Thomko Petro Chemical Blog

Nigeria and Big Oil are engaged in a power struggle over profits.

The country is withholding nearly $1 billion from Shell, in a bid to re-negotiate existing profit-sharing agreements.

Shell states that 95% of profits from its joint venture go to the Nigerian federal government - but Nigeria believes that it has been shortchanged by the oil majors.

Shell also claims that the government is failing to come up with cash to deal with gas flaring from oil facilities.

Anger in local communities at the pollution caused by the gas flaring - along with the inability of local and national governments, as well as oil firms, to provide basic infrastructure in the Delta has prompted protesting youths to regularly invade and occupy vital facilities.

The latest invasion took place on Friday and disrupted production, which is running at well below capacity.

Source: Guardian UK - Shell's future in Nigeria in doubt

India is making up for lost time in getting its own share of the oil market.  

Rather than focusing on OPEC, India has become concerned about China's presence in the African oil market, so the country is attempting to secure oil and gas assets from Africa.

So India has taken a big step in hosting one of the biggest events for the energy rich African nations. The India-Africa Hydrocarbon Conference and Exhibition will be held on November 6-7, and approximately 25 African nations will be in attendance.

India's crude imports from Africa constituted about 16% of the total import of 110 million tons, compared to China which imported 36 to 37 million tons out of its total import of 207 million tons from Africa.

India's prime objective is not only to acquire oil and gas fields, but other energy products such as petrochemical plants, refineries, and pipelines. All these projects will run into the billions of dollars, and is estimated to raise imports by 32% in the next few years.

With this new alliance, crude oil imports have been estimated to rise to 25 million tons, from the current 19 million tons imported. India currently imports 73% of its oil needs from Asia, but wants to reduce that reliance, and not put all of their eggs in one basket.

Refugees forced into crowded camps by northern Uganda's two-decade civil war need many things: food, doctors, toilets, bore holes for drinking water, schools -- and computers?

A new charity project wants to launch Uganda's long-isolated war victims into cyberspace, arguing that an Internet link to the outside world will give them a much-needed voice.

The project uses specially-designed PCs with such low energy needs they can be powered by solar panels or even bicycle pedals.

Read the full article at ENN

The price of oil has been rising for the past nine days, and now has hit an 11-month high on concerns of global supply fears. 

Last Fall oil was at an all time high of $78.65, and yesterday the price at one point hit $76.63. The rise has been caused by the contiuned violence in Nigeria, upcoming North Sea oil maintenance, along with refinery outages in the U.S.

A report yesterday from the International Energy Agency (IEA), predicted faster than expected oil demand growth over the next five years.

According to analysts, gasoline stockpiles are expected to be around 750,000 barrels, while distillates, which include heating oil, will have risen by some 600,000 barrels the first week of July. Crude oil is expected to fall 350,000 barrels due to refinery problems, but the rate at which refineries crack crude is expected to pick up.

Nigeria has been at the source of oil prices increases, and 25% of the crude oil production has been lost to the continued violence in the country. The African crude is of lighter weight, which makes it ideal for gasoline.

The North Sea oil refineries also produce light crude, and many will be down for maintenance. Here at home U.S. refineries have seen several unplanned outages which has gasoline production at lower than anticipated levels. 

The United Nations Environment Program warms that the International rules on disposal of toxic ship waste need to be tightened after the deaths last year of at least 10 people in a pollution incident in Ivory Coast.

Dutch-based oil trading firm Trafiguram has already paid a $198 million settlement to the Ivory Coast, and the company also says it backs tighter regulations. The settlement will be used to reimburse the state costs incurred in removing the waste, and treating those affected after black sludge was dumped in open-air sites around Abidjan, the capital of the Ivory Coast. 

Even though Trafiguram has paid the $198 million settlement, the company states that the oil waste was not the cause of the deaths. When asked why they did settle the suit, Trafiguram could only say that they wanted a long term relationship with the Ivory Coast, and the company has interests in an oil terminal located in the capital city Abidjan.

