The Resource Curse in Nigeria: Comparing the Security of Offshore and Onshore Oil Production

By Mary L. Kleinpeter
2016, Vol. 8 No. 03 | pg. 1/3 |

Abstract

Developing states with large natural resource industries have an inclination to become over-reliant on one source of capital, causing other industries to fail, promoting , and stimulating . Nigeria is one such case, as their booming oil industry has lead to the creation of new militant groups who target petroleum production sites to either loot oil, kidnap for ransom, or damage infrastructure. In the past decade, major international drilling companies such as Royal Dutch Shell have begun to focus their drilling operations offshore in the Niger Delta in result of the increasing attacks. However, several incidents offshore have suggested that miles of ocean water is not a sufficient means of protection, as militants have carried out successful attacks with simple motorboats and home-made explosives. By using a case-study approach to analyze the frequency and success of offshore versus onshore attacks in Nigeria between 2006 and 2014, I argue that offshore sites are not as secure as oil companies would like to believe, as capital-deprived militants will simply follow oil and gas production offshore.

Overview

States whose economies are largely reliant on the resource industry with little diversity tend to be prone to corruption. Abundant have a long history of fueling tensions and are believed to be the single largest predictor of civil (Collier and Hoeffler 2004). In areas with weak states and abundant resources, such as Nigeria, individuals or groups often target the resource industry because it is either the source of their grievances or to benefit from its value. While most “attacks” (instances of looting, kidnapping, damage of infrastructure, etc.) have traditionally occurred on land, there are valuable oil and gas platforms offshore that are relatively insecure and prone to attack, despite being located several miles offshore.

The lack of security on oil rigs may make up for the distance rebels must travel, making offshore sites even more desirable. Even if attacks offshore have occurred slightly less frequently than those onshore, offshore incidents have been more destructive overall.

The Resource Curse

States are labeled as having a “resource curse” when their economies are substantially reliant on renting indigenous resources to foreign clients, specifically fuel resources (Mahdavy). Such states often fail to develop other sectors of their economies (, , etc.), instead focusing on their naturally occurring wealth. The presence of valuable resources can undermine the government’s ability to provide security and accountability, further weakening political and welfare systems (Collier 2010). However, it is unclear what portion of conflict is driven by sociopolitical grievances as opposed to the wish of rebels to benefit from the abundant resource wealth (Fearon 2005).

Experts argue over the causal mechanism that links large resource industries and conflict, and also why fuel exports in particular seem to increase the likeliness of civil conflict. Most measurements fail to indicate whether rebels actually have access to the resources, and how their locations play into the likeliness of conflict outbreak (Gilmore and Lujala 2003). Distance and rough terrain make it difficult for governments to transport troops and sustain them for long periods, often giving rebel groups the advantage (Buhaug, Gates and Lujala 2009).

In order to determine how offshore drilling sites contribute to conflict differently, this paper considers the intensity and damage of offshore versus onshore attacks during the nine-year period between 2006 and 2014, as well as the outcome of some significant conflicts, which may help determine the success of rebels onshore as opposed to offshore, where resources, backup, and transportation are less available for both the rebels and offshore workers. By looking at the type of attack (kidnapping, damage, lives lost) and the amount of damage, it can be seen that offshore attacks are almost as likely as those onshore.

Despite large oil companies like Royal Dutch Shell moving their operations offshore, in many cases rebels simply moved their targets offshore as well. By using a case study approach with temporal variations and a controlled comparison between onshore and offshore attacks, this paper argues that offshore attacks have the potential to be nearly as frequent and disadvantageous as those onshore.

The Benefits and Challenges of Offshore Drilling

There has been little research on how likely rebels are to target offshore oilrigs (structures for drilling oil wells) and offshore platforms (structures that stand on the seabed and provide a base for oil wells). While conflicts are more likely to be located in areas of resource extraction within the state, oilrigs are much less secure and extremely valuable (Harel 2012). With this in mind, it is possible that rebel groups may target offshore oil fields because they pose fewer security obstacles. Because several miles of ocean water surround offshore sites, they pose an added difficulty for rebels, yet still, offshore fields often make up a significant portion of the country’s overall production. This is especially important as some oil industries like Shell and Chevron in Nigeria began to migrate offshore in the mid-2000s in order to reduce the number of insurgent attacks.

