Jan 15, 2013
Reuters photographer Akintunde Akinleye recently gained rare access to an illegal oil refinery near the river Nun in Nigeria‘s oil state of Bayelsa. There, he was able to document the secret and dangerous practice of oil bunkering, where locals hack into oil pipelines, steal the crude oil, and refine or sell it abroad. For over 50 years now, crude oil and natural gas have been extracted from the Niger Delta by large corporations, which have had their share of environmental disasters. The ongoing damage from the tapped pipes and these makeshift refineries continue to take a terrible toll on the environment and the local population. See also “Nigeria: The Cost of Oil” from 2011. [30 photos]
More photos: Source
French supermajor Total, operator of Block OML138, announces the start-up of production of the offshore Usan field in Nigeria, in line with the planned schedule. Usan is the second deep offshore development operated by Total in Nigeria, coming on stream less than three years after Akpo.
Discovered in 2002, the Usan field lies around 100 kilometers off the South East Nigerian coast in water depths ranging from 750 to 850 meters. The Usan development comprises a spread moored Floating Production, Storage and Offloading (FPSO) vessel designed to process 180 000 barrels per day and with a crude storage capacity of 2 million barrels. Its size of 320 meters long and 61 meters wide makes it one of the largest vessels of this type in the world. Development involves 42 wells that are connected to the FPSO by a 70 kilometers long subsea network.
Yves-Louis Darricarrère, President Exploration-Production at Total, stated on the occasion:
“I’m particularly proud to announce start-up of this major project together with the concession holder NNPC. This project demonstrates the ability of Total, a key operator of large-scale deep offshore developments in the Gulf of Guinea, to lead ambitious projects that will contribute to increase production for the Group and for the country. Total as operator has introduced a number of technological innovations, among which is a solution that drastically reduces gas flaring and thus minimizes the project’s environmental impact. The development of Usan has involved a record 60% of local content man-hours and thus has contributed to strengthening the know-how of the Nigerian industry in the area of hydrocarbon exploitation in the deep offshore.”
The Usan project has involved an unprecedented level of Nigerian local content, with over 500,000 engineering man-hours and 14 million construction and installation man-hours performed in Nigeria. FPSO construction included an offshore integration of 3,500 tons of locally fabricated structures. In addition, large-scale training and capacity building programs were put in place, raising the skills of the local workforce to the benefit of future projects.
Total’s wholly owned subsidiary Total E&P Nigeria Ltd. operates OML 138 with a 20% interest, while Nigerian National Petroleum Corporation (NNPC) is the concession holder. Total’s partners are Chevron Petroleum Nigeria Ltd. (30%), Esso E&P Nigeria (Offshore East) Ltd. (30%) and Nexen Petroleum Nigeria Ltd. (20%).
Offshore Energy Today Staff, February 24, 2012
- Total starts production at Usan field in Nigeria (marketwatch.com)
- Usan Production Will Mitigate Yemen Loss, Nexen Says (mb50.wordpress.com)
- Geopolitical stakes in Nigeria: Curious role of the IMF (mb50.wordpress.com)
Pacific Drilling, a growing offshore drilling company that provides global drilling services to the oil and natural gas industry through the use of ultra-deepwater drillships announced today that the Pacific Scirocco drillship commenced operations offshore Nigeria on December 31, 2011.
The drillship is contracted for an initial one-year term to a subsidiary of a French oil and gas giant, Total S.A. The contract further provides for options, to be exercised at the client’s discretion, which could result in up to four additional years of contract term.
