Oil companies in Nigeria are being hit with rising costs due to kidnappings of their staff that have become so commonplace in the volatile Niger Delta one Nigerian company is selling T-shirts calling it the country’s “fastest growing business!”
But in the face of growing insecurity, companies are paying more for insurance, salaries, perks and housing to try to keep fearful staff from fleeing .
“My wife doesn’t want to bring our kids back,” said Scotsman Graeme Kerr, a general manager of two oil services companies whose family left the country after a Port Harcourt bar Kerr was in was attacked by gunmen in August. “Now I’m looking for some work outside of Nigeria.”
Kerr, who asked that his employers not be named, escaped the August attack by hiding under a table, but his best friend was seized by gunmen. Nearly 60 other foreigners have been snatched this year, 10 of them friends of Kerr. All were released unharmed.
Militant groups say they are fighting for a greater share of the region’s oil wealth, which has largely bypassed Delta inhabitants and ended up in the pockets of corrupt politicians. However, many say that what may have once been a politically motivated protest has degenerated into simple extortion, as splinter groups seize foreigners and demand cash from their companies for their safe return. Most companies deny they pay ransoms, although militant groups and the Nigerian government tell a different story.
In the latest violence Tuesday, attackers wielding automatic rifles overran a navy base and occupied a nearby oil facility, holding several troops and 60 Nigerian oil workers hostage in an assault that trimmed crude output in Africa’s biggest producer.
Antony Goldman, a London-based oil analyst, said that major oil firms were trying to shift some of the risk and the cost to subcontractors, but he played down fears oil companies would start pulling out of the lucrative region.
“Oil companies are farming out the risky jobs … but with oil at over $60 a barrel I think we’re a long way from any oil companies pulling out of the Delta for risk reasons alone,” he said.
The volatility in Nigeria has helped push oil prices up in recent months, though crude futures sank below $59 a barrel Tuesday amid doubts that OPEC will make a formal cut in production.
Other daring raids recently include an attack on an oil platform over 25 miles offshore and a raid in which during which two guards were killed and seven foreigners were taken from a residential compound in Eket, Akwa Ibom state. Kerr said the attack, in a previously peaceful part of the country, was a watershed for him, showing “they can take people out of their houses anytime.”
Noticeboards on http://www.oyibosonline.com, the company selling the T-shirts, are full of reports of kidnappings, rumors of impending attacks, and foreigners chafing at curfews imposed by their companies.
Local businesses are suffering, too. Goodfella’s bar in Port Harcourt, popular with expatriates, said earnings were halved to $1,500 a month because so many customers had company-imposed restrictions. Twenty-four Nigerian workers had been laid off.
Bisi Ojediran, a spokesman for a subsidiary of Royal Dutch Shell PLC, declined to comment on security or wages but confirmed that Shell-operated installations had to shut down nearly half a million barrels of production per day due to militant attacks. Thirty percent of the lost revenue belonged to Shell, he said.
Analysts say the character of kidnappings has also changed. What were once mainly community-related disputes, typically carried out by lightly armed local people aggrieved over a lack of jobs or environmental degradation, have become far more serious. Attacks are now carried out by professional gangs using assault rifles, machine guns and even rocket propelled grenades. Few demand projects to benefit local communities, like electricity or water, or bother to issue even perfunctory political demands before asking for a ransom.
After a high of 18 foreigners taken in eight incidents in August, President Olusegun Obasanjo ordered a crackdown. The Delta had a quiet September but many observers say the problem is flaring up again.
While most believe that there is little risk that a hostage will be executed, the risk of becoming caught in a crossfire is increasing. After a string of bloody attacks last week, a jumpy military is firing warning shots at approaching vessels.
In August, a Nigerian employee of Shell died during a botched rescue attempt, sparking a national strike by Nigerian oil workers.