Trafigura says the waste unloaded from a tanker it had chartered was routine oil slops legally handed over for disposal to a state-registered Ivorian firm. Thousands of people fell ill shortly afterwards and at least 10 died.

"This is not just some minor problem," Achim Steiner, Executive Director of UNEP, told Reuters. He said there was "a whole unregulated and often illegal trade in toxic, hazardous waste". "We need to work on the broader environmental legislative framework globally so that these issues do not arise again," he said.

The Basel Convention has been the main pact regulating trade in poisonous wastes since it entered into force in 1992. It was spurred partly by international outrage at the 1987 dumping of Italian chemical wastes in 8,000 drums on Koko Beach in Nigeria.

Libya and Angola are set to overtake Nigeria as Africa’s largest oil producer due to the increasing insurgency in the oil producing region of Niger-Delta.

According to reports published by the Gulf Times on Friday, about 600,000 barrels per day already cut off from Nigerian oil production is set to increase as the April poll approaches.

According to the reports, Nigeria could lose its status as Africa’s largest oil producer if companies and workers decide it is to dangerous to operate in the volatile nation in the run up to elections in April. “It will definitely get worse as politicians give arms to local youths,” said Thoko Kaime, Africa expert at the London-based Exclusive Analysis.

A fifth of Nigeria’s oil production capacity, or about 600,000 barrels per day (bpd), has been shut down for the past year because of militants attacks on oil facilities.

Rebel groups have vowed to further disrupt output in the oil-rich Niger Delta in their fight for the neglected region to gain greater local control of oil wealth.

Nigeria estimates the February output to be about 2 million barrels per day (bpd), however rebel attracks could easily lower the estimated output.

Libya is pumping 1.7 million bpd, and is set to be Africa's largest oil producer. Also, hot on Nigeria’s heels is Angola, the newest member of the oil producers group, OPEC, where output is rising fast and is expected to top 2 million bpd early next year.

Not a single drop has been produced in the past year!

The seemingly unending violence in the oil-producing Niger Delta will prolong shortage of gasoline in the OPEC member country at least for the next two months.

Activities of rebel groups in the region had prevented necessary repairs of pipelines that feed oil refineries, effectively shutting down operations in the plants.

The Nigerian government says the rebels have caused a self inflicted fuel scarcity - which includes a non-availability of the pipeline supplies to refineries, and with the threat of violence from the rebels, employees cannot even gain access to the refineries. Neither the Warri or Kaduna refinery has processed a drop of crude oil for the past year.

Nigeria, which is Africa's top crude oil producer and biggest exporter, has been battling with gasoline shortage since last December as state oil company struggled to cope with petroleum product imports to meet demands of a population of 140 million people. country's 140 million people.

Vandalization of oil pipelines in the Niger Delta has also cut electricity generation in the country by 50%.

This problem has been ongoing - View previous posts on the subject of oil and violence in Africa.

Emma Woods, co-director of Foreign Policy In Focus at the Institute for Policy Studies, took a trip to Africa and this is her report on how the major oil companies have reaped riches, and produced negative social, economical and environment costs to the continent. I've done many posts on the state of the African oil industry, and violence towards the major oil companies. Woods personal observations provide many answers . . . CT 

It is almost impossible to imagine, as we sit in a well lit, fully functioning gas station on Main Street, USA, that a community blessed with oil riches under its soil could look as impoverished as Yenagoa in the Nigerian state of Bayelsa.

Yenagoa is the site of one of Nigeria 's first oil wells, built in pre-independence 1956. Yet as in many communities in Nigeria’s oil rich Delta region, most people of Yenagoa live in mud huts. Some reside only a few feet away from the oil wells. But they lack electricity and indoor toilets. They have no hospitals, no running water, no schools. And there is unemployment too. Oil companies like Royal Dutch Shell, BP, Chevron, and Exxon Mobil bring in foreign workers for even the most menial jobs.

