Blood Oil (original) (raw)

Also on VF.com: Michael Kamber’s photographs from Nigeria.

On June 23, 2005, a group of high-ranking government officials were convened in a ballroom of the Four Seasons Hotel in Washington, D.C., to respond to a simulated crisis in the global oil supply. The event was called “Oil ShockWave,” and it was organized by public-interest groups concerned with energy policy and national security. Among those seated beneath a wall-size map of the world were two former heads of the C.I.A., the president of the Council on Foreign Relations, and a member of the Joint Chiefs of Staff. The scenario they were handed was this:

Civil conflict breaks out in northern Nigeria—an area rife with Islamic militancy and religious violence—and the Nigerian Army is forced to intervene. The situation deteriorates, and international oil companies decide to end operations in the oil-rich Niger River delta, resulting in a loss of 800,000 barrels a day on the world market. Since Nigerian oil is classified as “light sweet crude,” meaning that it requires very little refining, this makes it a particularly painful loss to the American market. Concurrently, in this scenario, a cold wave sweeping across the Northern Hemisphere boosts global demand by 800,000 barrels a day. Because global oil production is already functioning at close to maximum capacity (around 84 million barrels a day), small disruptions in supply shudder through the system very quickly. A net deficit of almost two million barrels a day is a significant shock to the market, and the price of a barrel of oil rapidly goes to more than $80.

The United States could absorb $80 oil almost indefinitely—people would drive less, for example, so demand would decline—but the country would find itself in an extremely vulnerable position. Not only does the American economy rely on access to vast amounts of cheap oil, but the American military—heavily mechanized and tactically dependent on air power—literally runs on oil. Eighty-dollar oil would mean that there was virtually no cushion in the world market and that any other disruption—a terrorist attack in Saudi Arabia, for example—would spike prices through the roof.

According to the Oil ShockWave panel, near-simultaneous terrorist attacks on oil infrastructure around the world could easily send prices to $120 a barrel, and those prices, if sustained for more than a few weeks, would cascade disastrously through the American economy.

Gasoline and heating oil would rise to nearly $5 a gallon, which would force the median American family to spend 16 percent of its income on gas and oil—more than double the current amount. Transportation costs would rise to the point where many freight companies would have to raise prices dramatically, cancel services, or declare bankruptcy. Fewer goods would be transported to fewer buyers—who would have less money anyway—so the economy would start to slow down. A slow economy would, in turn, force yet more industries to lay off workers or shut their doors. All this could easily trigger a recession.

The last two major recessions in this country were triggered by a spike in oil prices, and a crisis in Nigeria—America’s fifth-largest oil supplier—could well be the next great triggering event. “The economic and national security risks of our dependence on oil—and especially on foreign oil—have reached unprecedented levels,” former C.I.A. director Robert Gates (now secretary of defense) warned in his introduction to the Oil ShockWave–study report. “To protect ourselves, we must transcend the narrow interests that have historically stood in the way of a coherent oil security strategy.”

In January 2006, less than seven months after the first Oil ShockWave conference—almost as if they’d been given walk-on parts in the simulation—several boatloads of heavily armed Ijaw militants overran a Shell oil facility in the Niger delta and seized four Western oil workers. The militants called themselves the Movement for the Emancipation of the Niger Delta and said they were protesting the environmental devastation caused by the oil industry, as well as the appalling conditions in which most delta inhabitants live. There are no schools, medical clinics, or social services in most delta villages. There is no clean drinking water in delta villages. There are almost no paying jobs in delta villages. People eke out a living by fishing while, all around them, oil wells owned by foreign companies pump billions of dollars’ worth of oil a year. It was time, according to MEND, for this injustice to stop.

The immediate effect of the attack was a roughly 250,000-barrel-a-day drop in Nigerian oil production and a temporary bump in world oil prices. MEND released the hostages a few weeks later, but the problems were far from over. MEND’s demands included the release of two Ijaw leaders who were being held in prison, $1.5 billion in restitution for damage to the delicate delta environment, a 50 percent claim on all oil pumped out of the creeks, and development aid to the desperately poor villages of the delta. MEND threatened that, if these demands were not met—which they weren’t—it would wage war on the foreign oil companies in Nigeria.

