(EnergyAsia, August 29 2011, Monday) — Last Friday’s deadly bomb attack in its capital city of Abuja and the on-going sabotage of its oilfields and infrastructure are a powerful reminder of the obstacles blocking Nigeria’s attempts to raise oil production beyond the West African state’s recent peak of over 2.5 million b/d.
Islamic radicals linked to Al Qaeda have claimed responsibility for the explosion that struck the UN complex killing at least 18 people, and are threatening further violence in a country already notorious for its ethnic violence and lawlessness.
The bombing topped Shell Nigeria’s announcement just three days earlier that it will not meet this year’s oil production target after saboteurs damaged the pipelines delivering Bonny Light crude for export. While Shell declined to provide figures, industry sources said the company has declared force majeure on more than 300,000 b/d of exports for at least three months from August.
The two events combined to cut short President Goodluck Jonathan’s celebrations of his first 100 days in office in which he had highlighted the country’s surging oil exports and relative peace as two of his key achievements.
Thanks partly to his peace mediation efforts with rebels controlling a large section of Nigeria’s oil-producing Niger Delta region, the country’s crude output rose more than 10% of 2.52 million b/d last year. A Christian presiding over a largely Muslim country, Mr Jonathan became Vice President in May 2007 and took over the top job following the death of President Umaru Yar’Adua three years later.
Before last week’s tragic events, a Presidential spokesman said the government’s amnesty programme for rebels of last year had enabled Nigeria to reclaim its position as Africa’s largest oil exporter from Angola.
Nigeria’s finances were also boosted by a 46% rise in last year’s oil export revenue to 9.15 trillion naira. (US$1=155 naira). According to the National Bureau of Statistics, the Federal government depends on oil exports for more than 80% of its revenue and 95% of foreign exchange income.
The government and oil industry have blamed the country’s growing population of separatist rebels, terrorists and gangsters for slashing the country’s oil production to around 2.1 million b/d between 2006 and 2009 compared with 2.5 million b/d in 2005. The most powerful of them, Movement for the Emancipation of the Niger Delta (MEND), launched its violent campaign against the government and the industry in 2005.
Nigeria has emerged as an important source of oil for the US and several Asian and European countries. Royal Dutch Shell, Exxon Mobil Corp, Chevron Corp, Total SA and Eni SpA operate joint ventures with state-owned Nigerian National Petroleum Corporation (NNPC) to produce the country’s crude.
With Libya unlikely to fully restore its 1.6 million b/d production after months of civil war, the bomb attack in Abuja, if indeed carried out by Islamic radicals, could open up Africa’s largest oil supplier as a new front for geopolitical conflict.