I recently took a trip to Yenagoa as part of a tour of three African countries--Nigeria, Chad, and Liberia - that may well fuel future U.S. energy needs.

Historically, the United States has gotten two-thirds of its oil from other countries. Most U.S. oil imports come from Saudi Arabia, Venezuela, Mexico, and Canada.

Increasingly, as the United States, China, and other nations expand their thirst for oil, and instability deepens in the Middle East, Sub-Saharan Africa is becoming a more attractive source for crude. The U.S. National Intelligence Council estimates that Africa could supply 25% of U.S. oil by 2015.

The three countries I visited could well play a role in meeting that goal. Each is at different stages of oil production. In Nigeria, oil exploration dates back to 1956. In Chad, extraction started just three years ago. In Liberia, where I spent much of my childhood, the potential of oil off its expansive coastline holds hope for the future.

In each of these countries, a complex web of geo-political actors, from oil company executives and government officials to military agents, makes decisions that impact the lives in the communities that produce the oil that flows straight to consumers in the United States.

Nigerian Injustice

The residents of Yenagoa lack jobs and basic social services. What they do have in abundance is environmental damage from decades of oil spills, compounded by the constant burning of gas flares necessary to extract the crude. Farmland is rendered useless while rivers and waterways, once well populated with marine life, are now barren.

One local chief explained that he received from Shell oil 150 Naira ($1.15) for each acre of land used by the company. I was astonished when he went on to say, “150 Naira, once every four years.” With oil prices at historic highs, how could the compensation to communities long suffering the health impacts of oil spills and gas flares be such a pittance?

Military and security personnel blanket the area around Yenagoa to protect oil interests. The communities are under siege.

In Odi, a community adjacent to a well built in 1958, villagers are demanding basic services like clean running water, electricity, and schools. The response from security agents has been severe. Our delegation watched in horror as one young man after another came forward to show fresh wounds from five days earlier. They told us that uniformed military men had grabbed 15 youths as they walked home from an adjacent village in the middle of the afternoon. The young men were beaten, tortured, and imprisoned, as a warning to others in the village. For almost a week, the youths languished in a prison miles away. Their crime? Clamoring for basic rights.

As oil companies celebrate record profits and the price of oil hovers close to $65 per barrel, African communities ostensibly blessed with the curse of oil languish in squalor. In fact, with no useable farmland or waterways, many in Nigeria say that they are worse off than their grandparents were before the discovery of oil.

Hope in Chad?

Recognizing the plight of their neighbors in Nigeria, communities in Chad’s oil producing areas worked hard, even before the onset of oil production in 2003, to minimize environmental damage and maximize the benefits to communities from which the oil flows.

The 650-mile Chad-Cameroon pipeline (Africa’s biggest investment project) links landlocked Chad to world export markets through Cameroon’s port city of Douala. It was funded through loans and other support from the World Bank. Heroic measures initiated by activist, civil society, human rights, and religious community leaders led to a forward-looking revenue management law to manage the flow of oil revenues in a transparent way, ensuring resources for future generations.

However, the Chadian government has subverted its own revenue management law. It has diverted spending away from the original priorities of agriculture, health, and education and toward “security.” As a result, money that only now is beginning to flow from oil production is spent on weapons and other military equipment, instead of poverty reduction and the interests of future generations.

The oil wells in Chad are newer, so its oil-producing areas haven’t yet experienced the damage caused by decades of oil spills. However, gas flaring, with its related health and environmental damage, is an integral part of the production cycle. When the wind blows, the smell of the burning gas blankets villages miles away.

In a community near Doba, with gas flares as a backdrop, villagers told us about increased death and dying in the past few years from respiratory ailments and contaminated water supplies.

Meanwhile, in Chad’s fertile agricultural zone, mangoes, cotton, gum Arabic and cattle are abundant. Yet there is not one factory transforming the raw produce into goods for domestic or international markets.