- Nigeria: Chevron Secures Pacific Bora Drillship for Agbami Field Development
- USA: Pacific Santa Ana Drillship Hits the Water
- Pacific Drilling Secures 1 Year Contract for Pacific Scirocco Drillship in Nigeria
- Pacific Drilling Takes Delivery of New Drillship from Samsung Heavy, South Korea
- Total Enters LOI for Use of Pacific Scirocco Drillship in Nigeria
- Pacific Scirocco Drillship Commences Operations Off Nigeria (gcaptain.com)
- USA: Busy December Ahead of Pacific Drilling’s Drillships (mb50.wordpress.com)
- Dolphin Drilling to Provide Two Drillships for Anadarko’s Mozambique Operations (mb50.wordpress.com)
- Ocean Rig Bidding to Rent 5 Drillships to Petrobras, Brazil (mb50.wordpress.com)
- Drillship animation in the Gulf of Mexico (video) (mb50.wordpress.com)
- Is the Industry Ready to Drill in the Arctic? Stena Drillmax Ice Nears Delivery (mb50.wordpress.com)
- Ophir Begins with Drilling Operations Offshore Tanzania (mb50.wordpress.com)
(Reuters) – At about 10.40 one morning last August, Mohammed Abul Barra rammed his ash-colored station wagon into a security gate outside the United Nations headquarters in the Nigerian capital, Abuja, knocking it off its hinges. Barra’s 1996 Honda Accord then crashed through the main building’s glass doors and slammed against the reception desk.
On security tapes of the incident seen by Reuters, a guard peers into the car, evidently unaware that it is packed with explosives. The grainy footage shows a dozen or so people in the reception edge towards the vehicle. Over 10 seconds pass in confusion before one man seemingly realizes what is about to happen. He grabs the person next to him and darts towards the lift. But it’s too late. Barra steadies himself, leans forward and the security screens blur into white fuzz.
The suicide strike left 25 people dead and the U.N. headquarters in tatters. It also drew global attention to Boko Haram, the militant group from northern Nigeria which has claimed responsibility for the attack and a string of bombings since then that has killed hundreds.
As the bombings have grown in frequency in recent months, the Nigerian government and Western security officials have begun to grapple with the exact nature of the threat. Is Boko Haram just the latest in a long list of violent spasms in Nigeria, or is it the next battalion of global jihadists, capable of thrusting Africa’s most populous nation into civil war?
The answer to that is not simple. There is evidence – some of it detailed in this story for the first time – that elements of Boko Haram have received training from foreign militant groups, including North Africa-based al Qaeda in the Islamic Magreb (AQIM). The August attack was far more sophisticated than anything linked to Boko Haram before.
Nigerian President Goodluck Jonathan calls the group a terrorist organization with global ambitions. In an interview in his presidential villa last week, Jonathan said there was “no doubt” Boko Haram has links with jihadist groups outside Nigeria. General Carter Ham, the head of the U.S. military’s Africa Command, said last year Boko Haram posed a threat to U.S. and Western interests.
At the same time, Boko Haram remains firmly focused on domestic Nigerian issues. When its secretive spokesman claims responsibility for attacks, he almost always lists local grievances that have little to do with the core ideologies of al Qaeda. The group’s name means “Western education is sinful” in Hausa, the language spoken in northern Nigeria, the country’s Muslim heartland. But its anger is directed not at America or Europe but at Nigeria’s elites: at their perceived arrogance, their failure to deliver services, and the brutality of their security forces. Many Boko Haram members say their focus is on targeting officials who have locked up its members or misused state funds.
Even Nigeria’s national security adviser, General Owoye Azazi, who sees a link between Boko Haram and AQIM, urges caution in defining the group.
“We need to tackle Boko Haram from several perspectives,” Azazi said in an interview. “If you go back to history, there are religious concerns, there are concerns about governance, and of course, political implications. It’s a combination of so many things.”
U.S. Federal Bureau of Investigation agents arrived in Abuja within days of last August’s attack to help with forensic analysis of the bomb site. A report authored by those agents, Nigerian authorities and independent security teams, paints a portrait of a sophisticated operation.
Barra was chosen because he was “low profile (and) well trained” and his attack was “well planned,” says the confidential report, seen by Reuters. The car was packed with 125 kg (276 pounds) of manufactured explosives, including the plastic explosive pentaerythritol tetranitrate (PETN) and triacetone triperoxide (TATP) – both highly powerful and volatile, and more potent than easier-to-build fertilizer-based explosives.
