The Cost of Doing Business

An oil-field services employee from Texas is shot down on the streets of Nigeria, martyr to someone's cause

"Any operator in Nigeria's delta or thinking about going there needs to be appreciative that these tribes went to war to share in oil profits in 1967," says Matthew Simmons, chief executive officer of Simmons & Co. International, a Houston-based investment bank. Simmons, a tough critic of the oil patch, is referring to the Biafra War, which ended after militants "called a truce on the promise that they would share in oil wealth."

"Almost 40 years later, they are far poorer, and they watched the Niger Delta turn into an environmental disaster. Now they want their oil back. I think they are serious, and ignoring their threats is unwise."

Being "far poorer" is a major factor in why this oil war escalates from time to time. Such as this year -- of all years -- when the oil industry is dealing with the likes of incredible demand, post-Katrina, Venezuelan President Hugo Chavez and, of course, an Iraqi insurgency.

People scavenge on refuse near an oil facility in Nigeria.
AP Photo / George Osodi
People scavenge on refuse near an oil facility in Nigeria.

But this time, something is different, say experts. The violence has a different edge. Car bombs, for example, have gone off in Port Harcourt. This is so alarming it has rattled the world's oil market to the core, helping push the cost of a barrel of oil to more than $70. By some estimates, Nigerian oil exports for 2006 have been cut by 20 percent.

Speculation about who's behind this new wave of violence is off and running. Some have suggested radical Muslims (60 million Nigerians are Muslim, the other 60 million are Christian). Earlier this year, militant spokespersons used the term "God willing" when making threats.

The most radical of rumors, however, include the Chinese. Some believe that China, desperate for energy, is secretly trying to force American oil companies out of Nigeria.

"Anything is possible in Nigeria," says Chris Albin, an investigator for the global organization Human Rights Watch. "[But] I'd be much more inclined to believe neither of those things."

Albin, who has traveled the delta and had long conversations with militants, says there are rational reasons behind this year's spike in aggression. Delta youths join the militant groups because outside of a few oil company jobs, there is nothing but farming and fishing for income, he says. "They're less willing to accept a subsistence income when they know billions of oil revenue is being pulled out from the ground beneath them."

Albin believes MEND is a mix of "old players." But he acknowledges they're "much more overtly political" and that taking hostages is a "radical departure" from past militant behavior.

What isn't a mystery is the global competition for energy resources. China is the world's second-largest energy consumer, and its growing thirst for oil undoubtedly pits it against the world's No. 1 consumer -- the United States -- says John Robb, who runs

Robb, who had an op-ed piece published in The New York Times about the emerging global trend of open-source, super-fragmented insurgencies, has floated this question: Is China supporting delta militants with weapons, training and intelligence?

"Securing oil rights is tough, power politics. It's pure Machiavellian," he says.

With that in mind, Robb says, consider the timing of China's $2.3 billion deal with Nigeria to purchase a 45 percent stake in an offshore oil field. It was China's first ever oil agreement with Nigeria. Days later, says Robb, MEND began attacking Shell institutions.

Michelle Medeiros, an American who works for the global environmental group Friends of the Earth, suggests MEND is what it is: a rebel group out to right a perceived wrong.

In 2005, Medeiros was working near Lagos, Nigeria's largest city, when she became aware of a farmer who had handed over his land for $300 to an "oil consortium" so a pipeline could run through it. The consortium was composed of international banks, government agencies and oil companies, notably Shell, the farmer told her.

"They're not being informed of their rights," says Medeiros. "They don't understand that they don't have to give up their land for so little."

As with the militants, much of what the oil and gas business does outside the United States, especially in far-flung lands with weak democracies, is shrouded in secrecy.

Besides a call for jobs, money and hospitals, it's no wonder delta militants have been demanding for years that big oil become more "transparent" when it comes to business.

This lack of disclosure has cost many Nigerians their lives, and may have helped take the life of Ricky Wiginton, a Texan who took the gut-check for the oil patch by going overseas where Americans are increasingly becoming easy targets.

Wiginton, who was laid to rest in Itasca, took that risk, in large part to support his wife and stepdaughter.

"He was never rude to anybody," says his stepdaughter. "He always made everybody feel at home."

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