Oil companies in Nigeria brace in case of election unrest

Oil production in West Africa’s biggest economy is hovering under 2.0 million barrels per day (mbpd), according to OPEC figures released in April, up from 2016 when militant attacks slashed production to 1.5 mbpd.

The attacks stopped after Nigerian President Muhammadu Buhari’s government resumed amnesty payments to militants and deployed troops to patrol the oil-rich creeks of the Niger delta.

But past elections have seen fragile peace broken by politicians exploiting frustration in the impoverished region to intimidate opponents and win votes.

Political players can cause “mayhem”, said Ladi Bada, managing director and chief executive of Shoreline Natural Resources, at an event hosted by Moody’s Investors Service in Lagos.

“There will always be unrest, because the situation is not perfect,” Bada said later in an interview.

“If there is no infrastructure in a particular area, there’s no electricity, there’s no water, school services are bad, an oil company cannot provide all of this.

“So until government also starts to do its part in increasing social amenities, making people feel a part of governance, there will always be some level of dissatisfaction.”

Domestic oil and gas producers like Shoreline, who operate in shallow waters onshore, are more vulnerable to attacks compared to international oil companies who run deep-water projects.

Buhari announced he is seeking a second term in April but concerns over his health have mounted after he left for London on Tuesday to visit his doctor.

Last year the 75-year-old former military ruler spent five months in the British capital being treated for an undisclosed illness.

Buhari was forced to continue paying amnesty payments to ex-militants after attacks in the region led by the Niger Delta Avengers crippled crude production.

That helped tip Nigeria into its worst recession in decades.

The Avengers and other militant groups want a greater share of oil revenues to stay in the southern swamplands, where the bulk of Nigeria’s oil is produced.

Nigeria’s economy is in “low gear”, according to a May report by the International Monetary Fund, which predicted real gross domestic product growth of 2.1 per cent in 2018.

While revenues climbed as a result of the rebound in oil prices and production, the performance of the non-oil sector remains weak.

Nigeria was vulnerable to any major shocks in the oil sector, including militant attacks and a lower crude price.