The explosives were used in a “shaped charge,” which increases damage from a blast. Investigators believe the bomb probably consisted of both stolen factory-made explosives and home-made materials.
“The only form of PETN that is commonly available is the core explosive in detonating cord,” said Sidney Alford, a British explosives expert. “You can get detonating cord from the manufacturers, the army, or from blasting contractors in the demolition or quarrying industries.”
The failed ‘underpants’ bomber Faroup Abdulmutallan, a Nigerian accused of trying to blow up a Detroit-bound flight on Christmas Day 2009 in an al Qaeda-style attack, used TATP. Another would-be plane bomber, Richard Reid, had PETN in his shoe in his unsuccessful effort to blow up a flight between France and the United States in 2001.
President Jonathan said Nigeria has evidence that Boko Haram members have held meetings in North Africa. Azazi, the national security adviser, said the advancement in Boko Haram’s weaponry and tactics points to help and training from outside groups.
“We have evidence of meetings between Boko Haram leadership and outside groups,” Azazi said, declining to give details. “We have evidence that some Boko Haram leaders are trained outside of Nigeria. Their methods, their bomb-making technologies – who taught them?”
Nigeria, Africa’s top oil producer, survived a brutal civil war in the late 1960s in which more than 1 million people died. Repeated rounds of violence since then, often between Muslims in the north and Christians in the south, have killed thousands more.
The violent spasms are often fueled by politics, and so it is with Boko Haram.
The group’s official name is Jama’atu Ahlis Sunna Lidda’awati Wal-Jihad, meaning “People Committed to the Propagation of the Prophet’s Teachings and Jihad.” It earned its nickname from the teachings of its founder Mohammed Yusuf in the early 2000s, in the restive northeastern city of Maiduguri, the capital of Borno state.
Yusuf argued that Western education, or “boko,” had brought nothing but poverty and suffering to the region and was therefore forbidden, or “haram,” in Islam. He began peacefully – mostly preaching – and quickly gained a following among disaffected young men in the northeast. But his anti-establishment rhetoric and hints that Boko Haram was building an arsenal of weapons also caught the attention of the authorities.
In 2009, the police clamped down on sect members who were ignoring a law requiring motorcyclists to wear helmets. That sparked a furious backlash. Police stations and government offices in Borno were burned to the ground, and hundreds of criminals released in a prison break, as the violence spread across northern Nigeria.
The government and army reacted with force; Yusuf was captured and shot dead in police custody. Five days of fighting left some 800 people dead.
Boko Haram leaders still cite Yusuf’s death as one of the main factors driving the insurgency. The group remains fiercely anti-government and anti-authority, and resentful of the decades of corrupt, poor governance that have impoverished its home region.
“You would never have believed the Boko Haram phenomenon came from these beginnings,” said Shettima Dikwa, a doctor at the University of Maiduguri. Dikwa is one of a number of professionals in the city frustrated at the way Nigeria’s government and military have allowed the insurgency to escalate. Like others, he says local politicians sponsored armed thugs to help disrupt the 2007 election and then abandoned them, creating a fertile recruitment field. The governor of Borno state has denied these allegations.
Boko Haram’s attacks have intensified since President Jonathan took power last April, in the country’s cleanest election since the end of military rule in 1999. Jonathan pledged to fight graft and attract investment. But he is a Christian southerner, and in the eyes of many Muslim northerners it was a northerner’s turn to rule.
CATCH-ALL LABEL, LOCAL STRUGGLES
That backdrop doesn’t explain how the group went from drive-by shootings and crude petrol bombs to shaping explosives for suicide missions against the United Nations.