The Conflict in Nigeria

Between 2007 and 2012, Nigerian rebels undertook approximately 1000 attacks on drilling sites, most of which were onshore though some were also offshore. Nigeria, specifically the Niger Delta, is a viable case because it has hosted an exceptionally high number of onshore attacks as well as a majority of the world’s offshore incidents during this time period. Nigeria also fits the model of a “weak” state, since it is largely dependent on the oil wealth generated from Shell, Chevron, ExxonMobil and so on.

The country has witnessed different insurgent groups, most recently the Movement for the Emancipation of the Niger Delta (MEND), who seeks control of the Delta’s oil reserves. MEND is notably remembered for their attack on Shell’s offshore Bonga field (located approximately 77 miles offshore), after which the oil platform was temporarily shut down along with a significant portion of Nigeria’s oil production. Thus, Nigeria is an ideal case study because it has experienced an exceptional amount of insurgency against its resource industry, as well as both on- and offshore attacks. Since big companies like Shell began moving their drilling sites within the time period, Nigeria allows for consideration of how the number of conflicts have increased, decreased, or stayed the same since then. Studying these exclusively in Nigeria also ensures that other factors like the economy and sociopolitical structures remain constant.

In Theory: States, Oil Resources, and Conflict

Resource Wealth and Conflict

James Fearon defines an oil dependent state as one that receives over one-third of its export income from oil (Fearon 2005). Resource wealth provides a relatively simple way to turn a very large profit, though it also often attracts groups that seek either to gain control of the valuable resources or to resolve perceived grievances such as political oppression. The groups’ motives may never be entirely clear, since they often claim to be acting for sociopolitical reasons in order to gain support, but actually seek to profit from illegal resource extraction (Renner 2002).

Most of these groups do not seek to overthrow the government or secede, but rather gain control of the resources, which is sometimes the sole source of wealth in the statei (Renner 2002). Rebel groups are aided by the political and economic factors of the resource curse, such as a weak and social division. While some groups start out with strictly loot-seeking agendas, others may begin with political goals and evolve into profit-seeking corporations (Collier 2010).

Still, the resource curse often causes considerable disadvantages for the local population, such as exploitation of agricultural land, environmental harm, and disruption to quality of life (Renner 2002; Lujala, Rod and Thieme 2007). Farmers may face a lack of support from a government no longer concerned with other sectors of the economy and may have their land confiscated if it sits on top of valuable hydrocarbons. Territory and resources may also represent a nontangible value for certain groups who hold spiritual connections to their land, contributing to the formation of rebel groups.

Even offshore, oil extraction poses a serious threat to fishing and maritime industries. Seismic cannon blasting can injure or kill tens of thousands of marine animals, threatening fisheries, coastal economies, depressing catch rates and displacing fish species (Charles 1992). Communities are rarely informed or considered before extraction projects begin, which has lead to a number of conflicts ranging from small-scale skirmishes to large acts of sabotage (Renner 2002).

If a rebel group rises from one or more of these possible motives, the state can be thrown into a sequence of acquiring more resource wealth and funding more war. Even though Collier and Hoeffler’s “Greed and Grievance in Civil War” claims that when resources are abundant the government has the means to build a strong military and prevent rebellion, resources have actually lengthened conflict in many places. These governments are often corrupt, weak, and unconcerned with the population, making them somewhat susceptible to rebel movements. Furthermore, Collier and Hoeffler only consider primary commodity exports in their research and do not account for the effect production may have on conflict.

There is also a cycle at work where the wealth of resource exploitation funds war that in turn provides the means to sustain illegitimate access to resources (Renner 2002). In this rotation, the leaders of the government and rebel forces use resource money to buy more weapons and line their own pockets, increasing their war supply and lengthening the war. To keep up their military and personal funding, the governments may have to increase their production of oil. The conflict in Sudan is one example where oil wealth has allowed the government to continue conflict against the southern rebels. To fund the war, the government must expand oil extraction deeper into rebel territory (Renner 2002).

