Growing violence in the Niger Delta poses risks to a broad range of stakeholders in the region.

Three overlapping sets of risks are combining to drive a rapidly escalating conflict in the main oil-producing region of Nigeria.

SDN's report argues that it is in the self-interest of all stakeholders in the Delta to address the growing risks of conflict together.

We argue for steps that should form a multilateral process of inquiry, analysis and action by communities, investors, governments, business and civil society generally. They must work together: to identify risks posed to their overlapping self-interests; to take immediate practical steps to address them; and to develop tools and concepts to measure and ameliorate these risks.

There are examples of these risks feeding off and amplifying one another, comprising a "triple threat" to investors, oil-companies, consumers and producer-communities. [1]

These risks - now well documented (the leaked Shell / WAC conflict report, assessments by Human Rights Watch, [2] Amnesty [3] and others) - are:

1. The State's failure to provide basic rights to its citizens (caused by pollution, lack of the rule of law, curtailment of freedom of expression, representation and development, etc) which has been created by a vacuum of government and economic development;

2. The scale and intensity of the activities of criminal networks with international connections (involved in "bunkering"- stealing oil from pipes - money laundering, arms trafficking, political and business corruption, contract killing and other criminal rackets) who have moved into this effectively lawless vacuum of governance;

3. The political and other risks thereby posed to external interests and investors, especially the oil industry.

Media and other analyses tend to focus on how investments are at risk in the Niger Delta (i.e.: growing militancy is risking oil production.) However, investors can act – and have acted in the past - as contributors to and drivers of the conflict as well.

For example, and as SDN argues in the report, threats to the oil industry – leading to phased shutdowns and staff withdrawals - can be a cause of disproportionate military actions intended to reassure oil companies that the State is in control (so posing risks to ordinary people's basic rights.) Corrupt people inside the oil industry assist oil thieves, and therefore contribute to the scale and intensity of the activities of criminal networks.

The important thing for all stakeholders in the Niger Delta to realise is that the three aspects of the triple threat are interdependent. It is in the self-interest of all stakeholders in the Delta to multilaterally address the growing risks of conflict posed by all three risks.

In the last two years, threats to the oil industry by militias and criminal gangs have led to numerous clashes with military and security forces. Hundreds of innocent people caught the crossfire have been injured, killed or have fled their homes. Oil companies have made significant staff withdrawals and oil workers have been kidnapped. (Kidnapping is a business in the Niger Delta, but there has been a dramatic increase in the number of kidnappings since January 2006, which are clearly political motivated. In August 2006, increasing risks to oil workers were cited as having led directly to the withdrawal from the Niger Delta of engineering firms Willbros and Julius Berger.)

World oil prices have consistently been high in response to these events in the Niger Delta, combining with growing tension between major oil consumers and Iran (the world's second largest oil producer) and continued threats to production in Iraq. In October 2004 this underlying instability contributed to a "perfect storm" of events pushing oil over the then-historic $50 per barrel. [4] Another crisis in mid-September 2005 was sparked by the arrests of senior Delta politicians and militia leader Alhaji Asari Dokubo, which again panicked oil markets. [5] As political instability has escalated in the following months, world oil prices have hovered around $70 per barrel. [6]

The superficial appearance of a cease-fire - that was maintained by all actors from the time of October 2004's "war" declaration by Asari - has been stripped away. A 16th January 2006 attack by a new militant group - the "Movement for the Emancipation of the Niger Delta" (MEND) - on Shell's flow station at Benisede near Ojobo in Delta state, brought the phase of political theatre to an end, and marked the beginning of a new and more dangerous phase in the conflict. At least 14 soldiers guarding the facility were killed, along with a number of the militia and innocent people.

President Obasanjo changed policy and instructed the military to meet "force for force" on 15th August in response to the rise of kidnappings, and on 31st August called on foreign governments to assist with security through the Gulf of Guinea Energy Security Strategy (GGESS.)

Yet as the GGESS was being convened in Abuja, Nigerian military personnel destroyed the 'Aker Base' slum in Port Harcourt near Italian company Saipem's facility. This, and the police's 1st September announcement of the purchase of 80 000 weapons and recruitment of 50 000 officers specifically in preparation for forthcoming elections, will do little to assure the general population that responses to ongoing violence from the state will be proportionate to the real threat.

Militia and gangs continue to kidnap oil workers, and to attack oil industry infrastructure. MEND made a 28th August commitment to end kidnapping and called on all armed groups to follow their lead. The MEND group has made good on threats to reduce Nigeria's export production, with over 800 000 barrels a day shut in by conservative estimates. Militants stated aim is to reduce all production. In SDN's view they are capable of inflicting major damage on output from on-shore facilities in the coming months, if not bringing about a full halt to Nigeria's oil industry.

It is unclear at the time of writing whether strong evidence exists for a link between MEND's militant campaign and active criminal gangs. Alongside attacks on the oil industry for which political motivations are being claimed, the Delta has been subjected to an unprecedented crime wave. For example, a 24th January raid by a heavily armed criminal gang on the commercial compound of the Italian oil-company, Agip, in the coastal oil city Port Harcourt left at least 9 people dead. The apparent motive was theft - reported to be of tens of thousands of dollars - though other motives are being attributed to the attack too. An armed robbery of $300,000 from the Nigerian subsidiary of the Korean company Daewoo Engineering on 30th January resulted in no fatalities.

There is also a rising level political violence connected with the forthcoming elections, in which local politicians employ gangs and cult groups as foot soldiers. 11 were confirmed dead in Rivers State during fighting in Emohua in July 2006, and in an ongoing stand off between factions within the governing PDP party in Bodo, Ogoni.

Stakeholder Democracy Network and most experts on the region are gravely concerned by many strong indications that throughout the period of apparent cease-fire, various factions and groups have been quietly arming, as though for a war. It is estimated that the conflict in the Niger Delta is already responsible for more than 1500 deaths a year, placing it on a par with conflicts in Chechnya or Colombia. The conflict has now moved into a new, more deadly phase where the already unclear distinction between law-enforcers, politicians, criminals, oil thieves, militants - and those who "harbour" them - is becoming increasingly blurred.

The most pessimistic assessments suggest Shell and foreign oil-operators may have to go offshore altogether from 2008, as security and public order deteriorate. The time frame for any possible escalation is hard to judge as the forces driving such a conflict are complex, interdependent and numerous. The crisis could reach a critical stage in 2006 as electoral primaries begin. This is far sooner than the 2007 horizon line - election year in Nigeria - previously suggested by many analysts.

If this simmering conflict is allowed to reach a critical stage it could lead to a very considerable loss of life, and a major political crisis in Nigeria. Potentially, given Nigeria's size and strategic importance, this could also affect the whole region. As the eight biggest global producer and the fifth largest in OPEC, Nigeria is not only of central strategic importance to West Africa and the Gulf of Guinea, but to global energy security and the world economy generally.

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