A video posted on YouTube on January 11 suggests the group’s leadership would like to be seen as part of a global jihad. Abubakar Shekau, who has run the group since Yusuf was killed, appears in the 15-minute tape wearing a camouflage bullet-proof jacket, sitting in front of two Kalashnikov rifles. His beard, headscarf and hand gestures recall the style of video pronouncements made by the late al Qaeda leader Osama bin Laden. But Shekau’s message hits local notes.
“The reason why I am giving this broadcast is the recent comments of Goodluck Jonathan about us and that of the leader of the Christians and other statements by others, describing us as a cancer to Nigeria. We are neither a cancer nor a disease. If people don’t know us, God knows us,” Shekau says. He then goes on to cite common complaints about Nigerian politics.
Most of the public evidence about what Boko Haram wants and how it operates comes from its avowed spokesman, Abu Qaqa, a mysterious figure who often pops up after an attack to claim responsibility and explain the motives.
Speaking by phone to a handful of reporters in Maiduguri in November, Abu Qaqa spoke of the links between al Qaeda and Boko Haram. “We are together with al Qaeda,” he said. “They are promoting the cause of Islam, just as we are doing. Therefore they help us in our struggle and we help them, too.”
But Qaqa offered no concrete details of those ties; the rest of the conversation focused on local issues. He said the group isn’t affiliated with Nigerian political parties and described the sect’s anger at the governor of Borno state. In claiming the recent Kano attacks, which killed at least 186 people, he cited the killing and arbitrary arrest and detention of Boko Haram members.
GLOBAL OR LOCAL?
Nigerian and Western security experts believe a small, increasingly ambitious and sophisticated group of extremists controls the very top of the group. A handful of those members have received training outside Nigeria, including from AQIM.
Nigeria-based security sources who track Boko Haram told Reuters that members of the group have been going to training camps with brigades of Algerian AQIM for the past six years. Small units of five or six members train at a time; no more than a few dozen have been trained in total, the sources said.
The foreign minister of neighboring Niger told Reuters last week that members of Boko Haram received explosives training at AQIM camps in the Sahel region, which runs along the southern edge of the Sahara desert. The U.N. Security Council said this month that it had been told that Boko Haram members had received training in AQIM camps in Mali.
Experts say the group has become a convenient cover for opportunists. Criminals, political thugs and gangs hide beneath the umbrella of Boko Haram, making it hard to judge its size and scope.
Most of its foot-soldiers are disillusioned young men who have only loose ties to religious ideology, and are easily drawn in because there are little or no opportunities elsewhere. Jonathan has begun to acknowledge this, telling Reuters last week that the government would “revitalize” northern agriculture to provide jobs for youths who might otherwise be “recruited” by Boko Haram.
Aisha Alkali, a human rights campaigner in Maiduguri, says young men in northern Nigeria feel forced to adopt violence to defend themselves. “If you push people to the wall, if you leave them with nothing and take everything, where will they go?” asks Alkali, shrouded in a traditional black abaya and burka with only her eyes and impeccably manicured hands showing. “You make people something they were not.”
Soldiers patrol the streets of Maiduguri in large numbers these days. By day, they hunch in roadside bunkers; at night, they regularly fight with Boko Haram units. Bomb blasts and gunshots punctuate the dark.
Amnesty International says the joint military task force (JTF) in the city has been behind dozens of unlawful killings there, further stirring the unrest. A report by the human rights watchdog says houses have been raided and burned by the JTF.
One of the JTF commanders in Maiduguri told Reuters there had been “excesses,” but said mostly the military were doing a good job under difficult conditions.
Yirami Bwala, a 42-year-old shop owner, lost his 18-year-old son Markus in a Boko Haram bomb attack in Maiduguri in January. “Most Boko Haram members are just a bunch of illiterates who have been misled about their religion and what tolerance is all about,” he said a day after the attack. “The military only make things worse by robbing people and attacking innocent, peaceful people.”
More than a quarter of Nigeria’s 2012 budget has been allocated to security spending. But with the number of attacks up – at least 250 people have been killed in the first three weeks of 2012 alone, according to Human Rights Watch – criticism of the way Jonathan has handled the violence is growing.