“Leave our land while you can or die in it,” a MEND spokesman warned in an e-mail statement after the attack. “Our aim is to totally destroy the capacity of the Nigerian government to export oil.”

Because Nigerian oil is so vital to the American economy, President Bush’s State Department declared in 2002 that—along with all other African oil imports—it was to be considered a “strategic national interest.” That essentially meant that the president could send in the U.S. military to protect our access to it. After the first MEND attack, events in the Niger delta unfolded almost as if they had been scripted by alarmist Pentagon planners. In mid-February, MEND struck again, seizing a barge operated by the American oil-services company Willbros and grabbing nine more hostages. Elsewhere on the same day, other MEND fighters blew up an oil pipeline, a gas pipeline, and a tanker-loading terminal, forcing Shell to suspend 477,000 barrels a day in exports. The nine hostages were released after a reportedly huge ransom was paid, but oil prices on the world market again started to climb. MEND had shown that 20 guys in speedboats could affect oil prices around the world.

The problem was one of scale. The Nigerian military—as poorly equipped as it is—can protect any piece of oil infrastructure it wants by simply putting enough men on it. But Shell has more than 3,720 miles of oil and gas pipelines in the creeks, as well as 90 oil fields and 73 flow stations, and there is no way to guard them all. And moving the entire industry offshore isn’t a good option, either. Not only is deepwater drilling very expensive, but there are still immense oil and gas reserves under the Niger delta that have not yet been exploited. And—as it turns out—the deepwater rigs aren’t immune to attack anyway. In early June, militants shocked industry experts by overrunning a rig 40 miles out at sea. Offshore oil platforms generally sit 40 or 50 feet above water level, but their legs are crisscrossed with brackets and struts that are not difficult to climb. After firing warning shots, dozens of militants scampered up the legs and ladders to the main platform, rounded up eight foreign oil workers—including an American—and forced them at gunpoint into their boats. They were back in the creeks within hours.

The militants are also capable of striking in the cities. In January of last year, about 30 militants ran their speedboats straight into the Port Harcourt compound of the Italian oil company Agip, killed eight Nigerian soldiers, robbed the bank, and made their getaway. In May, a man on a motorbike shot an American oil executive to death while he sat in Port Harcourt traffic in his chauffeured car. In August, members of another militant group walked into a popular bar named Goodfellas and abducted four Western oil workers. By the end of September, militants had kidnapped—and released for ransom—more than 50 oil workers, and onshore Nigerian oil production had been cut by 25 percent, or about 600,000 barrels a day. That represented a loss of nearly a billion dollars a month to the Nigerian government.

In early October, two separate attacks in the creeks reportedly killed at least 27 Nigerian soldiers and sank or captured two navy gunboats. In response, militants claimed, Nigerian helicopters strafed and then torched an Ijaw village named Elem Tombia. No one was killed, but it was a clear escalation of the conflict. By mid-October, the Niger River delta was on the brink of all-out war.

Into the Delta

The Ijaw village was just a scattering of huts along a meager break in the mangrove, and when our boatman spotted it he slowed and circled and ran his boat up onto the shore. Dugouts had been pulled onto a narrow sand beach, and cook fires smoked unenthusiastically through the thatched roofs of the huts. Behind us, a miles-wide tributary of the Niger River unloaded a continent’s worth of freshwater into the Gulf of Guinea. Village children gathered to study our arrival, and a local man saw us and walked away to tell someone that a boatful of strangers had just arrived.

After a few minutes a young man came and motioned for us to follow him, and we stepped carefully through the village and took seats on a wooden bench outside a thatched hut. It was very hot. Somewhere a transistor radio was playing Western music. The huts were sided with rough-milled planks and thatched with palm fronds, and inside women cooked on small fires. Malaria is rampant in these villages, as are cholera, typhoid, and dysentery, and almost none of the communities have safe drinking water. The people survive—barely—off local fish stocks that have been decimated by pollution from oil wells. After a while we heard gunshots, and then a group of young men came walking out of the forest and gathered around us. “Don’t be scared,” one of them said. “Feel free.”