Nigerian President Muhammadu Buhari’s nascent campaign to negotiate with separatists in the oil-rich Niger Delta has proven to be more effective in restoring oil output to pre-conflict highs than his previous all-out war tactic.
“Despite the president’s initial threats and bluster on the delta, common sense now seems to be prevailing,” Cheta Nwanze, of Lagos-based head of research at SBM Intelligence, told World Oil this week. “The government needs steady oil production to stand any chance of a quick end to the economic recession.”
It’s a numbers game, really. Oil output hit a low last August, with production falling to 1.4 million barrels per day, compared to the 2014-2015 average of 2 million bpd. Since Lagos declared that it had reached a truce with a consortium of militant groups in November, production has recovered to 1.68 million bpd.
Only a single force majeure, a clause that allows production companies to miss contractual supply commitments in extreme circumstances, remains since dialogue with the Niger Delta Avengers (NDA) started.
Lagos’ new numbers puts its country just ahead of rival Angola, which temporarily replaced Nigeria as the continent’s top producer in parts of 2016. February figures from the Organization of Petroleum Exporting Countries (OPEC) put Angolan output at 1.641 million bpd, but the bloc’s November deal to cut 1.2 million bpd of production in the first six months of 2017 has lowered Luanda’s growth prospects.
Nigeria has a special advantage in this field. OPEC allowed the country to be exempt from the agreement due to lowered output from ongoing domestic strife. In the meantime, the absence of bombings in 2017 has allowed for major progress on the reconstruction of the Forcados and Ibeo export terminals, both of which were attacked last year.
A tangible representation of the Avengers’ reduced relevance comes directly from the group’s dwindling online presence. The last post on the NDA’s official website was on January 6th, congratulating fighters for a “job well done in 2016” before promising 2017 to be a “year of surprises” in the “struggle for the liberation of our motherland.” Related: Oil Heads Higher As Iran And Saudi Arabia Draw On Reserves
The NDA demands the proportional allocation of oil revenues for the human and economic development of residents of the Niger Delta – a common-sense standard that the Nigerian government has chronically failed to meet.
"The Niger Delta is a region suffering from administrative neglect, crumbling social infrastructure and services, high unemployment, social deprivation, abject poverty, filth and squalor, and endemic conflict," read the United Nations Development Programme’s 2011 report on the area.
At the end of the NDA’s last web statement, Brig. Gen. Mudoch Adbinibo declared the commencement of Operation Walls of Jericho and Operation Hurricane Joshua to “reclaim our motherland and dislodge all cleavages the Nigerian Ruling oligarchy has foisted on the region.”
In the past 90 days, the website is without update. Same with the Adbinibo’s official Twitter feed.
This can be attributed to Vice President Yemi Osinbajo’s expanding communication with civilian and militant representatives of the Niger Delta. In February, the official visited the oil-producing region to restart negotiations.
"We seek to first to understand the problems and to offer solutions," Osinbajo said in Bayelsa. "Since the destruction began, Nigeria began to lose one million barrels per day and almost 60 percent of revenues have been lost to vandalization. You cannot destroy the sources of revenue and expect rapid development - development comes with revenue." Related: U.S. Threatens OPEC As Oil Exports Hit Record High
But the vice president does not seem to be the source of distrust within local communities. Buhari’s year of military action against the NDA and similar groups has made the president the source of uncertain loyalty.
“We welcome Osinbajo’s initiatives,” Dan Ekpebide, a community leader of the Gbaramatu district told World Oil by phone from the southern oil center of Warri. “If Buhari upholds them and implements them, then that will be the light at the end of the tunnel.”
Rhetoric from the delta suggests this is Buhari’s last chance to make diplomacy work in favor of national stability. A single military powered slip-up could mean another $7 billion in lost revenues. This would leave limited prospects for the conflict to be resolved until a new president takes power—which, at the earliest, would happen in 2019.
By Zainab Calcuttawala for Oilprice.com
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