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Niger Delta stability in the balance, as Forcados oil exports resume

THE RESUMPTION of exports from Shell's Forcados oil terminal reflects an improved security situation in the Niger Delta following last year's militant amnesty. But doubts over the region's long-term stability threaten to jeopardise badly needed investment

Shell said last month that it had restored output at the 400,000 barrels a day (b/d) Forcados terminal, in Bayelsa state, which had been shut-in because of attacks by armed militants. Mutiu Sunmonu, head of Shell companies in Nigeria, told Bloomberg in mid-June that the company was beginning to see an upward swing in its Nigerian production as a result of "peace returning to the delta". He did not provide figures.

Many foreign firms have withdrawn all but essential staff from the region as violence intensified in recent years. But the number of attacks on oil and gas installations has fallen sharply since an amnesty in 2009, designed to bring former militants into the political mainstream and lay the foundations for the delta's revival (PE 5/10 p4). The confirmation of Goodluck Jonathan as Nigeria's president in May has also helped the mood in the delta. Born in the region and governor of Bayelsa state until 2007, he is regarded as a man who understands the Delta's problems.

The Nigerian authorities hope that improved stability in the delta will enable big hydrocarbons-related developments to push ahead more rapidly. Diezani Allison-Madueke. Nigeria's new oil minister, says the government intends to back the construction of two or three petrochemicals plants and two or three fertiliser plants in the Delta region to harness natural-gas resources. In a speech, read on her behalf, at a London conference on Peace in the Niger Delta in June, Madueke said Nigeria also hoped to sign agreements with some "world-class investors" in coming months to develop gas-related industries.

A senior economic adviser to the governor of Bayelsa told the conference that the state remains optimistic that a final investment decision for the much-delayed Brass LNG (liquefied natural gas) export project would be made by the end of 2010. Brass LNG received a boost earlier this year, when LNG Japan – a joint venture between Sumitomo and Sojitz – agreed to take a stake in the project. The other partners are state-owned Nigerian National Petroleum Corporation, Total, Eni and ConocoPhillips.

However, a number of ex-militants and other delegates at the conference questioned the government's resolve to improve the lot of the Delta's 10 million inhabitants, many of whom have seen little social and financial benefit from the oil and gas industry, despite more than 90% of Nigeria's export revenues being derived from the region. They pointed to the failure of a previous amnesty, in 2004, to yield long-term dividends.

Some militants say they are contemplating abandoning the amnesty programme. Ateke Tom, formerly a rebel leader in Rivers state, said in June that he had seen little improvement in conditions in the region in the eight months since the amnesty and indicated that he and his supporters could return to violence if insufficient progress was made.

Unease has been exacerbated by delays caused, in part, by the ill health of former president Umaru Yar'Adua, who died in May. Jonathan is now pressing ahead with key elements of the amnesty agreement, such as a programme to educate more than 20,000 ex-militants rebels, which is set to start imminently. He is also promising to reform the government's Petroleum Industry Bill in response to industry criticism (PE 6/10 p27).

But any programme offered by the new president is already looking precarious, as Jonathan may not stand in elections scheduled for April 2011. An unwritten agreement within the ruling People's Democratic Party requires the presidency to alternate between the Christian south and Muslim north of Nigeria. As both Yar'Adua and Jonathan – who was his predecessor's vice-president – are from the south, there are calls for the party's next presidential candidate to come from the north. Jonathan has yet to rule himself in or out.

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