'Avengers' Deter Nigerian Gas-to-Power Investment
A London-based risk consultancy has said that the spate of militant attacks in the Niger Delta is deterring investment in Nigerian gas-fired generation.
The Nigerian government said June 6 it had set up a committee under the Office of the National Security Adviser to negotiate with militant group Niger Delta Avengers (NDA), the country’s Punch newspaper reported June 7, citing petroleum minister and state NNPC chief Ibe Kachikwu. But the NDA used Twitter to say that at 1am on June 8 they blew up well RMP20 belonging to Chevron near the Dibi flow station in Warri province and would "not negotiate with any committee.”
UK-based consultancy PGI Intelligence’s team manager for Sub-Saharan Country Risk, Charles Pembroke, told a briefing June 8 that the NDA has shown high technical competency and that its February 2016 attack on Shell's Forcados oil export terminal was "bold". NDA is formed from younger militants than were active in the MEND armed group in 2004-09. NDA also favours a Biafran state and economic devolution, he said.
Boosting gas-fired generation had been a key plank in Nigerian President Muhammadu Buhari’s 2015 election campaign, and the NDA had impacted this sector significantly. Before the attacks, the country achieved a record 5.07 GW power production (all types, including gas-fired) on February 2. But since on occasions, for example March 31, gas-fired plants had gone offline leading to a temporary “zero GW event” when centralised power generation almost collapsed.
Nigerian President Muhammadu Buhari (credit: Chatham House)
Pembroke said 19 of the 23 gas-fired generators had been shut by actions, but he did not say how many still were. Nonetheless “gas pipelines will remain a key target” for militants, which could deter much needed investment in the sector as “few companies will invest amid so much uncertainty.”
Attacks also led to Nigerian oil output in May 2016 to slump to 1.4mn b/d, 40% less than the 2.2mn b/d that Nigeria had budgeted for, he said, impacting public finances, June output is only slighter higher. Forcados (Shell) and Escravos (Chevron) oil pipes will remain at risk of attack by the NDA which could also widen its range to shallow-water facilities (Shell and Exxon), Pembroke cautioned.
That contrasts with the view of Shell CEO Ben van Beurden on June 7: he admitted that Nigeria’s security situation was already pretty tough and is continuously deteriorating. Shell said the NDA were targeting oil and gas infrastructure, affecting the company, government and the people but that it did not affect the deepwater oil or the LNG.
PGI's Pembroke meanwhile saw no evidence to suggest that the presence of both Buhari and his predecessor Goodluck Jonathan in London this week – in Buhari’s case ostensibly for medical treatment although his spokesman denied this – was so they could jointly negotiate with NDA representatives.
Mark Smedley