The Federal Government should act with caution in the Niger Delta, where militants have been blowing up oil and gas pipelines, as a military approach will not calm the situation, the governor of a state in the region said.
President Muhammadu Buhari has heightened the military presence in the oil-rich southern region where attacks in the last few weeks – mostly claimed by a group calling itself the Niger Delta Avengers – have driven the country’s oil output to a more than 20-year low.
“The way forward is for all stakeholders to discuss the issues and the need for the federal government to tread with caution and not adopt a military approach as a means to solve the problem,” Bayelsa State Governor Henry Dickson said in a statement on Wednesday, a day after meeting executives from oil majors. The meeting was also attended by security agencies.
“No one person can protect the assets in the remote areas of the region. I, therefore, call on those involved in this act of criminality and brigandage to stop forthwith,” he said.
The impact of the insurgency on crude production could push Africa’s biggest economy, which contracted in the first quarter of the year, into recession since oil sales make up 70 percent of national income.
Meanwhile, Nigeria was clawing back lost oil production this week after militant attacks on pipelines and an accident at an export terminal hobbled the country’s crude exports.
A spate of militant activity in Nigeria’s oil-producing region slashed output by some 40 percent, to more than 22-year lows, and an ExxonMobil terminal accident forced it to cut output of Qua Iboe, the country’s largest export stream.
On Tuesday, Italy’s ENI confirmed it issued a force majeure – suspension of deliveries because of events beyond its control – on Brass River crude, leaving at least four crude streams under force majeure on Tuesday.
But both current and planned exports have already begun to edge higher, according to traders and early July-loading programmes.
“The Nigerian issue seems to be easing,” one trader said.
Planned exports of Qua Iboe were set at 337,000 barrels per day (bpd) for July, the highest since January. Already this week, traders said Exxon Mobil’s production was approaching 300,000 bpd, close to the initially planned May exports of 317,000 bpd.
Bonny Light exports for July were also pegged at 240,000 bpd, the highest of 2016. Even as both grades remained under force majeure, traders said cargoes were loading with less than two weeks of delay, reports Reuters.
“Cargoes are loading,” a trader said, adding the forces majeure were largely just delaying the loadings of Bonny Light, Qua Iboe and Brass River.
Traders said that even Forcados, which has been under force majeure since February, was loading in small amounts via alternative export pipelines.
Shell declined to comment, but a spokeswoman referred to earlier comments from Osagie Okunbor, managing director of Shell Petroleum Development Company of Nigeria Ltd (SPDC), saying it was looking for “viable alternatives of crude exports” while it repaired the primary Forcados pipeline.
Still, the prospect of further attacks cast a shadow on Nigeria’s oil production, and traders said the loading delays and unpredictability of exports made some buyers reluctant to buy the country’s oil.
“There is a strong likelihood that the high frequency of attacks on oil infrastructure will continue at least in the short to medium term, resulting in depressed oil output over much of 2016,” PGI Intelligence, a UK-based risk management company, said in a note.
It added “the government’s handling of its crackdown on militants will be key to determining whether violence will escalate”.