Lootable resources are believed to increase the likeliness and length of conflict, with oil resources being the most likely to spark uprising (Collier and Hoeffler 2004). Even though oil tops the list, there is debate among experts over the lootability of oil. While scholars like Collier and Hoeffler claim that oil is a particularly large indicator of conflict, Fearon claims that oil requires the control of a national distribution system, which rebels lack (Fearon 2005). However, Fearon does not take into account that many of these rebels are not looking to take over the oil industry but rather turn a small profit. Small-scale looting does not require a national distribution system in order to be lucrative.

Oil-producing states also tend to have less reliable institutions than other primary commodity exporters, which encourages corruption. Scholars are yet to agree on the most important mechanism between oil and conflict, though it is agreed that oil exporters are more disposed to onset (Fearon 2005). It may be that oil is also a dispersed resource, which makes it harder to protect than a point resource and more available to benefit a range of contenders (Renner 2002). Besides its availability, oil provides ample opportunity for rebel through several methods, such as: bunkering (tapping pipelines), kidnapping and ransoming oil workers, or through extortion rackets against oil companies (Collier 2010). Offshore sites are equally prone to these methods, and can be particularly susceptible to acts of sabotage.

While scholars point out several ways that rebels can profit from the oil industry, they do not explain how different forms of attack may be used to achieve different outcomes. Bunkering, looting, and extortion can be assumed to be in aim of primarily economic goals, since they involve obtaining oil and do not seriously damage the industry. Kidnapping may pose either economic or political objectives, since rebels may either ask for money or for some other prize. Sabotage, on the other hand, is strictly the aim of a non-economic goal, since the valuable stored resources and equipment is damaged or destroyed.

The resource curse provides several overlapping motivations for the rise of rebel groups and conflict. Resource wealth may provide incentive enough for groups to rebel, though resource extraction and weak governance can infiltrate legitimate sociopolitical, economic, and environmental harm. These grievances pose another reason that groups may seek conflict with the state. Large resource industries can also lengthen existing conflicts, as both the government and the rebels may use the resource to fund the war and turn a profit. All of these factors are heightened in the case of oil, which is both dispersed and lootable. Rebels can profit from oil production in several ways besides looting, and their method of attack may depend on their desired outcome.

Location as a Detriment and Driver of Conflict

While resources are believed to increase the likeliness of conflict, the conflict is also likely to be located near the actual site of resource extraction (Collier 2010). Fighting in these areas of resource reserve are also proven to last substantially longer than those that take place in other regions (Lujala, Rod and Thieme 2007). With this being said, location can also help or hinder the ability of security forces. The greater the distance between the resource and the center of government , the more difficult it is for the government to maintain control and protect the source (Renner 2002).

Some argue that the distance from the capital influences the type and duration of conflict, and that diffused resources near the government center are likely to induce riots while those further away are connected to warlordism (Gilmore and Lujala 2003). This is especially true for oil reserves, since they are dispersed over large distances, both onshore and offshore. With less government intervention in remote locations, militant groups have the ability to conduct illicit operations on a larger scale. Buhaug, Gates and Lujala find that conflicts located a considerable distance from the center of government, near remote international borders, and in regions with valuable resources will last substantially longer (2009). When these valuable resources are located in far away, remote areas, conflict may last for even longer periods. Borders provide an added advantage for rebels because they are usually far from the capital and provide easy access to safe havens and trade (Buhaug, Gates and Lujala 2009).

Logistically, distance makes it difficult for the government to transport troops and equipment, especially if rough terrain is involved (Buhaug, Gates and Lujala 2009). Geographic features like mountainous terrain or deep forest can inhibit government accessibility and provide an advantage for rebels. Some of the longest-standing conflicts are those found in the remote hinterlands of Myanmar, which are known for rugged mountains and dense forests along the nation’s border as well as for a rich supply of natural resources (Buhaug, Gates and Lujala 2009). However, this study does not consider how offshore sites, which are separated from all communities, contribute to the likeliness of conflict. Offshore oil facilities are widely dispersed and difficult to protect for long periods of time, since no permanent safeguarding facilities can be established offshore.