President Jonathan told Reuters that Boko Haram militants have infiltrated the military, police and his own government. He sacked the chief of police and his six deputies last week, after the key suspect in the Christmas Day bombings escaped less than 24 hours after being arrested, in what Nigerian security sources said were “unusual and suspicious” circumstances.
The leader of the nation of 160 million people has also said that tackling Boko Haram could be worse than Nigeria’s civil war, if only because the enemy is faceless and unknown. Some analysts believe Boko Haram may be targeting Christians to trigger a religious conflict.
Nigeria has been here before. In 2009 it ended a militant insurgency in the southeastern Niger Delta by offering an amnesty. The government hints that a new broad political settlement may be on the cards. But dealing with a splintered and secretive group like Boko Haram will be difficult.
Olusegun Obasanjo, a former president and a southern Christian, visited the family of Boko Haram founder Yusuf last September for peace talks. Days later, gunmen killed Yusuf’s brother-in-law. Boko Haram denied involvement in the killing. But someone wanted the dialogue to end.
(Additional reporting by Tim Cocks, Ibrahim Mshelizza, Felix Onuah, Camillus Eboh and Mike Oboh in Nigeria, William Maclean in London and David Lewis in Dakar; Editing by Simon Robinson and Sara Ledwith)
Source – (Reuters)
- Boko Haram Kills 2 More Nigerian Civilians (waronterrornews.typepad.com)
- Nigeria army says kills 11 Boko Haram insurgents (nation.com.pk)
- Boko Haram: Are Nigerians Hoping For A Hero? (adebayoalonge.wordpress.com)
- Nigeria army claims retaliation as 11 Boko Haram members killed (telegraph.co.uk)
- MASSOB to Boko Haram: Don’t push us into violence (realissuesng.wordpress.com)
- Boko Haram: It’s not about Jonathan (vanguardngr.com)
Kaduna refinery (photo from nigerianbestforum.com)
Published: 29 January, 2012, 11:11
As Nigeria spirals into instability, historian and economic researcher Frederick William Engdahl argues a recent government decision to lift subsidies on imported fuel in the oil-rich nation bears the mark of Washington Consensus shock therapy.
In the article below, Engdahl explains his view.
Nigeria, Africa’s most populous nation and its largest oil producer, is from all evidence being systematically thrown into chaos and a state of civil war. The recent surprise decision by the government of Goodluck Jonathan to abruptly lift subsidies on imported gasoline and other fuel has a far more sinister background than mere corruption, and the Washington-based International Monetary Fund (IMF) is playing a key role. China appears to be the likely loser along with Nigeria’s population.
The recent strikes protesting the government’s abrupt elimination of gasoline and other fuel subsidies, that brought Nigeria briefly to a standstill, came as a surprise to most in the country. Months earlier, President Jonathan had promised the major trade union organizations that he would conduct a gradual four-stage lifting of the subsidy to ease the economic burden. Instead, without warning he announced an immediate full removal of subsidies effective January 1, 2012. It was “shock therapy” to put it mildly.
Nigeria today is one of the world’s most important producers of light, sweet crude oil—the same high-quality crude oil that Libya and the British North Sea produce. The country is showing every indication of spiraling downward into deep disorder. Nigeria is the fifth largest supplier of oil to the United States and twelfth largest oil producer in the world on a par with Kuwait and just behind Venezuela with production exceeding two million barrels a day.
The curious timing of IMF subsidy demand
Despite its oil riches, Nigeria remains one of Africa’s poorest countries. The known oilfields are concentrated around the vast Niger Delta roughly between Port Harcourt and extending in the direction of Lagos, with large new finds being developed all along the oil-rich Gulf of Guinea.Nigeria’s oil is exploited and largely exported by the Anglo-American giants—Shell, Mobil, Chevron, Texaco. Italy’s Agip also has a presence and most recently, to no one’s surprise, the Chinese state oil companies began seeking major exploration and oil infrastructure agreements with the Abuja government.
