Q+A: What is at stake in Nigeria's Niger Delta?

Sat Oct 3, 2009 1:33pm EDT

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(Reuters) - An amnesty offer to militants in Nigeria's oil-producing Niger Delta expires on Sunday.

Following are some questions and answers on why the Niger Delta crisis is important.

WHAT IS AT STAKE?

Nigeria's central bank Governor Lamido Sanusi has said growth this year in sub-Saharan Africa's second biggest economy hinged largely on a solution being found to the unrest in the Niger Delta.

The violence, which includes kidnappings, pipeline bombings and oilfield raids, was costing $1 billion a month in lost oil revenues, the central bank said.

Attacks on oil infrastructure by militants in the Niger Delta over the past three years have prevented the OPEC member from pumping much above two thirds of its 3 million barrels per day installed capacity.

The insecurity has been a major deterrent to new investment.

Hundreds of foreign workers have been kidnapped, prompting companies in sectors ranging from energy to telecommunications and construction to withdraw non-essential staff.

WHY IS THE NIGER DELTA IMPORTANT FOR OIL MARKETS?

The Niger Delta, a network of thousands of shallow creeks opening into the Gulf of Guinea, is the heartland of Africa's biggest oil and gas industry.

The region's light crude oil is popular among U.S. and European refineries as it can be easily processed into fuel products.

The United States, the world's top energy consumer, has said it wants the Gulf of Guinea to supply a quarter of its crude oil imports by the middle of the next decade. China depends on Africa for some 30 percent of its oil imports.

Nigeria also holds the world's seventh largest proven gas reserves and supplies 10 percent of global liquefied natural gas.

Attacks on Nigeria's oil and gas infrastructure last year helped lift oil prices to record highs near $150 a barrel.

WHICH FOREIGN OIL COMPANIES OPERATE IN THE NIGER DELTA?

U.S. oil majors Exxon Mobil and Chevron, Royal Dutch Shell, Italy's Agip, and France's Total run major oil and gas operations with Nigeria's state-run NNPC in the Niger Delta.

Insecurity in the region has forced companies to shut down around 800,000 barrels a day of crude oil production.

Gas supplies have also been affected. Shell's Soku gas plant has been shut down for nearly a year.

WHO ARE THE MILITANTS?

The Movement for the Emancipation of the Niger Delta (MEND) is a nebulous group which emerged in late 2005 and has been responsible for pipeline bombings and kidnapping oil workers. It says it is fighting for greater local control of oil resources.

MEND launched a series of attacks last September, dubbed a six-day "oil war," and carried out a raid on Royal Dutch Shell's Bonga platform 120 km (75 miles) offshore last June.

But it has failed to carry out any attacks as spectacular as those of early 2006 when it knocked out almost a quarter of Nigerian output in a matter of weeks.

Its presumed leader, Henry Okah, accepted a presidential offer of amnesty in July after gun-running and treason charges against him were dropped and he was freed.

(Reporting by Randy Fabi; Editing by Nick Tattersall)

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