Analysis: Nigeria losing 650,000 bpd

Increased violence has caused Nigerian oil output to decline by 650,000 barrels per day, according to the West African country's vice president.

The losses incurred by continuing attacks by armed militant groups on oil and gas installations in the Niger Delta are costing the country almost $68 million a day in lost revenue, said Vice President Jonathan Goodluck.

Goodluck also noted that Nigeria's oil output, once topping 2.5 million barrels a day, has dipped below 1.8 million bpd, dropping the country to second place among African oil producers behind upstart petroleum producer Angola.

Though a Niger Delta native, Goodluck has been an outspoken critic of Nigeria's lopsided dependence on the region for the vast majority of its national revenue, calling it an economic curse in recent months.

"The overdependence on oil has put an unpleasant bracket in our national economic freedom," Goodluck said before lawmakers earlier this year in an effort to encourage them to diversify Nigeria's export portfolio.

He attributed the persistent poverty in Nigeria to a culture of corruption within the petroleum sector, giving rise to militant groups in the delta such as the Movement for the Emancipation of the Niger Delta.

"The interpretation given by some observers is that present agitations were only but a reaction to the many decades of neglect," the vice president added.

About 95 percent of Nigeria's revenue is generated by oil and gas, resulting in billions of dollars in state funds every year, though much of the country remains impoverished and underdeveloped.

Since the 1970s, Nigeria, until recently Africa's No. 1 oil producer, has pumped more than $300 billion worth of crude from the southern delta states, according to estimates. But high unemployment in the delta, 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.

President Umaru Yar'Adua has made numerous pledges to tackle militancy in the delta and promote real development in the region.

In his budget proposal for this year, Yar'Adua said the government would allot one-third of the country's $20 billion budget for the military and development projects in the region in hopes of stemming the violence.

Money commitments aside, the effort could prove to be too little, note some experts, especially if government ambitions in the delta do not include policing state institutions and tackling a corrupt leadership that has siphoned off billions of dollars in oil revenue earmarked for development.

A culture of discontent with the Nigerian government and the foreign oil companies doing business there pervades the delta, as the region's oil and gas wealth rarely trickles down to the region's inhabitants, said Frank Verrastro, senior fellow and director of the Center for Strategic and International Studies' Energy and National Security Program.

"Delta residents see this wealth being exported and it infuriates them," said Verrastro.

"There is a way of dealing with the local population, but it takes a concerted effort by investors, the militants and government in power to be committed to the same objective," he said, referring to the development of the delta.

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