Ironically, despite the fact that Nigeria has abundant oil to earn dollar export revenue to build its domestic infrastructure, government policy has deliberately let its domestic oil refining capacity fall into ruin. The consequence has been that most of the gasoline and other refined petroleum products used to drive transportation and industry, has to be imported, despite the country’s abundant oil. In order to shield the population from the high import costs of gasoline and other refined fuels, the central government has subsidized prices.
Until January 1, 2012, that is. That was the day when, without advance warning President Goodluck Ebele Azikiwe Jonathan announced immediate removal of all fuel subsidies. Prices for gasoline shot up almost threefold in hours from 65 naira (35 cents of a dollar) a liter to 150 naira (93 cents). The impact rippled across the economy to everything including prices of grains and vegetables.
In justifying the move, Central Bank Governor Lamido Sanusi insisted that “The monies will be used in provision of social amenities and infrastructural development that will benefit Nigerians more and save the country from economic rift.”President Goodluck Jonathan says he is phasing out the subsidy as a part of a move to “clean up the Nigerian government.” If so, how he plans to proceed is anything but apparent.
The huge unexpected price hike for domestic fuel triggered nationwide protests that threatened to bring the economy to a halt by mid-January. The president deftly took the wind out of protester sails by announcing a partial rollback in prices, still leaving prices effectively double that of December. The trade union federation immediately called off the protests. Then, revealingly, Goodluck Jonathan’s government ordered the military to take to the streets to “keep order” and de facto prevent new protests. All that took place during one of the bloodiest waves of bombings and murder rampages by the terrorist Boko Haram sect creating a climate of extreme chaos.
The smoking gun of the IMF
What has been buried from international accounts of the unrest is the explicit role the US-dominated International Monetary Fund (IMF) played in the situation. With suspicious timing IMF Managing Director Christine Lagarde was in Nigeria days before the abrupt subsidy decision of President Jonathan. By all accounts, the IMF and the Nigerian government have been careful this time not to be blatant about openly announcing demands to ends subsidies as they were in Tunisia before food protests became the trigger for that country’s Twitter putsch in 2011.
During her visit to Nigeria Lagarde said President Jonathan’s ‘Transformation Agenda’ for deregulation “is an agenda for Nigeria, driven by Nigerians. The IMF is here to support you and be a better partner for you.” Few Nigerians were convinced.On December 29 Reuters wrote, “The IMF has urged countries across West and Central Africa to cut fuel subsidies, which they say are not effective in directly aiding the poor, but do promote corruption and smuggling. The past months have seen governments in Nigeria, Guinea, Cameroon and Chad moving to cut state subsidies on fuel.”
Further confirming the role US and IMF pressure on the Nigerian government played, Jeffery Sachs, Special Adviser to the United Nations (UN) Secretary General, during a meeting with President Jonathan in Nigeria in early January days after the subsidy decision, declared Jonathan’s decision to withdraw petroleum subsidy “a bold and correct policy.”
Sachs, a former Harvard economics professor, became notorious during the early 1990s for prescribing IMF “shock therapy” for Poland, Russia, Ukraine and other former communist states, which opened invaluable state assets for de facto plundering by dollar-rich western multinationals.
Even more suspicious is the manner in which Washington and the IMF are putting pressure on only select countries to end subsidies. Nigeria, whose oil today sells for the equivalent of $1 a liter or roughly $3.78 a US gallon, is far from cheap. Brunei, Oman, Kuwait, Bahrain, Qatar, Saudi Arabia all offer their petrol very cheap to their people. The Saudis sell their oil at 17 cents, Kuwait at 22 cents. In the US gasoline averages 89 cents a liter.
That means the IMF and Washington have forced one of the poorest economies in Africa to impose a huge tax on its citizens on the implausible argument it will help eliminate corruption in the state petroleum sector. The IMF knows well that the elimination of subsidies will do nothing about corruption in high places.