In spite of these challenges, Chadians maintain that their vigilance will minimize negative social and environmental impacts of oil and secure poverty reduction. Chad could easily feed itself and its neighbors if productive capacity were built in the agricultural sector. Oil revenue directed at building an education system, providing healthcare, as well as basic electricity, running water, and roads, could go a long way toward improving the condition of people’s lives.

Throughout the country, in spite of a recent coup attempt and the elections in April that the majority of people boycotted, Chadians remain hopeful. From the capital city to the Southern oil fields, everyone seemed confident that future generations will experience a better life.

Liberian Alternatives

Liberia, the third country I visited, has recently emerged from 25 years of war. People there are hopeful too, despite the 85% unemployment rate and the complete lack of functioning schools or healthcare.

Liberians hope that concessions now being granted for off-shore oil exploration will lead down the road to a new source of revenue. Liberia’s National Oil Company negotiated two contracts with the Nigeria-based Oranto Petroleum Limited and British-based Broadway Consolidated PLC. With exploration already underway, few in Liberia think that leaving the resource untouched is a viable option.

The key question is, whether and how Liberia can escape the oil curse that so clearly has hurt Nigeria, Angola, and other countries in Africa’s richly endowed Gulf of Guinea region.

One possibility is for countries like Liberia to consider alternative models for oil development. What, for example, can Liberia learn from Venezuela’s example of 61% national control of oil revenue and management? Or from Norway’s use of oil revenue to diversify the economy while advancing social services?

Like many Africans, I fear that oil companies look to Africa for its resource wealth without seeing the people. Resource-rich communities are dehumanized and the color-line is ever present as the greatest profits flow steadily to wealthy white men who already control enormous wealth and power.

The price of oil nearly tripled since President George W. Bush took office in 2001, yet the majority of the people who live in the countries from which the fuel flows still experience grinding poverty. Taken together, the $10 billion quarterly profits of Exxon Mobil, Chevron, BP, or Shell and the $1.15 per acre compensation paid (every four years) to some farmers in oil producing zones, show just how unfair the global oil industry has become.

The next time you pull up to the pump, stop a moment and remember that the thick black crude is extracted from the earth’s crust at great social, political, and environmental cost. Then do whatever it is in your power to demand dignity and proper compensation for those whose land or sea may be cursed with the blessing of this natural resource.

New America Media, News Feature, Emira Woods, Oct 08, 2006 - Emira Woods is co-director of Foreign Policy In Focus at the Institute for Policy Studies.

A follow up to our previous posting: Chad Tells Foreign Oil Companies to Leave

Chad must have a 60% stake in its oil output after receiving only "crumbs" from a foreign consortium running the industry according to President Idriss Deby. 

Such a stake would match the share held in the consortium by two companies, U.S. Chevron Corp. and Malaysia's Petronas, which Deby ordered to leave the country three days ago. He says the two are refusing to pay taxes owed totaling $486.2 million.

Chevron confirmed on Tuesday it had received notification from the Chadian government to discontinue operations because of the dispute over taxes. Petronas has said it is seeking clarification.

Some analysts view the expulsion order as a crude move by Deby, who has ruled Chad since 1990 after seizing power, to grab a controlling state stake in the consortium, which is led by Exxon Mobil and started pumping oil in Chad in 2003.

Addressing a rally, Deby said his landlocked African state, ranked among the poorest in the world, was not benefiting enough from its oil. The Chadian state currently has no direct stake but receives royalties and taxes.

"How can we fight poverty and develop our country with crumbs?" he told cheering supporters, some carrying banners reading "Chad's black gold is not for anyone else".

"Chad must enter into production at a reasonable level of 60%," Deby told the rally.

Source: Reuters

Chad, a landlocked country in north central Africa, ordered two major foreign oil firms to leave the country yesterday in a row over taxes.
 
President Idriss Deby told ChevronTexaco and Malaysia's Petronas to leave "because they have refused to pay their taxes".
 
There was no immediate comment from the two firms, which are responsible for handling 60% of Chad's production. The decision leaves only Exxon Mobil remaining in the consortium which handles the country's oil production.

