Political and other risks to external stakeholders
(In particular, energy companies and their investors)

Analysts for oil-companies operating in Nigeria, including Shell, have argued that despite the problems on the land, production offshore could continue, preventing an economic meltdown and a possible escalation and widening of a crisis.

According to a February 2005 report in The Times:

"Optimists argue that under the civilian government of President Olusegun Obasanjo, Nigeria's oil wealth is increasingly trickling down to Niger Delta villagers. Shell continues to invest in building up Nigerian exports of liquefied natural gas and expects the Bonga field, its first project in deep waters off Nigeria, to begin pumping in July.

The pessimistic view, best summed up in a 93-page report prepared for Shell in December 2003 by WAC Global Services, a Lagos-based group of experts in conflict resolution, is that Shell may have to retreat from the Nigerian mainland by 2009 as the violence gets worse. WAC concluded that Shell's presence in the country fed a deepening cycle of violence and corruption that would grow worse as Nigeria's oil wealth failed to raise living standards in the Delta." [48]

The weakness in the optimists' arguments is to assume that offshore operations will not be affected by events onshore. Offshore operations are dependent on infrastructure onshore. It is also not too great a stretch of the imagination to envision how well armed combatants - in possession of local speedboats and a variety of other heavy weapons - could affect offshore operations.

In predicting how much oil and gas is in the ground - and if it's possible to get it out and to international markets, or not - it's a mistake to focus too much on where fighting is now or is likely to be in the near future. Violence is, by its nature, unpredictable.

In terms of how events in the Niger Delta affect things more widely, any assessment of businesses' responsibility for creating risk - to investors, pension funds, global energy supplies and prices, and the world economy generally - has to take into account a broader set of concerns. Corruption, tax avoidance, lack of transparency and criminal networks operating inside legitimate business are all drivers of the poverty and the all-pervasive sense of despair pushing the region to the brink.

Although Shell has reported record profits [49] - mainly as a result of higher oil prices - it is not in Shell or the oil industry's best interest to add to the causes of conflict in the Niger Delta which are driving oil prices higher. Most energy analysts agree that oil companies - who in a country like Nigeria must invest for the long-term - want and benefit from stability, even though their actions might be creating more instability. This is why they must act multilaterally in order to find solutions to address the rising triple threat.

According to Keith Myers, an associate fellow at the Royal Institute of International Affairs, higher prices could be helping to fuel unrest in Nigeria by sharpening the contrast between company profits and poverty on the ground, and people's sense of injustice.

"People see higher oil prices and expectations are raised which can't be met. The issue for Nigerians is that although they produce a lot of oil the actual economic benefit is really very small. In the Niger Delta they see all the negative consequences, the infrastructure, the flares, the spills, of the oil that is produced from their land but they don't see any of the benefits." [50]