Nigerian focus

Patrick Crow
Washington, D.C.
[email protected]

Petroleum-rich Nigeria is facing its worst domestic crisis since the Biafran civil war of the late 1960s, with serious consequences for the U.S.

Paul Michael Wihbey of the Institute for Advanced Strategic and Political Studies, Washington, D.C., and Anthony Mitchell, a former visiting fellow at the American Enterprises Institute for Public Policy Research, have been watching the growth of U.S. oil imports from the South Atlantic region (OGJ, June 29, 1998, p. 25).

They noted Nigeria is the preeminent West African nation, with 125 million people and significant oil and gas deposits. It is the fifth largest source of U.S. oil imports, and U.S. oil firms have major interests there.

"Nevertheless, despite its 2 million b/d of production and relatively short transit routes to its main customers in Europe and the U.S., Nigeria's 5-year economic and political downward spiral has gone largely unnoticed."

Economic woes

Wihbey and Mitchell said that, since 1993, the oil-dependent Nigerian economy suffered under the shortsighted policies of Gen. Sani Abacha, the military strongman who died last June.

"Marked by high inflation, severe erosion of social services, capital flight, currency devaluation, and recurrent labor unrest, the negative economic climate has had a deleterious impact on the oil industry.

"In early October, 250,000 b/d of crude exports was halted as anti-government protesters attacked and took control of 10 Shell Oil Co. relay stations, seizing company boats and crew members.

"The widespread nature of the attacks and the reluctance of Nigerian security forces to intervene illustrated the growing sense of frustration and anger felt by Nigerians over their economic and political plight."

Gen. Abdulsalem Abubakar, who succeeded Abacha, has promised elections next spring. He wants to increase production capacity to 3 million b/d by 2000 and up to 4 million b/d by 2010 and to sell 60% of Nigerian National Petroleum Co.

Recommendations

Wihbey and Mitchell said, "The run-up to next year's elections will be marked by tension, suspicion, and possible attempts to thwart the establishment of democratic rule.

"It is at this crucial juncture of events that the U.S. needs to apply a full-court press of diplomatic/military initiatives, economic incentives, and social development schemes to stabilize the domestic climate and permit the urgently needed growth and development of the energy sector."

They said the U.S. should monitor the election process to encourage fairness and consider increased visits by the U.S. Navy and increased military ties.

Wihbey and Mitchell said that the U.S. should use direct economic aid to encourage Nigeria's sale of state-owned firms and "downsizing of bloated state enterprises."

They also said, "U.S. oil companies need to take immediate and concrete action to deal with legitimate environmental problems."

They concluded, "Nigeria could be the key platform for an American policy of enlargement and engagement in the Western African region."