Niger Delta produces nearly all the country's petroleum, about 2.5 mm bpd. That's about 3 % of the 82 mm barrels of oil the world burns daily. An average of about 32,500 barrels of Nigeria's oil, about 1.3 % of its production, enters the Houston port each day.
The planners expect Nigeria, which supplies about 9 % of US energy needs, and its West Africa neighbours to produce up to 25 % of America's oil imports within a decade after offshore fields are developed. Nigeria will account for about half the amount. Billions of dollars in new investments are planned, including for plants to ship LNG to US ports.

Since the return of democracy five years ago, Nigeria has been optimistically cast by Washington as a stabilizing influence on Africa. Nigeria's troops man regional peacekeeping efforts. Its diplomats broker negotiations between governments and rebels from Sierra Leone to Sudan.
"There is a lot riding on Nigeria," Ottaway said.
Oil has become the lifeblood of Nigeria, accounting for 95 % of its export income, four-fifths of its government revenues, just about all of its economic prospects. Revenues from oil have deposited at least $ 350 bn into the national treasury in the past five decades.
"The oil comes from the delta, but the politics of it is countrywide," said Edmund Daukoru, the Nigerian president's senior adviser on petroleum issues. "Everyone depends on it."

But the delta's 14 mm people have been left with little more than poverty, pollution and pent-up rage. If the world wants more of Nigeria's oil, Asari and other militants say, better terms must be given to the people living atop it.
"We can clearly see that the demand for oil is becoming very tight," said Dimieari Von Kemedi, a Niger Delta political and environmental activist. "People in the villages understand this, and they are willing to act on it."

As it has in many poor and precarious societies, oil dependence here has helped nurture corruption, pervert politics and poison the landscape. Academics and social reformers call it the "oil curse."
Oil money "makes us lazy. It makes us forget what we used to be," said Nuhu Ribadu, the Nigerian government's anti-corruption czar. "With all the money that has come into this country, we have nothing to show for it. What can you say is a success story? Nothing."

Oil spills -- more than 4,000 have been recorded during the past five decades -- stain farmlands and waterways, killing crops and fish. Burned-off natural gas spews toxic chemicals. Competition for unskilled jobs financed by the oil companies cleaves communities. Violence arising from ethnic and political disputes kills more than 1,000 people in the delta every year.
Nigeria's great surge in oil income in the 1960s and '70s coincided with the country's long night of military dictatorship. Corruption became embedded. Nigeria now is ranked the third-most corrupt country on Earth, after Bangladesh and Haiti, according to an October report by Transparency International, an independent, anti-corruption organization.

Source: Houston Chronicle
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