Were the IMF and World Bank genuinely concerned with the health of the domestic Nigerian economy, they would have provided support for rebuilding and expanding a domestic oil refinery industry that has been allowed to rot, so that the country need no longer import refined fuels using precious state budget resources.The easiest way to do that would be to expedite a two-year-old deal between China and the Nigerian government to invest some $28 billion in massive expansion of the oil refinery sector, to eliminate need for importing foreign gasoline and other refined products.
Quite the opposite—the criminal cabal inside the Nigerian National Petroleum Company (NNPC) and the Government making huge profits on the old subsidy system are suddenly making double and potentially triple more to maintain the old corrupt import system, and, of course, to sabotage Chinese refinery construction that could put an end to their gravy train.
Cutting their nose to spite the face…
Rather than benefit ordinary Nigerians as the IMF proclaims to want, the elimination of the subsidies has further pauperized the 90 per cent living on less than $2 a day, according to Mallam Sanusi Lamido Sanusi, the Nigerian Central Bank governor. An estimated 40 million Nigerians are unemployed in the country of 148 million.
Because transport costs are a significant factor in delivery of food to the cities, food price inflation has soared along with costs of public transportation for the majority of poorer Nigerians. According to the Nigerian Leadership Sunday, “prices of commodities which shot up as a fallout of the fuel pump price increase have refused to come down.” Everything from street vegetable sellers to carwashes to roadside photographers are feeling the shock of the rise in fuel prices. Unemployment is rising as small businesses fold.
The argument of the IMF and the Jonathan administration is that by freeing fuel prices, funds would be available to more social services and rebuilding Nigeria’s “infrastructure.” Both the IMF and the government know it would have been far more economically viable to replace the current corrupt system of importing refined gasoline and fuels with investing in rebuilding Nigeria’s domestic refining capacity.
Son Gyoh of the Nigerian Awareness for Development organization asks, “Would it not be more expedient to pressure government to service the refineries to full production capacity, given the implications on overhead and competitiveness for local industries?”
Gyoh pointed to the source of the problem: “Why have successive governments left the refineries in a state of disrepair while spending huge on subsidy? Is there any chance that the savings from subsidy withdrawal will go directly into rehabilitating the refineries? Does deregulation imply NNPC will no longer operate a monopoly in importation of refined petroleum product, or is this lobby a self-serving lifeline to continue its monopoly? ” He concludes, “In any case, there is good reason to doubt subsidy removal will solve the fuel scarcity problem as the cabal will only regroup to change tactics, a fact Nigerians are only too aware of.”
After Nigeria partly nationalized its oil sector in the late 1970s, it also took control of Shell Oil’s Port Harcourt I refinery. In 1989, Port Harcourt II refinery was built. Both refineries fell into serious disrepair after 1994, when the Abacha military dictatorship cut the “take” of the Nigerian National Petroleum Company NNPC from domestic sale of refined oil products such as gasoline from 84% to 22%. That caused a cash crisis for NNPC and a halt to refinery maintenance. Today only one of four refineries operates at all.
What developed since was a system of NNPC importing foreign gasoline and other refined products for Nigeria’s domestic needs, naturally at a far more expensive cost. The price subsidies were to relieve that higher import cost, hardly a sensible solution but a very lucrative one for those corrupt elements in the state and private sector making a killing, literally, off the import process.
NNPC criminal enterprise
The IMF is well aware of the real cause of Nigeria’s fuel industry problems. A Nigerian legislative committee examining the sources of the industry’s problems recently released a report documenting that at least $4 billion annually is taken from taxpayers in fuel industry corruption with the state Nigerian National Petroleum Company (NNPC) at the center. According to the commission, “every day, fuel importers drop off 59 million liters of fuel. The country consumes 35 million liters daily. That leaves 24 million liters of oil available for smugglers to export, paid for by government fuel subsidies. This costs the Nigerian people roughly $4 billion yearly, according to Reuters.”
