EIA: Nigerian oil sector plagued by risk

Militant group in the Niger Delta recently forced staff to evacuate oil installations.

By Daniel J. Graeber

WASHINGTON, May 10 (UPI) -- Nigeria is the largest oil producer in Africa, though it's plagued with risks as much of the industry is in the conflict-prone Niger Delta, analysis finds.

The U.S. Energy Information Administration published an updated country profile of Nigeria at a time when militant attacks are escalating. A group calling itself the Niger Delta Avengers in February launched a campaign it called Operation Red Economy, urging revolution to wrestle the country away from the hands of the "wicked" administration of Nigerian President Muhammadu Buhari.


According to the Organization of Petroleum Exporting Countries, member-state Nigeria produced an average 1.7 million barrels of oil per day in March, the last full month for which data are available. The EIA said in its report that production peaked at 2.4 million bpd in 2005, but is down significantly because violence in the Niger Delta region has curbed production and forced companies to evacuate their staff.

A Nigerian subsidiary of Royal Dutch Shell this week evacuated about 100 staff members from a Niger Delta oil facility that was producing around 90,000 bpd. The Niger Delta Avengers forced the Shell evacuation, one week after taking credit for knocking pipelines controlled by the Nigerian National Petroleum Corp. and Chevron offline.


"The lack of transparency on oil revenues, tensions over revenue distribution, environmental damages from oil spills, and local ethnic and religious tensions created a fragile situation in the oil-rich Niger Delta," the EIA's profile stated.

Meanwhile, a public notice issued by the Nigerian Oil Ministry last week warned security agencies were on alert because of the "very rampant" market for illegal crude oil products on the streets. EIA said the theft of oil has led to pipeline damage that is "often severe," creating an environmental risk on top of the loss in production.

The Nigerian government has worked through an amnesty program in order to curb militancy. In March, the government said the state oil company would be split up into dozens of distinct entities in an effort to address corruption and revenue losses.

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