The Fuse

Nigeria Makes Progress With Militant Groups, But Oil Production Still Faces Challenges

by Zachary Waller | September 01, 2016

The Niger Delta Avengers, arguably the most visible and effective militant groups opposing the Nigerian central government in the Niger Delta, confirmed on Monday that it halted hostilities in the oil-rich region, implying that it was pushing ahead with dialogue. In a strongly worded open letter to President Muhammadu Buhari posted on its website, the group said it expected his government to respond with “a genuine and positive attitude to restructuring and self-determination for every component unit of Nigeria.”

The progress with the militant groups could portend the stability Nigeria needs to meet its goal to significantly rebuild its oil production capacity.

While it remains to be seen if the peace process will continue without further attacks by the Niger Delta Avengers, such developments bring some hope at a time when another militant group in the region, the Adaka Boro Avengers, has also agreed to talks with the federal government. This progress could portend the stability Nigeria needs to meet its goal of significantly rebuilding its oil production capacity. In August, Oil Minister Ibe Kachikwu told CNN that the nation would need to ramp up production by 900,000 barrels per day to compensate for  the string of militant attacks on oil infrastructure that has plagued the Niger Delta, Nigeria’s main oil-producing region. While attacks on the oil industry there have been common since the late 1990s, they increased significantly this year, severely disrupting production (see chart below). Many militant groups remain active, and Buhari told U.S. Secretary of State John Kerry during his visit to Abuja last week that the government may be compelled to use military force against them to protect the nation’s economy.

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Last year, Buhari became president after defeating incumbent Goodluck Jonathan. Buhari, a retired major general and former military ruler of Nigeria, won on a promise of rooting out corruption and fighting Boko Haram, the Islamist insurgency in the country’s northeast. While Buhari has tried to make progress on both of these issues, he has also had to attend to a new crisis that emerged just a few months into his term—a resurgence of violence in the Niger Delta.

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Origins of militancy

In 1998, when the Ijaw Youth Council (IYC) was formed, it launched attacks on oil infrastructure in the Delta, claiming it was fed up with environmental damage caused by oil companies and demanding more oil revenues be sent directly to the people of the Niger Delta. The IYC inspired others to take up arms, including the Movement for the Emancipation of the Niger Delta (MEND), the group that became the main source of attacks in the early 2000s. While their fight was rooted in grievances (oil companies were causing environmental damage in the Delta and local populations were seeing little from oil revenues), they quickly undermined their message as they began siphoning and bunkering oil, seeking profit for themselves by causing more environmental damage.

In 2009, then-president Umaru Musa Yar’Adua reached a peace deal with the militants. Under the agreement, the government would pay militants who laid down their arms a stipend of around $400 per month—a large sum in the Niger Delta—in exchange for peace. Additionally, the government awarded oil industry security contracts to former militant leaders. This agreement continued under the Jonathan administration and served to largely keep the peace in the Delta.

Attacks resume

In his first months in office, Buhari took a tough stance on corruption and made several controversial decisions, one of which was to cut the total amnesty payments to former Niger Delta militants by 70 percent. In reducing the size of the amnesty program, Buhari was looking to both reduce government spending and end an agreement he views as inherently corrupt. To Buhari, the deal not only requires precious government funds, but also sets a precedent that militancy pays (both through official stipends and contracts with the government, and illicit deals with local politicians). While MEND has not launched attacks since 2013 and is currently in peace negotiations with the government, new militant groups have sprung up, largely comprised of disgruntled former militants and other disillusioned young men looking for a slice of the oil pie.

With names like the Niger Delta Avengers, Niger Delta Suicide Squad, Ultimate Warriors of the Niger Delta, and Niger Delta Sea Commandos, many may find the militants in the Delta hard to take seriously, but they have had a significant impact. Since the attacks started, Nigerian oil production has declined precipitously. According to the EIA, Nigeria produced 1.9 mbd of crude oil in 2015, making the country OPEC’s 7th-largest producer and the largest oil producer in Africa. Nigeria lost both of those titles early in 2016 (see chart below), largely as a result of the attacks. Production fell to a mere 1.4 mbd in May (before rebounding slightly to 1.5 mbd in June), making fellow OPEC member Angola the largest African oil producer.

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Seeking peace

Making things harder for the government, many of the militant groups have different goals and will not be easy to placate. Moreover, the government has not been able to get all of the parties to the negotiating table for peace talks. Some militants, such as the Ultimate Warriors of the Niger Delta, want 60 percent of oil and gas revenue to go directly to the Niger Delta and are also seeking an export processing zone and federal maritime university completed before they will lay down their arms. Others, such as the Aswana Deadly Force of the Niger Delta, say they will accept nothing short of independence for the Niger Delta before they quit fighting.

The military is embroiled in a bitter fight against Boko Haram in the northeast and is trying to keep peace between farmers and herders in the center, making it increasingly difficult to allocate resources to the south to seriously fight the Niger Delta militants.

Further, the military is already embroiled in a bitter fight against Boko Haram in the northeast and is trying to keep peace between farmers and herders in the center, making it increasingly difficult to allocate resources to the south to seriously fight the Niger Delta militants. However, as it has become clear that certain Niger Delta groups will not lay down their arms, the government has explored military options. It recently launched Operation Crocodile Smile, a military operation supported by MEND that will use both regular military forces and former militants still a part of the amnesty program to secure oil infrastructure.

Economic problems

Reducing attacks, limiting outages, and increasing production matter greatly for the West African country. Nigeria is extremely dependent on oil, and revenue losses from decreased oil exports (which account for 92 percent of Nigeria’s export earnings) severely challenge the economy and government. Lower oil prices had already forced the government to cut spending before attacks reduced output and prompted new spending. These issues have been negatively reinforcing: the fall in the oil price was actually part of the reason why Buhari cut amnesty payments and temporarily suspended them, as it became harder for the government to afford them. Reducing the outages is a concern globally as well, since only a relatively weak oil market has prevented the attacks from causing destabilizing spikes in world crude prices. In a bid to boost the oil price, Nigeria joined together with Venezuela, Libya, and Angola to push for OPEC production cuts at the cartel’s last meeting, but was ultimately unsuccessful.

Ending the violence

 To restore production and keep Nigeria’s economy from collapsing, Buhari needs to both end the attacks and win the support of the people of the Niger Delta.

While Nigeria is coping, the situation is grave and something needs to be done. To restore production and keep Nigeria’s economy from collapsing, Buhari needs to both end the attacks and win the support of the people of the Niger Delta, who feel a corrupt government and oil industry have reaped the oil rewards while their region has been polluted. Currently, 13 percent of oil revenues go directly to the Niger Delta, but politicians largely squander the money on white elephant projects or steal it. By targeting local corruption, encouraging competent governance, and bolstering efforts to clean up the Delta, Buhari can work to end the attacks by taking away the militants’ claims to legitimacy.

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