The Nigerian government has said that the 7.5 billion dollars spent yearly on fuel subsidies could be used to provide desperately needed infrastructure. But they omit any mention of the rampant siphoning off of $4 billion of oil by black market smugglers, reportedly with connivance of high NNPC government officials, to sell to neighboring countries at a hefty profit. The refined imported fuel is reportedly smuggled into neighboring countries like Cameroon, Chad and Niger where petrol prices are far higher, according to Abdullahi Umar Ganduje, Deputy Governor of Kano State.
China as IMF target?
One major geopolitical factor that is generally ignored in recent discussion of Nigerian oil politics is the growing role of China in the country. In May 2010, only days after President Jonathan was sworn in, China signed an impressive $28.5 billion deal with his government to build three new refineries, something that in no way fits into the plans of either the IMF, or of Washington, or of the Anglo-American oil majors.
China State Construction Engineering Corporation Limited (CSCEC) signed the deal to build three oil refineries with Nigerian National Petroleum Corporation (NNPC), in the biggest deal China has made with Africa. Shehu Ladan, head of NNPC, said at the signing ceremony that the added refineries would reduce the $10 billion spent annually on imported refined products. As of January 2012, the three Chinese refinery projects were still in the planning stage, reportedly blocked by the powerful vested interests gaining from the existing corrupt import system.
A report in China Daily last November quoted Nigeria’s Olusegun Olutoyin Aganga, the minister of trade and investment, that Nigeria was seeking added Chinese investors for its energy, mining and agribusiness industries. Last September on a visit to Beijing, Nigeria central bank governor Lamido Sanusiannounced his country planned to invest 5 per cent to 10 per cent of its foreign exchange reserves in China’s currency, the renminbi (RMB) or yuan, noting that he sees the yuan becoming reserve currency. In 2010 China’s loans and exports to Nigeria exceeded $7 billion, while Nigeria exported $1 billion of crude oil, Sanusi stated.
Until now Nigeria has held some 79% of her foreign currency reserves in dollars, the rest in Euro or Sterling, all of which look dicey given their financial and debt problems. The move of a major oil producer away from dollars, added to similar moves recently by India, Japan, Russia, Iran and others, augurs bad news for the continued role of the dollar as dominant world reserve currency. Clearly some in Washington would not be happy with that.
The Chinese are also bidding to get a direct stake in Nigeria’s rich oil reserves, until now an Anglo-American domain. In July 2010, China’s CNPC (China National Petroleum Corporation) won four prospective oil blocks – two in the Niger Delta and two in the frontier Chad Basin, with plans to become core investor in the Kaduna refinery, and construction of a double track Lagos-Kano railway. China’s oil company, CNOOC Ltd also has a major offshore production area in Nigeria.
The IMF and Washington pressure to lift subsidies on imported fuels is at this point in question, as is the future of China in Nigeria’s energy industry. Clear is that lifting subsidies in no way will benefit Nigerians. More alarming in this context is the orchestration of a major new wave of terror killings and bombings by the mysterious and suspiciously well-armed Boko Haram. This we will look at next in the context of Nigeria’s recent transformation into a major narcotics hub.
F. William Engdahl, author of A Century of War: Anglo-American Oil Politics and the New World Order
The statements, views and opinions expressed in this article are solely those of the author and do not necessarily represent those of RT.
- Viewpoint: Nigeria’s President Jonathan backs down (bbc.co.uk)
- Seun Kuti: ‘End of fuel subsidy is treason against Nigerians’ (worldnewsflesh.wordpress.com)
- Nigerian leader Goodluck Jonathan defends fuel cut (direcmood.wordpress.com)
- Nigeria’s government squeezed by subsidy protests, militant movements (cnn.com)
- Occupy Nigeria – a reactionary occupy movement? (ethanzuckerman.com)
- REVELATIONS FROM HOUSE PROBE: Wanted; Subsidy on sincerity (vanguardngr.com)