The announcement, which caught diplomats and oil executives by surprise, followed closely on the heels of a demand by Chad's government to restructure the country's foreign-owned oil consortium to allow in a just-created national energy company.

Reuters

A previous posting reported than six foreign oil workers, including an American, were taken hostage in the Niger Delta. This is a repeated cycle with workers being abducted, released, and then more oil workers being held hostage.

As news of those six hostages being released hit the news wire, another oil worker was abducted, along with one soldier injured, and another soldier killed in an exchange of gun fire with the kidnappers.

An Italian worker was abducted from the residential compound of an Italian oil service company, and reports that other hostages were taken was not confirmed by government sources.

The news of this latest abduction came the same day that Nigerian soldiers doused petrol on shanty towns in Port Harcourt and burned them to the ground in response to the killing of the soldier in a flight with militants. The military accused the inhabitants of the shanty town of harbouring militants.

The Nigerian military was recently ordered by the country's President Olusegun Obasanjo to step up moves against militants responsible for a number of kidnappings of oil workers.

Armed men seized four foreign oil workers, two British, an American and a German, from a nightclub, the latest in a spate of abductions targeting the petroleum industry in Africa's largest crude-producing country.

Meanwhile, two foreign oil workers kidnapped last week, a Moroccan and a Belgian were released late Monday. Earlier in the day, three Filipino hostages were released.

Witnesses said more than 10 people wearing military uniforms went into the Goodfellas night club, and dragged a group of foreigners away late Sunday night.

Police confirmed the kidnapping on Monday, saying that those taken included an American, two British citizens, and one German citizen. 

Nigeria's oil-rich southeastern delta has seen 14 abductions in the last week.

Kidnappings and sabotage attacks by militants, who argue that the impoverished region does not benefit from its oil, have cut Nigerian production by more than 20% since the beginning of the year.

Most kidnap victims in the delta are returned unharmed.

Previous postings on Nigeria's Oil Troubles

Source: AP

Nigeria's oil minister said he could not say when crude oil production lost to unrest in the Niger Delta region would return.

Edmund Daukoru said that over 700,000 barrels per day has been lost because of militant attacks.

The minister said that companies like Shell and Chevron shut down facilities because of the fear of being attacked and that patience was now required.

He said: "You have to be patient with the government, and the government has to be patient with the communities."

Patience is not necessarily what the oil markets want to hear, and the Europeans are reacting by the real and feared supply disruptions in Nigeria, Russia and the Middle East.

Oil has surged to a record high above $US76 a barrel amid renewed worries over supply from Nigeria and conflict between Israel and Lebanon.
 

Nigerian authorities are investigating explosions at two crude oil pipelines, which are causing massive spills in the southern state of Bayelsa.

State authorities are seeking to end a wave of kidnappings, hostage-taking and other acts of violence in the oil-rich state.

Nigerian investigators are trying to determine whether Wednesday's explosions at two crude oil pipelines operated by Italian oil company Agip were as a result of sabotage or purely accidental.

One of the blasts blew apart an 18-inch oil pipeline while the second blast hit a 10-inch riverside pipeline resulting in heavy spillage.

Bayelsa state has seen several acts of violence in recent months targeting the oil industry, including kidnappings of foreign workers and attacks on oil facilities.

Attacks on oil installations this year in the main oil-producing Niger Delta have cut more than 20 percent of Nigeria's daily oil exports of 2.5 million barrels and helped drive up world oil prices. See Oil & Blood in Nigeria

Militant groups in the delta say they are fighting for local control of oil revenues by the impoverished inhabitants of the region who feel cheated out of the wealth produced in their backyards.

Banyoro tribesmen, whose kingdom area covers the area where oil has been discovered, are already claiming their share of the oil. Tribe leaders sent a statement to the news media, saying that 51% of the oil royalties should go to the tribe.

