Nigerian Offshore Oil Crisis

Written by on June 26, 2008

Nigeria’s oil production has reach its all time low in 25 years due to attacks from a militant group named MEND (Movement of the Emancipation of the Niger Delta), a group who believes the wealth created from Nigerian oil should provide for more than the government. MEND is recently responsible for as much as 345,000 barrels/day being unable to leave the country at times.
 

Onshore oil fields have been continuously attacked by this militant group, but in the past it was believed that offshore facilities were out of MEND’s reach. This was a huge relief because the future of Nigerian oil is offshore rather than onshore. In fact Nigerian offshore oil is considered to be one of the few states with geological potential to significantly increase oil production and exports. For this reason MEND’s attack on Shell’s 120 knm offshore Bonga facility(seen above) on June 19th may prove to be a serious problem. On the following day MEND also destroyed a key Chevron pipeline. Keep reading for more information on this crisis

That’s 1.25 million barrels per day of new offshore production planned in the next 6 years. None of it was previously considered vulnerable to attack. Now it all appears to be within the demonstrated reach of MEND.
 

So…how vulnerable are these offshore facilities?
 

These offshore facilities engineered to endure extreme weather conditions, but not terrorist attacks. As previously stated it was not known that MEND could reach offshore facilities, hence no measure have been taken to prevent them. Historically offshore facilities are extremely vulnerable to these attacks. The Piper Alpha platform explosion in the North Sea resulted in 167 deaths and was one of the largest insured financial losses in history. Overall, this is a situation which heavily favors MEND.
 

Since it appears the attacks from MEND are nearly impossible to stop, what is a possible solution to this attack? One of the major reasons MEND carries out these attacks is that the average person in Nigeria does not benefit at all. The jobs created by the oil are not given to locals, but rather people are brought from other countries to do the job. If oil companies could give the locals compensation, whether it be money or jobs they could possibly come to an agreement. This would most likely save the oil companies the money that they would spend on preventing and repairing terrorist attacks.
 

The more likely situation is that oil companies spend more money to increase defense and violence increase.
 

Let me know what you think the solution is or what will happen in the future by commenting. Thanks!