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Wave of delta kidnappings rings alarm bells

After a relative calm period, unrest in the Niger delta could be on the rise

Fears that militant violence and sabotage in the Niger delta are about to take off again has been fuelled by a spate of kidnappings of oil industry workers over recent weeks.

In one incident, two Royal Dutch Shell workers were abducted in Nigeria's oil rich Rivers state in late April 2019, while their police escorts were killed. The two workers—from Canada and the UK—were released after a week, but there are concerns that there will be more problems to come, as Delta unrest picks up after a relatively quiet period.

"In the last month, we have had a total of 11 people kidnapped within the oil industry", says Cheta Nwanze, head of research at Lagos-based risk advisory firm, SBM Intelligence, which runs a security tracker for the area. "For residents, there also appears to be an increase in kidnappings in the region."

Pipeline sabotage is also back in the headlines. In April 2019, both Shell and pipeline operator Aiteo declared force majeure—since lifted—on production, following the outbreak of fire, due to suspected sabotage, which damaged the 150,000bl/d Nembe Creek Trunk Line.

Back to the bad old days?

Kidnappings for ransom have long been a way of life in the creeks of the Niger delta, as militants continue to agitate for more resource control and against continuing environmental degradation. Four states in the region—Delta, Rivers, Bayelsa and Akwa Ibom—are responsible for most of Nigeria's oil output of around 2mn bl/d.

For months, lump sum payments to ex-militants under a government-backed amnesty programme, along with profits from illicit, small-scale refining operations, have helped quell unrest in the Delta. Meanwhile, the security forces turned a blind eye in an effort to keep the peace.

But a change in government spending priorities in the run up to the general elections in February 2019, which led to a delay in amnesty payments, seems to have prompted the militants to pick up their weapons and return to the delta creeks. Early in May, a group of ex-militants protested over the lack of payments on the border between Rivers and Bayelsa states, alleging that the coordinator of the amnesty programme was embezzling funds meant for their allowances.

"There have been three or four incidents of protest in the area over the last month," says Nwanze. "As the unemployment numbers show, there are a lot of idle people in the region... which is awash with small arms."

Unemployment remains a serious problem in Nigeria, as the country slowly emerges from a recession in 2016-17, which was triggered by a combination of falling revenues due to the low oil prices prevailing at the time and disruption caused by oil facility attacks. Some 16mn people are jobless and 87mn people live in extreme poverty across Nigeria, according to the national bureau of statistics.

An uncertain future

Besides potentially affecting exports, the remerging issue of insecurity in the delta could also impact Nigeria's push to revive its moribund refining sector, particularly if oil supply is affected.

A new 650,000bl/d refinery being built by tycoon Aliko Dangote on the outskirts of Lagos is intended to alleviate the problems caused by a failure to keep most of the 445,000bl/d capacity of four state-owned refineries operational. The Dangote refinery is due to come on stream in 2020.

However, a recent increase in Nigeria's oil production may ameliorate the risk of disruption caused by any further deterioration in the security situation in the short term.

"Nigeria's oil production is the highest it has been in a long time. That, combined with recently higher prices, means the impact should be muted," says Nonso Obikili, chief economist at Nigeria's Business Day newspaper.

“The delta is awash with small arms” – Nwanze, SBM Intelligence

But the increase in militant activity does reinforce the view that there is a link between higher oil prices, tension in the delta and oil theft from pipelines, he adds.

"When oil prices go up, the frequency of these incidents seems to go up as well... Higher prices means higher rewards for bunkering and other illegal activities," Obikili says.

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