The Banyoro leaders' statement also said they were "keenly aware of the misery, torture and even executions that befell indigenous people in oil-producing areas like in Nigeria, Chad, etc."

Therefore, the Banyoro are "'not taking any chances," according to the leaders statement. 

The Banyoro also want to establish that as the indigeneous community in the locality where oil has been found they should be given a share that reflects their God-given ownership of the natural resource. 

Oil exploration firms from Australia and the UK have turned a remote jungle region in western Uganda into a fast-developing area with roads, airports, schools and other forms of infrustructure being set up overnight.

For the past five years, exploration for oil has been going on in the area. Hardman Resources, an Australian company. and the UK-based Tullow Oil company in recent weeks announced the test results which depicted the East African country as being about to join the oil- producing club of nations.

Regarding the Banyoro issue, the Uganda government will issue a policy statement regarding royalties.

Venezuelan president Hugo Chavez urged African nations at the weekend to boost taxes on oil producers, saying the continent was not gaining enough benefits from its reserves.

In Africa "we know there are international companies that do not pay taxes on what they get from petrol, or some pay very little", Chavez said at the annual summit of the African Union in the Gambian capital.

"That is robbery. In Venezuela, they have to pay 30 percent of what they get from petroleum and on income they pay 50 percent. And even with that, they are still making a profit."

Countries with oil reserves had to ensure that they were not exploited and used the money for development, Chavez said.

"Nature has given Venezuela one of the greatest reserves of oil in the world, and we are tired of this oil going to feed Dracula. Oil is a powerful instrument for social development, for education, employment, for agriculture, for the life of our people. Petroleum, which was used to colonise us, we are now going to use it to set ourselves free."

Chavez called for greater cooperation between South American and African oil producers and said a co-operation agreement similar to that between state oil companies in Venezuela, Argentina, and Brazil might benefit the continent.

"We should create a commission so that we can see how we can create a co-ordinating opportunities for studies and for putting in place practical petroleum projects."

By Joe Bavier - Bloomberg

Nigerian militants on Sunday released eight foreign oil rig workers, who looked tired but unharmed after two days in captivity.

Police involved in negotiating the release of the six Britons, one American and one Canadian would not say whether a ransom was paid.

Two of the Britons were released before dawn, followed by the six remaining hostages later in the day. The eight met with a local governor and were handed over to a representative of Nigerian oil firm Peak Petroleum in Yenagoa, the capital of Bayelsa state.

The eight, whose names have not been released, looked tired but cheerful and said they were treated well by their kidnappers.

The workers were kidnapped Friday from the offshore platform 40 miles from Nigeria's southeastern coast by a group of unidentified militants demanding jobs and money.

Bayelsa Gov. Goodluck Jonathan accused Peak Petroleum of bringing on the crisis by failing to honor agreements with residents of Bilabiri, the village the kidnappers are believed to have come from.

"The people of Bilabiri are aggrieved that nobody from the community has been employed by the company," he said. Company officials were not available for comment.

Nigeria's oil-rich southern delta region has been plagued by unrest for years. In recent months, armed militants have stepped up a campaign against the oil industry, blowing up pipelines and kidnapping foreign workers, cutting supply and driving up world energy prices.

Residents and militants in the delta are demanding a greater share of oil revenues. They complain their region remains mired in poverty while oil companies and select government officials reap the petroleum wealth.

The Movement for the Emancipation for the Niger Delta, the main militant group behind a wave of attacks and hostage-takings in the delta this year, has said it was not responsible for the latest kidnappings, which it called purely a moneymaking scheme.

Oil prices jumped by almost $2 a barrel Friday after the kidnappings. Although no output was affected, the news reignited concerns about the stability of supplies.

The country, which normally pumps 2.5 million barrels a day, is the fifth-largest source of oil for the United States.


Associated Press writer Dulue Mbachu in Lagos and Bashir Adigun in Abuja contributed to this report.

Chad’s oil minister said on Saturday he wanted a U.S.-led oil consortium to pay at least $100 million by Tuesday to circumvent a World Bank freeze on oil profits or else crude production would be halted.

