Foreign Oil Worker Killed in Nigeria as Militants Attack Oil Services Company Saipem

Foreign Oil Worker Killed, Others Kidnapped

A Colombian oil worker has been killed by militants who attacked the construction yard of oil services company Saipem. The death of the expatriate and the kidnapping of two other foreigners plunges the security of Nigeria's oil-producing region the Niger Delta to a new low under the administration of President Umaru Yar'Adua.

Reuters reports that 10 gunmen dressed as soldiers raided the construction yard and abducted a Filipino and a Colombian. Another Colombian was wounded in the attack and later died in hospital. Police spokeswoman Ireju Barasua in Port Harcourt, the main commercial hub in the Niger Delta where the yard is located, said: "Some armed men came in boats, attacked Aker base where you have Saipem. The attackers killed one person and abducted two."

Outlook and Implications

The death of an oil worker at the hands of militants will send shockwaves through the oil industry and add to the deteriorating security situation in the Niger Delta. No one has taken responsibility for the attack and the notorious militant group the Movement for the Emancipation of the Niger Delta (MEND) has denied any involvement. MEND has told news agencies that it was not behind the attack, despite stating earlier this week that it would once again renew attacks on oil facilities and restart the abduction of foreign oil workers. Jomo Gbomo, MEND's spokesman, had previously stated: "We will commence attacks on installations and abduction of expatriates. There will be no forewarning of these attacks," but MEND has to be believed when it issues a denial and it would be unusual for it to wage an attack in Port Harcourt when it is known to prefer operating in the creeks of the Delta.

The attack should be a major concern for oil companies and Global Insight believes that it could be the beginning of the splintering of the militants and that the oil industry may experience renewed attacks on installations that would be uncoordinated and seemingly random. The attack comes only a day after Alhaji Mujaheed Asari-Dokubo, the leader of the Niger Delta People's Volunteer Force, dismissed fears that oil companies are facing renewed attacks in the Delta. It has become apparent since his release from jail that Asari is no longer considered as important as prior to his incarceration. Although he still yields huge influence over his ethnic Ijaw group, it seems that he will now have to create a new role for himself as a middleman between the Delta indigenes and the Federal Government.

One possibility for the attack is revenge. A leading Niger Delta militant known as Henry Okah was arrested on 3 September in Angola and it is believed that it is Okah, known to be a gun runner and an alleged money launderer, was responsible for the funding of MEND. So far there has been little news on Okah, but the attack on Saipem cannot be ruled out as retaliation for Okah's arrest. By detaining Okah the Nigerian government is not necessarily weakening the Niger Delta militants but causing them to act more impulsively now that a major figure has been removed.

The oil industry must be worried that the attack took place in Port Harcourt and this could mean that the "cults" associated with the rival politicians in Rivers State were responsible for the attack. Ijaw national leader Chief Edwin Clark recently met with President Yar'Adua, according to local newspaper ThisDay. Yar'Adua has ordered a thorough investigation into allegations made by leaders of the Ijaw National Forum on the origins and causes of the recent crises in Port Harcourt and Rivers State as a whole. Violence still mars the Delta and Port Harcourt, which is under a curfew from 7pm to 7am, has witnessed gun battles between the government's Joint Task Force and militants and young Delta indigenes. The violence in the Delta is now focused on rival "cults" which are sponsored by leading local politicians and emerged into the national consciousness during the 2003 presidential election, despite having had low-key operations for many years before. It is alleged that current Rivers State governor Celestine Omehia and his predecessor Peter Odili have links to and finance such cults.

From an investment point of view all companies operating in the Niger Delta must regard this attack as a major warning that could see the Delta spiral into a new round of violence. Although it is possible that the raid on Saipem was a kidnapping that went wrong, expatriate oil workers must now be aware of the danger of being targeted and abducted. The oil companies will be concerned as more attacks appear likely and despite its denial MEND seems ready to launch new attacks. Shell is still shutting in 477,000 b/d, which has been offline since February 2006. A destabilising environment in Port Harcourt amidst violence directed at the oil industry will only see the vital final investment decisions (FID) for major new oil and gas projects delayed further. It would be no surprise to see the OKLNG and Brass LNG projects FIDs delayed well into 2008. Nigeria's Federal Government has been making good progress, announcing that the NOC Nigerian National Petroleum Corporation is to be restructured and unbundled within six months, but there seems to be no solution to the crisis in the Niger Delta.

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