Militant attacks in the Niger Delta, unquantifiable corruption and increased levels of piracy in the Gulf of Guinea all pose significant risks to foreign investors in Nigeria, a report has claimed.
The risk analysis report, which was released on Monday by Maplecroft, a global risks, responsibility and reputation firm, stated that dozens of piracy attempts and vessel hijackings had characterised the Nigerian waters over the past four years.
It said militants and pirates had increased their operations, a development that posed greater risks to foreign oil firms operating in the country.
“Nigerian pirates have become increasingly active, targeting vessels both in Nigerian waters and further afield,” the report stated.
According to the report, militants steal from oil vessels and this has negatively affected earnings of most firms, and has also increased insurance and security costs for operators, with kidnappers sometimes also involved in the activities perpetuated by the restive sect.
It stated that this month, pirates boarded a Singapore-flagged products tanker, Abu Dhabi Star, and were believed to have potentially stolen some cargo before fleeing the scene upon sighting Nigerian Navy personnel.
Last month, two Nigerian guards were murdered after armed assailants attacked Rotterdam-based Sea Trucks Group’s Jascon 33 offshore service vessel. It was reported that four foreigners, who were crew members of the vessel, were kidnapped in the attack but were released after about three weeks.
According to the report, onshore operations are also at risk from the Movement for the Emancipation of the Niger Delta militants.
It noted that MEND had renewed its attacks on oil infrastructure after an amnesty in 2009, and from “extremely widespread” illegal oil siphoning.
Maplecroft said in recent months, Shell Nigeria had offloaded its share of two onshore blocks, OML 34 and OML 40, to domestic explorers with militant activity having prevented production at the latter block for the past five years.
The report stated that the tense situation might have forced the Anglo-Dutch super major to sell its onshore blocks.
It added that Shell had been selling its attack-plagued onshore blocks in the country in a drive publicly aimed at refocusing on offshore exploration that might also be motivated by the violence.
According to the report, last month, a leaked document showed that Shell had spent some 40 per cent of its global security budget in recent years solely on protecting staff and installations in the Niger Delta.
The report ranked Nigeria worse than almost all its neighbours in terms of corruption. It stated that the country was the 16th worst country in the world on the issue of corruption.
“Corruption is embedded in all major Nigerian institutions and the payment of bribes as part of the day-to-day business of government is considered normal,” it said.
It further noted that the reputation, legal and financial risks involved were put in the spotlight in 2009, when Halliburton and KBR agreed to pay $727m after admitting to bribing Nigerian public officials.
According to the report, this was one of the largest settlement fines paid in the history of the United States Foreign Corrupt Practices Act.
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