The financial crisis that engulfed the world at the close of 2008 has had dramatic implications for world oil and other energy supplies. For one, it has pushed oil prices to below US$50 a barrel from a record high of about US$150 per barrel. All of this took place within a matter of weeks. If the low price regime holds, it will have substantial implications for the urgent search for alternative and renewable energy. A clear tendency will be for crude oil suppliers to pump more oil in order to shore up the flow of their revenue. The Organization of the Petroleum Exporting Countries (OPEC) may seek to control the volume of oil in the market for similar reasons and hope that such curtailment would jack up prices. Will the oil corporations be uninterested bystanders in all this? Unlikely.
The oil sector has been a precursor of many conflicts since its ascendancy, and the correlation between incidence of wars and a rise in the cost of oil and attendant profits to the oil majors has already been established. With regard to present-day Africa, we can extend this argument to say that virtually all conflicts are about who has the right to exploit what resources are available. A member of the International Crisis Group had this to say about the fighting in the Democratic Republic of Congo, acknowledging the economic roots of the fighting: 'This is the absolute core of the conflict. What we are seeing now are beneficiaries of the illegal war economy fighting to maintain their right to exploit' (Swagler, 2008).
It is quite interesting to see that the usual laws of economics (the supply-and-demand theories) do not always work with the oil and gas industry. What we mean is that oil prices do not necessarily go up because there is a shortage of oil; and the prices do not necessarily fall because there is a glut in the market. This situation says something about the place of oil corporations' influence in today's governance systems, as well as about our fossil fuel-driven society. This theme runs through the discussion in this chapter.
There are, however, closely related factors that undeniably affect the profitability of the oil corporations: conflict and the threat of conflict. An analysis of the fact would more or less lead one to conclude that the oil and gas sector has been oiling conflicts throughout its stormy history. The arms-industrial complex cements the relationship between oil and conflicts. There are extensive arguments that show why this is so. These range from the fact that conflicts indicate possible disruptions of supplies, thus pushing up prices, to the argument that the arms industry directly thrives on selling arms and these sales are not at optimum levels in peacetime.
Oil revenue-dependent states become inexorably drawn into the trap of violence by the sheer need to maintain a firm grip on the levers of power. This happens because such states, although known as oil-producing states, are actually oil rent-collecting states. The oil corporations do all the production and the governments merely collect rents for the concessions. Such states have a regular inflow of petrodollars and enjoy windfalls when oil prices climb. As the petrodollars keep flowing in, these governments do not bother to rigorously collect tax from their citizens and mostly only those in formal institutional employment pay taxes - because they cannot avoid it. Since the vast majority of people do not directly contribute to the financial support of the structures of governance, there is a rather tenuous thread by which the governed are spurred to insist on accountability on the part of their governments. In order for government to maintain its grip on the people and power, when discontent creeps in, the tendency is for those in power to take the authoritarian route.
This brings in the arms industry, whose stock-in-trade is violence. It is reported that from 1984 to 1994, the military expenditures of OPEC countries as a percentage of their total budgets were three times that of developed countries, and up to ten times that of developing countries that were not members of OPEC (Ghazvinian, 2007, p106).
The question that our topic raises is: how local are the conflicts generated by this sector? If the conflicts are local, are the ripples circumscribed or do they spread regionally or even internationally? In this chapter, I will use Nigeria's Niger Delta as the localized arena. The Niger Delta has become an unmistakeable emblem of oil-sector-induced conflicts. The continued incidence of violence visited on peaceful communities here led to the expulsion of Shell Petroleum Development Company from Ogoni in 1993, for instance. In recent years, there has been a rise in armed groups fighting for space within the oil region. These fights have manifested themselves in the kidnapping of oil-sector workers, demand-and-receipt of ransoms and the destruction of oil pipelines. The upswing in violent confrontation contributed to the upward swing in crude oil prices globally, until somewhat checkmated by the financial crash that unravelled from the US in 2008.
The Niger Delta has been a historically neglected region of Nigeria. This neglect and the inability of the Nigerian state to deliver development and a stable democratic order have added deeper dimensions to the struggle for spoils in the region and the nation at large (Okonta, 2008, p181). The Niger Delta has become a parable from which new oil countries, especially of the East African Rift Valley area, are to draw lessons. If the states fail to draw the obvious lessons, it may be difficult for the region to stop drifting into more agonizing situations.
The rise of armed militias in Nigeria's oil fields has been traced to the setting up of gangs of thugs by politicians with the aim of fighting political opponents during election campaigns (Ghazvinian, 2007, pp54-55). With huge caches of arms in circulation and without tasks from their 'godfathers', the thugs turned their focus on illegal bunkering and other illegal ways of tapping into crude oil resources. It has been said 'that it would be no exaggeration to say that contemporary Nigerian politics are dominated by efforts to appropriate oil money' (Turner, 1980, p211). But there are some groups who claim loftier political ideals and agenda.
Even before the recent rise of armed gangs in the Niger Delta, popular resistance has often meant the intervention of the Nigerian military to dissipate such resistance. Over the years the Niger Delta has become the most militarized region of Nigeria. The role of the military has been suspect from as early as the 1990s as it regularly took an anti-people stance in the conflicts. It was responsible for the attacks on communities on behalf of oil corporations at different times, including Umuechem (1990), Ogoni (1993 to 1995), Odi (1999), Odioma (2005) and Ugborodo (2008). The oil companies, such as Shell, continue to provide 'logistical support' to government security forces in the Niger Delta, ostensibly to help secure their facilities. They also claim to be 'providing training to help them avoid human rights violations' (Shell, 2007, p24).
Apart from turning their guns against helpless local people, it has been revealed by none less than the Nigerian Chief of Defence Staff (CDS) Air Marshal Paul Dike 'that secret military information meant for the joint task force (JTF) fighting militancy in the Niger Delta region is leaked before it gets to the soldiers. The CDS also has information that some soldiers attached to the JTF encourage illegal bunkering in the area. He has also been informed of extortions and harassment of the people in the area by the soldiers' (Amaize et al, 2008).
In other situations, communities such as the Iwerekhan1 have taken the path of litigation (against Shell's gas flares) and obtained unenforced victory, while others such as the Aja-Omaetan community in Warri North of Delta state chose to petition their governor for the cessation of gas flaring in their area. The people of Aja-Omaetan complain of intense heat from the gas flare point in the Dibi Oilfield, which is a mere 1km from the community. Chevron has been accused of deploying heavily armed security men to the area following the complaints of the people. In their petition to the Delta state governor, they stated that 'the effect of Chevron Nigeria limited gas flaring in
Dibi Field has taken a dangerous dimension as their farms have been burned beyond redemption, their land, air and surrounding water are overheated with its attendant associated unknown ailments now prevalent in the community'. Accordingly, the community urges and requested urgent intervention to 'stave off imminent bloodshed in the area' (Arubi, 2008).
The violent bent of the industry continues. In late November 2008, peaceful community members protesting Chevron's unwillingness to honour the terms of a memorandum of understanding that Chevron had entered into were shot at. In that incident, some Ugborodo community people, including at least one child, received injuries from gunshots (ERA, 2008a).
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