Offshore Oil Facilities and Maritime Law

Facing attacks and attempted attacks onshore, many multinational companies like Shell in Nigeria have begun to move their production offshore in attempt to make their fields harder to access for rebels. While these fields may be out of sight, they are still potentially important targets if rebels are set on attacking the resource industry. These sites are still likely to be targets, since offshore oil and gas production is the largest marine industry in the world, and amounts to more than $300 billion annually (Harel 2012). Platforms also store large volumes of flammable liquids and gas that could significantly increase the effect of an attack (Harel 2012). Offshore sites are very important generators of energy and income, and damage to such assets can be highly damaging to the state.

Though it would seem that offshore sites would be more difficult for rebels to attack, not much is needed to carry out large-scale sabotage. Devastating attacks have been carried out by a handful of people in simple speedboats, such as the attack on Shell’s Bonga field, though larger groups are able to acquire more advanced equipment. At one time, al Qaeda was believed to control several large cargo ships that could be used as “floating bombs” on offshore targets (Harel 2012). There is also an increasing fear that these groups could acquire shore-to-sea missiles that could easily be used for an attack (Harel 2012).

Due to international maritime law, states can only enforce absolute authority for up to 12 nautical miles (13.8 miles) from their coast. In this area, called the “territorial sea,” the state can impose limitations on the navigation of vessels in the vicinity of offshore platforms, establish safety zones around the extraction sites, and prohibit unauthorized access to those zones (Harel 2012). Even then it is difficult to enforce these laws, especially considering that these states are invariably weak with poor military coordination, especially offshore. Moreover the state does not possess sovereignty past the territorial boundary, meaning that any vessel that passes this point is subject to jurisdiction of the flag state. Thus, foreigners who carry out attacks beyond another state’s territorial sea cannot be prosecuted by that state.

The “contiguous zone” extends another 12 nautical miles from the territorial sea (27.6 miles from shore). In this zone, the state does not have sovereignty, it may exercise the degree of control needed to prevent the violation of laws that apply within their territory (Harel 2012). Vessels and aircrafts of all nations have freedom of navigation in the contiguous zone, though the coastal state can establish safety zones and sea-lanes to monitor sea traffic. Again, these rules are not easily enforced with the offshore capabilities of weak states.

The “Exclusive Economic Zone” extends 200 nautical miles (230.2 miles) from the state’s baseline. In the EEZ, the state is given exclusive rights for the economic and scientific exploitation of natural resources and for the construction of offshore platforms (Harel 2012). Though many platforms exist in this area, military ability weakens as the sites move further away, possibly making them tempting targets for rebels with the capability to travel that distance. Beyond the EEZ is the “continental shelf,” which extends to the outer edge of the continental margin and is subject to the same regulations as the EEZ. Past the continental margin lies the “high seas” in which all states posses the “freedom of the high seas,” a right that includes constructing offshore installations (Harel 2012).

States engaged in armed conflict gain extended rights offshore, such as the right to further limit navigation near offshore platforms and create exclusions zones in which access to the platforms is prevented. A state actually has greater authority to protect offshore platforms when it is engaged in armed conflict than it does in peacetime (Harel 2012).

Though offshore drilling sites seem more secure than those located onshore, the government possesses much fewer rights to protect offshore platforms and usually lacks the desire or ability to provide the military security necessary to protect the very large and diffused areas of sea where the platforms are located. While it may seem advantageous for resource industries to move further and further from the coast, these sites are actually much less protected, and are usually not too difficult for rebels to attack. While navies require large ships, equipment and many people to operate, rebels can carry out swift and destructive attacks with minimal supplies. This may be why attacks and attempted attacks offshore have become increasingly frequent in the last several years (Harel 2012).

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