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RPT-Anger in the Delta keeps oil majors quiet - and Nigeria's crude offline

Mon, 22nd Aug 2016 07:00

(Repeats Aug. 21 story with no changes)

By Libby George and Ulf Laessing

LONDON/LAGOS, Aug 21 (Reuters) - Oil companies and evenNigerian officials are losing faith in a deal anytime soon withmilitants who have slashed the nation's oil output, castingdoubt on a production recovery in what is typically Africa'slargest oil exporter.

In the six months since the first major attack on Nigeria'soil - a sophisticated bombing of the subsea Forcados pipeline -dozens of attacks have pushed outages to more than 700,000barrels per day (bpd), the highest in seven years.

Talk in the country has shifted from ceasefire optimism, andoil companies' assurances that repairs were underway, to hedgedcomments from the government and radio silence from oil majors.

"People are giving up in the short term," one oil industrysource told Reuters of a resumption in exports of key Nigeriangrades such as Forcados or Qua Iboe, adding that you "can't getanything" out of the majors, including Shell, Chevron, ExxonMobil or ENI, about when the oilmight come back.

Shell declined to comment, while the other companies did notimmediately responded to a request for comment.

In June, Nigerian government officials said privately it hada ceasefire with militants. But pessimism crept in, with evenOil Minister Emmanuel Ibe Kachikwu telling journalists this week"we are talking but (it) is not an easy thing," and "we need aceasefire" - a contrast to the belief that a ceasefire wasunderway.

The problems reflect deep-seated issues in the Niger Delta,which produces the bulk of oil but whose local communitiescomplain of pollution, a lack of opportunities and what they sayis an insufficient share of petro dollars. These problems arecompounded by an economic crisis and a government battle withBoko Haram militants in the north.

"This is likely the beginning," said Elizabeth Donnelly,deputy head and research fellow of London think-tank ChathamHouse's Africa Programme said of the unrest, adding that "theresolution that will come will not come quickly."

The government this month resumed cash payments to militantgroups that it stopped in February, just before the launch ofthe worst violence since the payments began under a 2009amnesty. But attacks continued anyway.

A group calling itself the Niger Delta Avengers claimed thebulk of them, announcing strikes on Twitter even before oilmajors themselves knew their remote pipelines had been hit.Twitter shut the group's account, but sources said the Avengershave extensive knowledge of oil sites, and follow the mediaclosely to track companies' actions.

"With the Avengers, you don't want to say 'we'll be back upnext Wednesday', because then you'll get a bomb next Tuesday,"one oil executive said. "They have to be careful."

But new groups, such as the self-styled "RevolutionAlliance", which claimed an attack on a Shell-owned oil line,loom, while non-violent local protests have also exacted a toll.

Collings Edema, a local youth leader of the Itsekiri groupthat has blocked access to Chevron's Escravos tank farm foralmost two weeks, said "the oil companies have not shown anysign that they are ready to improve our lives."

Experts warned that as long as people are unhappy, militantsand their targets could evolve in unpredictable ways.

"This is also about frustrations of younger people coming upin the Niger Delta and needs not having been addressed,"Donnelly said. "This isn't just about militancy, though thepolitical and economic context feeds it."

Kachikwu told journalists this week that it was too early tosay when Nigeria could increase output due to security concerns.

But the Avengers call the country a "failed state," whileyouth groups in the region remain deeply sceptical of the oilindustry.

"From the situation on the ground I do not think the oilcompanies are ready to improve the lives of people of the NigerDelta region," said Eric Omare, spokesman for the Ijaw YouthCouncil, the youth body of biggest ethnic group in Delta. "Thepresent structure of Nigeria does not encourage that." (Additional reporting by Anamesere Igboeroteonwu in Onitsha,editing by David Evans)

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