A turning point for Nigeria’s insurgency?

The last two weeks have seen a storm of insurgent activity in Nigeria: Shell’s onshore output has been halved to around 140,000 barrels a day, Chevron has lost about the same again (taking the aggregate output lost to over to a fifth of Nigeria’s total) – and for the first time Lagos has been attacked.  According to Africasia.com,

Fighters from the Movement for the Emancipation of the Niger Delta (MEND) attacked the facility, the first strike in Nigeria’s economic nerve centre since the oil insurgency was launched in 2006. Rescuers said five people were burnt beyond recognition in the blast.

“The militants went into open shooting with the naval officers guarding the facility but they were overpowered. They used dynamite to destroy the manifold,” said Geofrey Boukoru, a member of the emergency rescue team.

The militants arrived in four speed boats, exchanging fire sporadically with the navy for about three hours before hurling dynamite into the facility, said a senior official from the Pipelines and Products Marketing Company, an affiliate of the state-run petroleum corporation.

The Lagos attack took place just before the federal government’s planned amnesty release of Henry Okah, the head of MEND – a release that, in the event, still went ahead despite the attack.  MEND has since said in a statement that it “considers this release as a step towards genuine peace and prosperity if Nigeria is open to frank talks and deals sincerely with the root issues once and for all” – although as Abubakar Momoh of Lagos State University observes to AlJazeera, “What the government has done in the case of Okah is like treating the symptom and not curing the disease … there are issues that drove the militants to the trenches. Until those issues are resolved in a fair and just manner, there will never be peace in the Niger Delta.”

As David noted back in November last year, counter-insurgency expert John Robb has called Henry Okah “one of the most important people alive today, a brilliant innovator in warfare”. Here’s Robb’s account of how Okah did it. (more…)

Here comes trouble

From a post here last October:

[We can expect] a reduction in commodity prices for the duration of the global downturn (however long that may be) as demand for them falls.  As I’ve mentioned, futures prices for grain crops are already falling; we can expect that trend to be supported by falling energy prices, which will reduce some of the pressure on food that’s come via fertiliser prices, transport costs and demand for crops as biofuels.

That said, let’s be clear: the fall in commodity prices due to a global downturn does not mean that we’re out of the woods for good on high food and fuel prices. As Javier Blas notes in the FT today, the downturn also means that necessary investment in increasing supply will be put off.  As soon as we’re out of the dowturn and demand starts going up again, we’ll discover that there’s been no shift in the underlying supply fundamentals – and hence that the stagflation drivers we were all worrying about until the credit crunch really began in earnest are just waiting where we left them.

Latest oil price data (Jul 08 – now, courtesy of BBC News):

Latest FAO Food Price Index:

Shell settles Saro-Wiwa case

Royal Dutch Shell - Flickr User Lee Otis

Royal Dutch Shell - Flickr User Lee Otis

After 13 years, Royal Dutch Shell has agreed to pay $15.5 million compensation to settle a court case over its alleged part in the execution of Ken Saro-Wiwa and other Ogoni leaders in the Niger Delta. Much of the backstory can be found here.

Now I’m no judge (not yet, anyway), but $15 million doesn’t seem a lot for a firm with 2008 revenues of $458 billion. Michael Goldhaber, who does know something about law, describes the sum as ‘nuisance value’ from Shell’s point of view.

Yet the fact that Shell settled the day before the trial was due to begin is indicative of the firm’s distaste for either the publicity that court proceedings would create, or the culpability that might be uncovered. (more…)

U-turn at the IEA?

Nobuo Tanaka, the executive director of the International Energy Agency, is quoted in the FT this morning as saying that “it would be in the interests of producers and consumers if oil stayed at its present level of about $45”.

This strikes me as a bit odd.  A whole range of senior oil industry figures has been warning that with prices having fallen off a cliff since last summer’s peak of $147, investment in new production capacity has fallen sharply as well – setting the stage for a potential supply crunch as soon as the world begins to emerge from the downturn and demand starts to pick up.

Nick Butler, for example, suggested in December that a price band of $50-$75 a barrel is needed to ensure that sufficient new investment comes on stream to meet demand (which the IEA projects will rise from 85m barrels a day in 2007 to 106m mb/d by 2030). Total CEO Christophe de Margerie, meanwhile, said in October last year that if the oil price fell to $60 a barrel and stayed there, “a lot of [new] projects would be delayed”.

Strangest of all, it’s less than a month since Nobuo Tanaka himself was briefing heavily about the risks of a future supply crunch resulting from under-investment, and stressing that he expected demand to rise by about 1 mb/d from next year onwards.

So what’s going on?

(more…)

Saudi Arabia’s warning to the US

If you missed Turki al-Faisal’s op-ed in the FT last week, then take a look.  Entitled “Saudi Arabia’s patience is running out”, the language of the former Saudi Ambassador to the UK and the US (and before that the long-time head of Saudi intelligence) is blunt.  For instance:

Unless the new US administration takes forceful steps to prevent any further suffering and slaughter of Palestinians, the peace process, the US-Saudi relationship and the stability of the region are at risk. Prince Saud Al-Faisal, Saudi foreign minister, told the UN Security Council that if there was no just settlement, “we will turn our backs on you” …

America is not innocent in this calamity. Not only has the Bush administration left a sickening legacy in the region, but it has also, through an arrogant attitude about the butchery in Gaza, contributed to the slaughter of innocents. If the US wants to continue playing a leadership role in the Middle East and keep its strategic alliances intact – especially its “special relationship” with Saudi Arabia – it will have to revise drastically its policies vis a vis Israel and Palestine.

Think that’s strong?  Try this:

Last week, President Mahmoud Ahmadi-Nejad of Iran wrote a letter to King Abdullah, explicitly recognising Saudi Arabia as the leader of the Arab and Muslim worlds and calling on him to take a more confrontational role over “this obvious atrocity and killing of your own children” in Gaza. The communiqué is significant because the de facto recognition of the kingdom’s primacy from one of its most ardent foes reveals the extent that the war has united an entire region, both Shia and Sunni. Further, Mr Ahmadi-Nejad’s call for Saudi Arabia to lead a jihad against Israel would, if pursued, create unprecedented chaos and bloodshed. So far, the kingdom has resisted these calls, but every day this restraint becomes more difficult to maintain …

Today, every Saudi is a Gazan, and we remember well the words of our late King Faisal: “I hope you will forgive my outpouring of emotions, but when I think that our Holy Mosque in Jerusalem is being invaded and desecrated, I ask God that if I am unable to undertake Holy Jihad, then I should not live a moment more.”

The FT followed Turki’s article up with a leader yesterday, observing that:

Anyone with a stake in the stability of the wider Middle East should take very seriously the warning set forth in the Financial Times last Friday by Prince Turki al-Faisal … The Saudis have emitted a crescendo of warnings, as Arab leaders over the past decade have lost faith in American leadership and signalled they may make their own arrangements: hostile to Israel, in detente with Iran, and turning their backs on the US – unless it can restrain its Israeli ally. 

Pretty sobering.  Also worth checking out this analysis from a retired US foreign service officer who was twice posted to Sauid Arabia.