Nigerian oil under siege

An e-mail diary, written by a hostage on an oil rig off the Nigerian coast, gives an unusually detailed insight into the latest trouble to hit the oil industry in the restive Niger Delta region. The journal charts how a strike protesting, in part, the firing of five Nigerian oil workers has evolved into a siege trapping hundreds of employees, including almost 100 foreigners, on four offshore oil rigs.

"Emotions on the rig are high and have been for a week already," reads one entry dated April 25. The writer foresees "big trouble" if Transocean, the US company that owns the rigs, decides to use armed force to implement a court injunction to stop the siege.

The crisis is the latest in a series of blows to the oil industry in Nigeria. Multinationals working in the country, the fifth-largest source of US oil imports, have faced a series of problems over the past few months with theft of oil, political instability, and social unrest resulting in sabotage or occupation of facilities.

But even as oil exploration and production moves into the vast crude reserves in the Gulf of Guinea and farther from the unrest on land, experts say this latest crisis demonstrates that, only by giving a higher priority to improving relationships with both their staff and the communities in which they operate, can oil companies hope to put these problems behind them permanently.

"I have been urging the Nigerian workers to leave [the rigs] as peacefully and as quickly as possible," says Jake Molloy, general secretary of the Offshore Industry Liaison Committee, a trade union based in Britain. "And I would hope and implore Transocean to meet these guys on their return, sit them down, and address their issues in a constructive and amicable fashion."

The action on the Transocean rigs, which began on April 16, has attracted worldwide attention because it has trapped an estimated 17 US workers, 35 Britons, and more than 40 other foreigners, as well as almost 300 Nigerians. The company says the atmosphere aboard the rigs is calm, despite reports of threats against some of the hostages and the mobilization of the Nigerian Navy into the area. The Offshore Industry Liaison Committee says it has had no contact from the rigs since early this week, although it has heard from women whose husbands are aboard and have been in touch by satellite phone to confirm they are safe.

The Transocean dispute is just one of a range of security problems facing the industry in Nigeria. In its annual People and the Environment report, published this week, the Shell Petroleum Development Company of Nigeria, the country's largest producer, highlighted the growing problem of oil theft, known as "bunkering." Shell said it lost about 6 million barrels last year to criminals who had reached "new levels of sophistication" to siphon crude from pipelines. The company added that the amount of production it deferred due to sabotage and community disturbances rose 12.6 percent to 39.4 million barrels, although it pointed to a "welcome reduction" in the number of incidents involving hostage-taking from 45 in 2001 to 24 last year.

Oil multinationals in Nigeria are still recovering from a temporary shutdown in late March of more than one-third of the country's total output. The problems, which led to the evacuation of employees of companies including Shell and ChevronTexaco, came after clashes between the armed forces and members of the Ijaw ethnic group in the western Delta. At least 13 people died, the latest casualties in a succession of disputes involving communities unhappy that decades of vast oil production in the Delta have failed to translate into economic development.

The social unrest stems from a sense of political disenfranchisement as well as economic dissatisfaction, observers say. The Delta's remote geography, characterized by a lack of roads and profusion of waterways, makes it hard to hold clean elections and leaves the system of governance open to abuse by opportunistic politicians. Voting in a number of Delta states in national elections last month was heavily criticized by domestic and international observers, who said widespread intimidation and ballot fraud helped President Olusegun Obasanjo's Peoples Democratic Party secure more than 90 percent of the vote in many areas.

The oil companies say they are working to establish better community relations, adding that their increasing exploitation of deep-water offshore oilfields has much more to do with economics than with running away from potential conflicts. Analysts say multinationals working in deep water have less tax liability and have to give less of their production to the government, although security considerations are still part of the overall calculation. "One of the factors of the offshore production is that it's less likely to be disrupted by disturbances," admits one oil-industry executive, speaking on condition of anonymity. "But production is still going to come from onshore fields, where unrest and safety and security of people will still be issues."

The occupation of the Transocean rigs is one of two events this week that suggest that even moving offshore is no panacea for companies seeking to avoid trouble. In an apparently unrelated incident, Shell published a full-page advertisement in the Nigerian press warning that it was aware of a threat to attack a floating oil production and storage facility known as the Sea Eagle. The company says it has increased its security but has experienced no problems so far.

Observers say that oil companies operating in and around the Delta must build on attempts to improve community relations made since a low point in 1995, when Ken Saro-Wiwa and eight other social activists were executed by the military government of that time.

Bill Knight, regional program director of Pro-Natura, a nongovernmental organization based in Paris, says the industry is making an effort, although he adds that big problems remain, such as tensions between villages receiving substantial aid from oil companies and those receiving nothing at all.

"The oil companies are changing gradually," Mr. Knight says. "Nothing is going to change overnight - but there is a lot of positive thinking going on."