Analysis: Yar'Adua eyes emerging Nigeria

Nigerian President Umaru Yar'Adua is hoping to transform his energy-rich country into a leading world player on the energy market and beyond during the next decade by improving the country's oil and gas production as well as its infrastructure.

In a recent meeting with officials from General Electric -- led by GE Vice Chairman John Rice -- Yar'Adua said his administration recognized the need to focus on developing infrastructure with the help of multinational companies if it hoped to improve oil and gas production in years to come.

"We urgently need this partnership in our effort to develop Nigeria and transform it to be among 20 top nations in the world by 2020," he said earlier this month while expressing his hope Africa's No. 1 oil producer would one day be considered among the world's leading developing nations and one of its largest economies.

Reaching such goals won't be easy, however, considering the country's current state and the continuing unrest in the resource-rich Niger Delta, where armed militant groups have been blamed for a 20-percent decrease in oil production alone over the last few years to 2 million barrels per day.

Yar'Adua's efforts to negotiate a viable peace settlement with the militants have produced mixed-to-poor results in recent months with a tenuous cease-fire declared by one militant group going unrecognized by another.

A recent increase in violence in the delta forced Royal Dutch Shell to shut down operations. Its terminal had already been shut down once before because of violence and reopened in October 2007 after more than a year of halted production. Since its reopening, the facility, which can produce some 450,000 bpd, had been operating at a fraction of its capacity.

Militant groups like the Movement for the Emancipation of the Niger Delta have in recent weeks made good on promises to increase attacks on petroleum installations, raising fears that already-hampered production would be stymied further.

The attacks came amid efforts by Yar'Adua to negotiate a peace settlement with the militants. For months, it appeared Yar'Adua's efforts would pay off as MEND said it would honor a cease-fire brokered while the president attempted to make good on promises to improve the lives of the residents of the impoverished delta.

Despite generating more than $300 billion worth of crude from the southern delta states over the last three decades, poverty and high unemployment persist. Environmental degradation due to oil and gas extraction, and a lack of basic resources such as fresh water and electricity, have angered some of the region's youth and incited them to take up arms.

Yar'Adua said that in 2008 the delta's security would be chief among his concerns, adding the government would allot one-third of the country's $20 billion budget for the military and development projects in the region. Those promises, however, haven't dissuaded one militant leader, Ateke Tom, and his Niger Delta Vigilante Movement from waging numerous attacks in recent weeks.

Tom said recent attacks were in retaliation for the "unprovoked destruction and invasion" of homes at his base in Rivers state by Nigeria's Joint Task Force.

Analysts say the recent round of violence won't last much longer, as Tom and his militant group recently accepted a cease-fire.

"The recent spate of violence is unlikely to last for more than another several weeks into early February at the most, since already political pressure has led Tom to declare an unverified unilateral cease-fire," said Eurasia Group Africa analyst Sebastian Spio-Garbrah.

Despite the violence hampering production, analysts are predicting an improved security situation for the delta in months ahead and have forecast that Nigeria would exceed its production goals for 2008, set by the Organization of Petroleum Exporting Countries, as new offshore facilities are expected to come online.

Those predictions, it appears, have in part fueled Yar'Adua's hope that Nigeria is poised for a turnaround, which some say is far from near.

"It would take a tremendous effort to do that," said Mark Schroeder, a Sub-Saharan Africa analyst for Stratfor Strategic Forecasting Inc. "They would first have to demonstrate that they could stabilize their own sector, curtail militant violence and expand out.

"That's not something that's going to happen overnight."