Nigeria cannot afford to allow insurgency hurt oil revenues further

Renewed insurgency have continued to present significant challenges in the industry, badly impact on oil and gas production especially onshore and hurting the nation’s revenue. The cost on the economy has been steep in the past one year.

Media reports quoted Shina Bankole, vice-chairman of the security sub-committee of the Oil Producers Trade Section (OPTS), Lagos Chamber of Commerce and Industry (LCCI), to have said that between January and November 2016, the resurgence of militancy has cost the nation over 130 million barrels of oil (approximately $4 billion) even at the base price of $30 per barrel.
During the period, about 58 incidents of sabotage on the facilities of the oil companies were recorded. The Niger Delta Avengers (NDA) claimed responsibility. The NDA have attacked oil-producing facilities in the delta, causing the shutdown of oil terminals and a fall in Nigeria’s oil production to its lowest level in twenty years.
The attacks caused Nigeria to fall behind Angola as Africa’s largest oil producer. The reduced oil output has hampered the Nigerian economy since the country depends on the oil industry to run its budget. Crude sales make up about 70 percent of government revenue and the attacks deepened the economic crisis brought on by low global oil prices.
A catalogue of attacks
In February 2016, an explosion in a pipeline operated by Shell Petroleum Development Corporation to the Shell Forcados export terminal halted both production and imports. Ibe Kachikwu, Minister of State for Petroleum and then head of Nigeria’s state oil company, Nigerian National Petroleum Corporation (NNPC), said the country’s crude oil production went down 300,000 barrels a day as a result the attack.
A bomb had closed down Chevron’s Escravos GTL facility a week on May 3, 2016. A week later, Shell closed its Bonny oil facility due to attack. On 19 August, the group reportedly blew up two pipelines belonging to NPDC in the Delta State. Also, on 30 August, the group blew up the Ogor-Oteri oil pipeline.
How far will Osinbajo peace tour go?
Recently, acting President, Yemi Osinbajo, visited a number of oil communities across some Niger Delta States. His office said the visits were in “further demonstration of President Muhammadu Buhari’s readiness and determination to comprehensively address the Niger Delta situation”.
“The Buhari presidency is fully committed to having an effective dialogue and positive engagement that will end the crisis in the oil-producing areas, and believes that these visits would further boost the confidence necessary for the attainment of peace and prosperity in the areas and the Nigerian nation in general,” the vice president’s office said.
A peace deal could help revive production, with the government this year aiming to produce an average of 2.2 million barrels per day.
Concerned Professionals’ Congress (CPC) stated that the visit by Osinbajo to the Niger Delta region is a bold and courageous move capable of promoting a positive engagement with the people.
Though there appears to be some measure of distrust and cautious optimism among the people of Niger Delta but the visit by Osinbajo, according to analysts, is a realization that dialogue and not force of might and weapons is what will produce beneficial result. The time for government to scale up development efforts in the entire Niger Delta region, as a way of assuaging the frayed nerves is now.
Extending olive branch to illegal refiners
Military crackdown on illegal refineries in the Niger Delta which process mostly stolen crude oil raised tensions in the region. But the acting President says Nigeria needs to offer work to people who make a living from illegally refining oil in the Niger Delta in order to achieve peace there.
“Our approach to that is that we must engage the illegal refiners by establishing modular refineries so that they can participate in legal refineries,” Osinbajo said during a visit to Rivers state, part of the Delta region.
Illegal refining is one of the few businesses flourishing in an otherwise desolate region, as petrol is scarce in Nigeria due to the country’s derelict state refineries.
He also said the government would make more provisions for an amnesty scheme for former militants who laid down arms in 2009 in exchange for cash stipends and job training.
“I see the resumed payment of cash stipends to former militants agreed under a 2009 amnesty in the country’s Niger Delta oil hub as a measure that addresses only one element of a broader systemic challenge. I believe however that a longer term resolution of restiveness in the area calls for more than these payments. It is critical that the government and all the stakeholders move in to commence progressively realizable aspects of the Niger Delta Masterplan while the window for peaceful negotiation is open”, said Prof. Joe Ezigbo, Managing Director, Falcon Corporation.
Authorities had originally cut the budget for cash payments to militants to end corruption but later resumed payments to stop surging pipeline attacks crippling vital oil revenues.
“We have make more provisions for amnesty and provisions for social intervention,” Osinbajo said during his tour of the region.

FRANK UZUEGBUNAM