Global Insight Perspective

Significance

MEND has become the most recognisable militant group and its actions this year have seen the facilities of oil companies vandalised, oil pipelines sabotaged, bombs exploded in company compounds, foreign oil workers kidnapped, and most importantly a significant amount of Nigeria's crude shut-in for most of the last year.

Implications

The bombings and the return to kidnapping are indicative that MEND has stepped up its campaign ahead of the 2007 presidential election.

Outlook

Global Insight believes that 2007 is likely to see a continuation of the violence seen this year, with an increase in pipeline sabotage and the kidnapping of expatriate oil workers. MEND is likely to play a crucial role in Nigeria's elections next year.

In 2006 a militant organisation emerged in the Niger Delta that had a profound effect on the politics and business of Nigeria—particularly the workings of the oil companies that operate in the country's oil producing region. MEND has become the most recognisable militant group in the region and its actions this year have seen the facilities of oil companies vandalised, oil pipelines sabotaged, bombs exploded in company compounds, foreign oil workers kidnapped and most importantly a significant amount of Nigeria's crude shut-in for most of 2006. MEND started its attacks on the oil industry in Nigeria in December 2005; its actions have dominated the scene in 2006, but it is in 2007, when the country faces crucial elections including presidential poll, that MEND will want its voice heard. Over the past month, MEND's tactics have taken a more violent turn: the group has returned to hostage-taking and the bombing public places, Global Insight believes that Nigeria should be ready for an explosion of violence in 2007.

MEND's first attack was on 20 December 2005 when it blew up the Opobo pipeline in the Delta; since then it has attacked Nigeria's oil industry in various ways, while also disappearing for many weeks at a time. Notably, MEND is a sophisticated and organised militant group and communicates with international media outlets. MEND's spokesman Jomo Gbomo contacts Global Insight either to claim responsibility for the group's actions or to deny any involvement if it was not associated with an attack.

Kidnappings and a Deteriorating Security Situation

It was MEND that first started the much imitated strategy of kidnapping foreign oil workers in 2006, using hostage-taking to focus global media attention on their cause. The group soon found hostage-taking to be cumbersome, but this tactic was adopted by criminal gangs in the Niger Delta knowing they could extract a large cash ransom for the safe return of the oil workers. Over the summer this led to a rash of expatriates being kidnapped and making the Niger Delta an extremely dangerous place to work. In 2006, over 50 foreign oil workers were kidnapped: all were released unharmed, except for one Briton who was killed during a botched rescue attempt.

Nevertheless, MEND is currently holding four foreign oil workers hostage: one Lebanese and three Italian oil workers. The group has said that it will keep the hostages "for years" and refused all demands for the workers to be released before Christmas day. It has also said that it will capture more workers, who it will seek to use as bargaining chips for the release of Mujahid Dokubo Asari the leader of the Niger Delta People's Volunteer Force (NDPVF) and deposed Bayelsa State governor Diepreye Alamieyeseigha; however, the federal government is extremely unlikely to give in to this tactic.

In the last couple of weeks, MEND has started a bombing campaign targeting oil companies and government offices in the Port Harcourt area of the Niger Delta. The security situation has deteriorated as two bombs were set off at Agip and Shell compounds. The latest incidents show the militant group growing in experience and sophistication. Earlier in the year, on 29 April, MEND blew up at least five oil tanker trucks in a car bomb attack in Warri; back then, the group said that the attack was a “final warning” before it turns its attention to oil workers, storage facilities, offices, and other “soft oil industry targets”.

Last month, the U.S. consulate in Lagos warned of the imminent threat of a coordinated attack on oil facilities, including the increased risk to U.S. citizens of further kidnappings in the Niger Delta. The report said the "attack may include 10 to 20 simultaneous bombings of land-based targets and a series of separate attacks on oil facilities”. Similarly, on 4 October, a U.S. consulate report suggested that militants wanted to attack Bonny Island. However, no attack materialised. The question raised by the bombings in Port Harcourt yesterday is whether this is the start of a bombing campaign or just another one-off incident. MEND has warned of a violent future for the region, including the targeting of oil company vehicles with roadside bombs; a tactic taken from the war in Iraq.

The bombings are likely to hit investor confidence and in August this year Willbros a U.S. engineering services firm and German construction firm Julius Berger concluded that the commercial and operating risks associated with doing business in Nigeria exceeded acceptable risk levels. It is unlikely that the major oil companies operating in the region will consider leaving Nigeria, but the kidnappings and bombings have caused the security situation to deteriorate further.

Outlook and Implications

The bombings and the return to hostage-taking show that MEND has stepped up its campaign ahead of the 2007 presidential election. Global Insight predicts MEND will look to disrupt crude oil production throughout 2007 and increase the levels of violence already seen this year. MEND has been successful in forcing oil companies to shut-in production in 2006: this has been accomplished by rupturing pipelines or sabotaging oil company facilities. There have been numerous times this year when a force majeure (which indemnifies a company from lawsuits for not meeting contractual obligations as a result of an event, such as sabotage to a pipeline, that is beyond its control) has had to be called. Since the major attacks started a year ago, Nigeria has been shutting in around 500,000 barrels per day (b/b) of oil, although Nigeria's department of petroleum resources has claimed the figure to be as high as 872,000 b/d.

All oil companies operating in the region have been targeted, but it seems that Eni and Shell have been most affected. Earlier this year, MEND warned that it would “execute all staff and workers found in previously attacked locations”. Shell's Chief Executive Jeroen van der Veer admitted that the company will need a new strategy to address Nigeria’s deteriorating security situation.

MEND seems content to be viewed as an outsider and does not want to work with the federal government or elected political representatives. The ruling People's Democratic Party (PDP) announced its candidates for April's presidential election this month, handing Umaru Yar'Adua the nomination. (A new president will be elected as the incumbent Olusegun Obasanjo is constitutionally barred from standing for a third term in office.) MEND has told Global Insight that it has no interest at all in working with the federal government and is not impressed by the nomination of Bayelsa State governor Jonathan as the PDP's nominee for vice-president, despite his being an Ijaw politician from the Niger Delta. There seems to be no way of resolving the crisis in the Delta and the current administration has put little effort into bringing peace there over the last year. It is possible that a new government will appeal to MEND, which could be brought inside the government, but this appears to be unlikely: MEND wants revolution not reform.

Global Insight believes that 2007 is likely to see a continuation of the violence seen this year, with an increase in pipeline sabotage and further expatriate oil workers taken hostage. This will mean more crude is shut-in and the Delta will be an even more dangerous location to operate; however, in the eyes of most of the oil companies the rewards still outweigh the dangers. It is unlikely that outside intervention will be requested, even though the U.S. government has previously offered to provide added security. Either a severe disruption of energy supplies to the Atlantic Basin markets or large amounts of violence as a result of electioneering would be reasons for U.S. forces to step up security operations in Nigeria.

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