Alison Rowat / The Herald – 2004-09-29 22:58:08

http://www.theherald.co.uk/news/24989.html

(September 29, 2004) — Oil prices surged past $50 a barrel yesterday, driven to the historic high by the threat of an armed uprising in Nigeria against the government and multinationals. Moujahid Dokubo-Asari, who heads the Niger Delta People’s Volunteer Force, said his forces would launch “a full scale armed struggle” to seize the region’s oil riches on October 1.

Oil company employees were listed as targets and foreign embassies were told to pull their nationals out of the region. “Any part of Nigeria, wherever we have the opportunity to strike any target, we will strike,” said Dokubo-Asari, who claims to be fighting for independence for eight million Ijaws, the region’s dominant tribe.

Colonel Ganiyu Adewale, a spokesman for Nigeria’s military, played down the warning, calling it “an empty threat”. “All oil installations are being manned by the armed forces and oil workers are safe. I foresee no problems at all,” he said.

But the markets continued to show their nervousness, setting the scene for further price rises today. Alongside worsening violence in the Middle East and the impact of Hurricane Ivan in the Gulf of Mexico, the unrest in Nigeria is part of a “perfect storm” of forces combining to drive oil prices upwards.

Keith Myers, an associate fellow at the Royal Institute of International Affairs, said higher prices could be helping to fuel unrest in Nigeria by sharpening the contrast between company profits and poverty on the ground. “People see higher oil prices and expectations are raised which can’t be met.

The issue for Nigerians is that although they produce a lot of oil the actual economic benefit is really very small. In the Niger Delta they see all the negative consequences, the infrastructure, the flares, the spills, of the oil that is produced from their land but they don’t see any of the benefits.”

Two million barrels a day come out of the region, making Nigeria the world’s seventh largest oil exporter and the fifth biggest source of US oil imports. But the lands of the Niger Delta are awash with misery as well as drenched in oil. The region has been called Africa’s Chechnya, a place so poor, lawless and scarred by violence that 1000 deaths a year is considered the norm.

In the elected government led by Olusegun Obasanjo, no one is panicking, in public at least, over Dokubo-Asari’s threat. Such is the troubled history of the country that officials are used to calming multinational concerns. They routinely dismiss rebel groups in the region as petty criminals.

On paper, Dokubo-Asari’s militia, which he claims to be 2000-strong, is a flea on the back of Nigeria’s armed forces. His fighters may be dedicated and believe themselves protected by Egbisu, their god of war, but the leaves they strap to their heads and carry between their teeth as they go into battle are no protection against helicopter gunships.

Nor are the oil multinationals who operate in Nigeria the kind of outfits who scare easily. Risk is factored into the profit equation, with large amounts paid out to each year to consultants to assess changing levels of risk and tailor security accordingly.

“We are not in any way moved by the threat. We believe the Nigerian security forces are equal to the task of safeguarding oil installations and protecting workers,” said a Shell spokesman. Even so, Dokubo-Asari’s cause is a popular one and his fighters have been holding out against government forces since April.

The military has been hitting back harder each time, and civilians are being caught up in the fighting. His choice of start date for the armed struggle, October 1, the 44th anniversary of Nigeria’s independence from Britain, shows him to be an astute political operator.

The way his threat was tailored to target foreign workers was certain to grab international attention given the current hostage crisis in Iraq.

The latest government offensive came early this month in response to raids by his militia into the country’s main oil industry centre, Port Harcourt, in August. Since then, army helicopter gunships and troops in gunboats have raided and bombarded 10 towns and villages considered militia strongholds, resulting in the death of dozens of people, militia leaders say. Amnesty International said at least 500 people were killed in August alone in and around Port Harcourt.

What remains to be seen is whether the government is right to dismiss his current threat as an empty gesture. “It is difficult to judge,” said Mr Myers. “You have to have a motive and a capability to carry out a threat. Do they have a motive? Yes. Do they have a capability? We don’t know. What we can say is that they have the capability to cause some disruption.”

Nigeria’s senior oil adviser said he was confident foreign oil firms would not succumb to the threats to halt production. “We have had these kind of threats before and nothing has happened,” Edmund Dakoru said.

Shell said it had shut down an oil flow station in the Niger Delta which pumps 28,000 barrels a day because it could not get staff there to fix a “technical problem”.

Boom and Bust

Winners
• Oil companies are reaping rewards from the increase in crude oil prices. BP revealed a 20% rise in half-yearly profits of £4.68bn in July.

• Gordon Brown will see at least £1bn extra thanks to higher receipts of petroleum revenue tax on North Sea production.

Losers
• Motorists’ petrol prices have risen to almost 84p a litre, just below the record 85p that sparked the 2000 fuel protests.

• The slowdown in the US economy this summer has been widely blamed on rising oil prices and this effect is likely to hit other economies.

• The International Air Transport Association has warned that increasing jet fuel costs could lead to losses of £2.2bn for airlines.

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