Nigerian Sars Protests On Brink Of Hitting Oil Output, Demand
Growing concerns protests will escalate in Niger Delta. Militants supportive of antigovernment protests. Oil demand starts to fall as key cities face curfews.
Nigeria is bracing for fresh disruption to its oil production and demand after violence sparked by weeks of nationwide protests against police brutality began spreading into the country’s key oil producing states, Nigeria-based sources say.
Millions of Nigerians began marching against the Federal Government to put an end to extra judicial murders perpetuated by a special anti-robbery squad of the Nigerian police known as the Special Anti-Robbery Squad (Sars) in early-October.
These have snowballed into violent clashes and attacks on government properties and institutions in some urban centers.
Although the pockets of violence and clashes so far experienced in various parts of the country have yet to disrupt its oil supplies, Nigeria-based oil officials said if the government did not move fast to ease the rising tensions, they could escalate in the restive Niger Delta region.
“To us in the industry, it is a matter of time that oil operations are disrupted if the situation remains unchecked and allow to escalate,” an oil official said.
Africa’s largest oil producer’s production plummeted to a 30-year low of around 1.4 million b/d in mid-2016 due to devastating attacks on oil installations by Niger Delta militants.
These protests come at a difficult time for Nigeria’s economy, which is still reeling from the crash in global oil prices along with the coronavirus pandemic.
The governor of southern Delta State, Ifeanyi Okonwa, imposed a 48-hour curfew on Oct. 22, citing rising violence by protesters.
Delta State is home to the Forcados oil export terminal, the key Trans Forcados pipeline, many Shell and Chevron’s oil fields.
On Oct. 20, a coalition of former oil rebels in the Niger Delta, now known as the Reformed Niger Delta Avengers, issued a statement threatening to resume attacks on oil installations if the Federal Government failed to meet the demands of the protesters across the country.
“We may resume heavy destruction of major crude oil pipelines and their platforms, including the major gas distribution pipelines from Escravos-Warri-Kaduna,” the statement said.
The Niger Delta Avengers were responsible for a bulk of attacks on Nigeria’s oil infrastructure in 2016.
The government still has a presidential amnesty program in place for former Niger Delta militants, to maintain peace in the Niger Delta for economic and social reasons.
The introduction of the program in 2009 helped rein in militant activity that caused extensive damage to Nigeria’s oil infrastructure between 2006 and 2009.
President Muhammadu Buhari on Oct. 23 said Nigerians had the right to peaceful protest but he called on them to end the protests and “constructively engage government in finding solutions.”
“I call on all Nigerians to go about their normal businesses, and enjoin security agencies to protect lives and properties of all law-abiding citizens without doing harm to those they are meant to protect,” he said.
These protests have been very large in Nigeria’s largest city, Lagos, which has been in curfew since Oct. 20.
Lagos accounts for around 40% of domestic oil demand and, with turmoil brewing on its streets, gasoline consumption has already fallen steadily due to the curfew, Nigeria-based sources said.
Gasoline demand had rebounded sharply in the past few months as Africa’s largest economy emerged from lockdown.
Nigeria is one of the leading consumers of road fuels in Africa, typically using around 1 million-1.25 million mt of gasoline a month.
Nigeria, which has the capacity to produce around 2.2 million b/d of crude and condensate, imports almost all of its domestically consumed gasoline due to the poor performance of the four state-owned refineries.
Nigeria depends on imports for almost all its oil products to meet its demand of around 450,000 b/d.
– S&P Global