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Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

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Nigeria’s Oil Production In Free Fall After More Attacks

The resurgence of Niger Delta militancy has reached the level of an all-out renewal of conflict that Nigeria’s security forces appear incapable of stopping, and force majeure on oil deliveries is being declared almost across the board.

Attacks are now coming on a weekly basis, and each time, they succeed in taking more oil offline, forcing the government to admit that half of the country’s oil production is now effectively halted.

As of Monday, oil and condensate production in Nigeria is down to 1.1 million barrels per day, according to Nigerian petroleum officials, with 50 percent of output offline. Over one million barrels per day of production has been lost.

Four major crude export grades—Qua Iboe, Bonny Light, Brass River and Forcados—are now under force majeure. Exxon’s is Qua Iboe, and this is said to be a mechanical failure, but the rest are confirmed as the direct result of militant attacks.

On Saturday, the Niger Delta Avengers (NDA) made another strategic move by blowing up oil and gas pipelines belonging to Shell and Eni-owned AGIP. The attacks targeted Shell’s Bonny terminal trunkline and AGIP’s Brass export terminal.

The deadline for the supermajor oil companies to leave the Niger Delta is tomorrow—May 31. Related: When Will Solar Overtake Oil?

And as militants threaten that more is to come and “something big is about to happen and it will shock the whole world,” no one is second-guessing them.

Securing Nigeria’s oil production appears for now to be elusive at best. Late last week, the NDA rejected an attempt at peace by the government, saying they would settle for nothing less than “a sovereign state”. They don’t want pipeline contracts. They don’t want a piece of the corruption pie as their comrades before them won in a 2009 amnesty deal. They want the entire pie. They want full control of the Niger Delta and all its oil.

Nigerian military officials claim to have thwarted additional attacks on Sunday targeting oil pipelines in Gulobokri and Eweleso in Bayelsa state. The attacks were apparently aiming to take another chunk out of the Eni-operated AGIP pipeline at Gulobokri, but security forces reportedly halted the attack after a standoff and shootout with militants in speed boats. A second thwarted attack targeted an oil facility also in Bayelsa.

The question now is whether Nigerian security forces can really stem this tide of violence. So far, the militants have made good on every threat they have issued. They have stood their ground, taken half the country’s oil production offline and managed to win key community leaders over to their side. Related: Oil Heading for $60

If they can’t be bought off like their predecessors were in 2009, Nigeria could lose the Niger Delta, and its oil wealth entirely. From a strategic perspective, it’s not looking good for the Nigerian government, whose military forces are already stretched too thin with a war against Islamic radical Boko Haram in the North. The oil price slump has also made it nearly impossible to fund the successful fighting of any conflicts, so a Niger Delta militancy hits where it hurts most.

While the initial resumption of attacks by Niger Delta militants under the newly formed NDA may have seemed arbitrary, it has clearly been in the planning stage for some time. The attacks are not random but designed to take production offline and to keep the oil majors from completing any repairs. The new and improved Niger Delta militancy is clearly well-organized, well-armed and well-equipped—enough so that they can launch multiple simultaneous attacks.

Their goal is full-throttle force majeure—and the government itself may have to declare force majeure on security. But the militants have promised that bigger attacks are yet to come.

By Charles Kennedy of Oilprice.com

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