NIGER DELTA AVENGERS: We just blew up 2 Chevron oil wells

The Niger Delta Avengers announced that they blew up two Chevron oil wells.

The militant group took credit for the attack in a series of tweets on Wednesday.

Reuters reports that an oil spill was seen in waterways and wetlands near the Chevron sites following the reported attack.

The exact volume spilled is so far unclear.

Some Niger Delta residents have been pushing for foreign energy companies to leave the region. And this attack comes a few days after the NDA's deadline for all foreign oil companies to vacate the Niger Delta.

 

The NDA previously targeted a Chevron offshore facility in mid-May and the underwater Forcados export pipeline operated by Shell in late March.

Nigerian oil production has fallen by 46% this year to about 1.1 million barrels a day (as of Monday), down from 2.03 million barrels a day in January. That's such a huge drop that Angola is now the No. 1 producer in Africa, as its production held steady in April at 1.8 million barrels a day.

Notably, Nigerian President Muhammudu Buhari canceled a planned visit to the Niger Delta region at the last minute on Thursday.

The NDA's rise has roots dating back to the 2000s, when armed militants in Nigeria's oil-rich Niger Delta, including members of the Movement for the Emancipation of the Niger Delta, routinely kept hundreds of thousands of barrels of oil off the market. (Interestingly, the NDA's Twitter avatar is actually a photo of a MEND militant from 2008, as the BBC pointed out.)

In 2009, the Nigerian government signed an amnesty agreement, pledging to provide monthly cash payments and vocational training programs to the nearly 30,000 former militants in exchange for cooperation. 

The arrangement was a pretty good Band-Aid, but it failed to address the fundamental drivers of instability in the region such as poverty, corruption, and the proliferation of weapons.

Fast forward to today: The new Buhari administration has cracked down on corruption in the region by axing the expensive security contracts and issuing indictments for theft, fraud, and money laundering.

Even if the government wanted to pay off the militants today, it doesn't really have the money to do so given that oil prices are still far below their peak and state resources have been redirected to counterinsurgency operations against Boko Haram.

And so, given that the Nigerian oil production disruptions are at least partially a product of long-run structural issues, analysts think they could continue for some time going forward.

"I think we have to look at what happened in the past and say, well, could they potentially shut in production? ... No company is going to keep their operations going when people show up with AK-47s," Helima Croft, the head of commodity strategy at RBC Capital Markets, told Business Insider last Tuesday. "You just wait it out. You don't run a risk to your personnel or operations."

"So this one, I think, fasten your seat belts. This one's going to go on."

 

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