Niger Delta attacks are among top threats to US businesses

Jan 01, 2007 01:00 AM

The kidnappings and armed attacks plaguing oil companies operating in Nigeria's oil-rich Niger delta are among the top security challenges US businesses are likely to face in 2007, a State Department official said.
"We're keeping our eye on Nigeria right now," Doug Allison, a special agent with State's Bureau of Diplomatic Security, said. "That situation seems to be not getting any better."

Allison's comments came one day after the Overseas Security Advisory Council, which advises the agency on business activity abroad, released its top 10 list of the greatest threats to US companies in 2006. The list included the Israeli-Hezbollah conflict in Lebanon, intellectual property piracy in Asia and corruption in Africa.
Allison is the executive director of the council, which was established in 1985 to promote security cooperation between the US government and American businesses. Its members include Chevron, which operates in Nigeria.

The instability in Nigeria, Africa's largest oil producer, is well-known. Companies operate there under tight security and with police guards. Yet the violence continues, raising concerns among government and industry officials.
Nigeria's crude output was slashed this year by roughly 500,000 bpd because of attacks from criminal gangs and militants seeking political influence. The Nigerian strife has helped to keep upward pressure all year on oil prices, which traded at $ 60.50 a barrel on the New York Mercantile Exchange.

More than 90 % of the country's oil is produced through joint ventures between the Nigerian government and major international oil firms, such as Royal Dutch Shell, ExxonMobil, Chevron, Paris-based Total and Italy's ENI. The chief executive of ENI, Italy's largest oil and gas producer, spoke with the Nigerian president in Lagos to try to secure the release of four workers -- three Italians and one Lebanese -- held hostage there since Dec. 7.
A pipeline blast in Lagos killed 265 people, and coupled with the recent car bomb explosion outside a government building, illustrates direct consequences of local gasoline shortages amid ongoing political turmoil in the country.

"The first few weeks of the new year will likely be volatile, with probably more attacks on oil supplies -- just as happened in early 2006," Sebastian Spio-Garbrah, a Eurasia Group analyst who focuses on Africa, said in a research note.
Also, gunmen raided a pumping station owned by Total, killing three police guards, and Royal Dutch Shell and several oil service companies began evacuating all dependents of foreign employees from the delta region due to the unsafe conditions.
The companies that operate in the Niger delta "build in safety wherever they can," said John Felmy, chief economist at the American Petroleum Institute in Washington.

A Chevron spokesman said the San Ramon, California-based company places a "high priority" on employee safety, but would not provide any details on security measures at its facilities. He did say that Chevron has about 2,000 employees in Nigeria, about 90 % of who are Nigerian nationals.
The energy sector has "a culture of dealing with risk that has been fine-tuned" by working in remote, hostile environments worldwide, Allison said. But, he added, the Nigeria situation remains especially troubling.

Source: Dow Jones Newswires
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