The World Bank has frozen oil profits from a pipeline in Chad saved in a London escrow account in a dispute over how the revenues are spent. The savings include royalties from the pipeline’s operator, Exxon Mobil.

“We want at least $100 million paid (by the oil consortium) by Tuesday midday,” Oil Minister Mahamat Nasser Hassan told Reuters in a telephone interview.

“We have asked Exxon Mobil, Petronas and Chevron to put the money directly in the state treasury account. If they do not agree by Tuesday midday, we will stop oil production,” he said.

Exxon Mobil said it was talking to the government, consortium members and other relevant parties about the demand but declined to comment on whether it would pay the money.

The central African country is in a state of heightened alert after rebels attacked the capital N’Djamena early on Thursday in the boldest assault yet by insurgents who have vowed to end President Idriss Deby’s nearly 16-year rule.

Deby has in the past said Chad needed the oil revenues to help bolster national security to face attacks from rebels and the spillover of the war in neighbouring Sudan’s Darfur region.

As well as freezing the escrow account, the World Bank suspended loans to Chad on Jan. 12, saying the government had breached an agreement with the bank when it changed a law to access oil profits that were meant to benefit the poor.

The agreement, originally touted by the global lender as a test case in Africa to show how oil profits could fight poverty, was meant to ensure 10 percent of revenues were saved in a special fund to help future generations.

The bank pressed Chad to pass the original oil revenues law in exchange for funding for a $3.7 billion pipeline which carries crude 1,000 km (620 miles) from the landlocked country to the Gulf of Guinea for export.

“Ever since we’ve had this disagreement with the World Bank all the parties involved have had access to their share of revenues apart from Chad,” Hassan said

Chad, which produces 160,000-170,000 barrels of crude per day, had already threatened on Friday to stop production if it failed to reach an agreement with the bank to end the dispute by Tuesday.

Just as things seemed to be calming down in the delta region of Nigeria after a spate of kidnappings and insurgent attacks, the militant group calling itself the Movement for the Emancipation of the Niger Delta, MEND - announced last week to all who would listen that it was planning new violence against oil facilities in the region.

MEND even gave a date for the start of its new campaign: April 25. The guerrillas could not have hoped for a better reaction.

Crude oil prices immediately jumped on the news, hitting $70 a barrel, as new fears about a supply squeeze hit the global oil market.

Ever since Royal Dutch Shell discovered oil in the Niger Delta back in 1956, revenue from oil wells has gone to line the pockets of Nigeria's elite: military dictators and corrupt federal and local government officials.

Very little has gone to help the impoverished communities in the delta, which remain among the poorest in the world. Environment degradation, caused by oil slicks and gas flares, has gone untreated.

Under Nigerian law, oil revenues go to the federal government, which then passes on a percentage to the states.

In 2004, for instance, the 36 Nigerian states received $6.2 billion. Supposedly, about one-third of that went to the four major oil-producing states.

But thanks to theft, corruption and mismanagement, on both the federal and state levels, very little of that money reached the local communities.

Update on Nigeria

Oil prices nudged back above $67 on Monday with 23% of Nigerian output still shut by rebel attacks and no sign of Royal Dutch Shell restarting exports from its vast Forcados oilfield and terminal.

The removal of 550,000 barrels per day of Nigerian oil has coincided with growing demand from refiners in the US, consumer of 40% of the world’s gasoline.

Nigerian minister of state for petroleum Edmund Daukoru told reporters on Monday the biggest foreign operator Shell would restart its offshore 115,000 bpd EA field in days.

However, oil industry officials in Nigeria have stated that Royal Dutch Shell is reluctant to send its staff back into the delta region despite more naval patrols there.

Oil prices hit a $70.9 record high last September after hurricanes knocked out a big chunk of Gulf of Mexico refining and oil and gas production.

Analysts say another active US hurricane this year could strain the oil market still further.