Violent Struggle Over Oil and Money Rattles Global Energy Market
After years of relative peace, militants are again blowing up the pipelines that criss-cross the mangrove swamps of Nigeria’s Niger River delta, reducing oil output to the lowest in almost three decades and fueling a rally in global crude prices.
The resurgent conflict in Africa’s largest economy has a long history, interweaving corruption and poverty with regional rivalries and presidential politics, but at its core is money.
Between 2006 and 2009, when the oil-rich region was rocked by similar campaign of violence, the then president, Umaru Musa Yar’Adua, came up with a controversial solution: He offered a pardon and monthly stipends to fighters willing to disarm. After his death in 2010, former President Goodluck Jonathan doubled down on the strategy, awarding security contracts worth millions of dollars to rebel leaders, who went from blowing up pipelines to protecting them.
The opposition at the time denounced the deal, but it worked. Thousands of fighters accepted the presidential amnesty, joining new private security companies formed by their leaders and enjoying monthly payments from the government. The revolt, which at its worst point had sunk oil production by about a third to 1.65 million barrels a day, quickly ended.
It hasn’t proved a long-term solution. President Muhammadu Buhari, a 73-year old former general elected last year on an anti-corruption platform, ended all pipeline security contracts and reduced the monthly stipends. In a wave of attacks this month, the militants responded by blowing up key pipelines, pushing oil output to a 27-year low of 1.4 million barrels a day.
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http://www.bloomberg.com/news/articles/2016-05-18/violent-struggle-over-oil-and-money-rattles-global-energy-market
