JOURNAL: The Shadow OPEC in Nigeria

"The fact that we have influenced the price of world oil, no matter how little, and caught the attention of the foreign media indicates we are on the right track."

Jomo Gbomo (one of Nigeria's MEND spokespeople)

Two years ago, I wrote about the development of a shadow OPEC (read for more, "A Shadow OPEC"). Basically, it was a description of how small groups of global guerrillas, using systems disruption, would increasingly set the price of oil. I've written about it extensively since them. That idea was picked up by the press with yesterday's Page One article in the Wall Street Journal by Chip Cummins (a citation from him would have been nice):

The list of people with big influence over the $2 trillion-a-year global oil market has long been an exclusive one, topped by Saudi princes and American presidents. This year, someone calling himself Jomo Gbomo emailed his way into the club. Since January, the obscure Nigerian rebel group that he claims to speak for has battled Nigeria's military, blown up oil facilities and kidnapped foreign oil workers. All the while, Mr. Gbomo (pronounced BO-mo) has fired off emails to the international media taking responsibility for the attacks or threatening new ones -- and often roiling global oil prices in the process.

The media-savvy guerrilla group's emergence as a market mover points to a mounting problem for the U.S. and other big oil consumers: maintaining energy security in an era of scarce oil resources and ever-longer supply lines. With today's tight oil markets, even small disruptions -- or the threat of them -- can jolt the world economy, leading to higher costs of gasoline, airline tickets and other goods for consumers everywhere... Now even Mr. Gbomo's small group, armed with little more than machine guns and an email account, has realized that it, too, can use oil as a weapon on the global stage.

Comments

[Vet]

Gbomo's a government-protected man, as his comm links lead right back to his ISP and his computer. Their security services know exactly who he is and where he is, yet choose not to strike - why?

Perhaps the corrupt Nigerian government is using Gbomo and MEND as their tool to exert a special sort of destabilising control over the delta while simulaneously extorting higher royalties from the western oil companies?

[P-]

"... armed with little more than machine guns..."

What is interesting to me is WHO or country is supplying "BO-MO" with a cache of these weapons. Though the truth is small arms sales is difficult to trace but the thought of its' source is somewhat interesting. Mr. "BO-MO" would be so freely imposing his will and his wishes known if not for the "machine-gun."

[Cardenio]

Journalists and ' consultants ' and whomever else are just going to rip you off. I've been trying to think of a way that this could be turned into something that makes for you, and all I can think of is you can use this to create promonitonal material for pirivate military corporations ( like Blackwater, who are ready to start real military contracting not just training now ). " How 4GW military corporation can meet your 4GW sercurity needs ". ???

[John Robb]

Vet. The Nigerian government is a kleptocracy usually tries to buy off opposition if they can't kill them. The problem with MEND for them is that it is open source with dozens of groups. As one Nigerian general recently lamented: they don't know who to bribe since there are too many "invisible" groups. To the extend that Gbomo is one of the few "faces" of the movement, he is a potential conduit for bribes.

P- Globalization transformed the guerrilla war in Nigeria. It enabled billions of dollars a year of stolen oil to flow into transnational criminal networks. Weapons and much more flowed back. They don't need a state to supply them. The only potential "tin foil hat theory" I have in regards to state involvement is that CNOOC is helping them to push out Shell and other western producers (a Sudan solution -- make the environment so foul that only they can operate there).

Cardenio -- I am working on this too.

[Marcello]

"What is interesting to me is WHO or country is supplying "BO-MO" with a cache of these weapons."

We are not speaking about complex weapons which can be supplied only by state actors. Stuff like AK-47s, RPG-7s, explosives and such is available from a large variety of sources many of which are driven exclusively by profit and not by geopolitcal calculations.
These weapons have been built and disseminated by the millions and are still being made and traded.For all that we know they might have been purchased from a local arms dealer who got them from some corrupt official of a nearby country which got them from the USSR.Or whatever.
Someone, like the chinese, might be behind this but then again maybe no.

[Cliff Nickerson]

Come on, they just bought the guns. International trade in guns is largely legal and poorly traced. Look at weapons such as the Taurus 9, which is legally manufactured in Brazil, legal exported, and then largely used as a throw-away gun for "small crimes" in the US.
Or considering a gun like the AR-14. How many are manufactured? How many go to military and police organizations? The rest of them go to criminals/terrorists. The manufacturers know it, the stock holders know it, the US government knows it, too. If the US wanted to do a systempunkt attack on these "little" military groups, they could simply shut down the gun factory.
Many other popular weapons (from FN and HK, just off the top of my head) are very popular with police and military organizations all over the world--and with terrorists and criminal groups.

[John Robb]

Also, I am much less concerned with the guns than what they do with them. If they use them in traditional warfare, they won't get farther than the range of the rifle. If they use them to assault systempunkts, they will accelerate to the global stage.

[Adam]

"What is interesting to me is WHO or country is supplying "BO-MO" with a cache of these weapons. Though the truth is small arms sales is difficult to trace but the thought of its' source is somewhat interesting. Mr. "BO-MO" would be so freely imposing his will and his wishes known if not for the "machine-gun."

John, good point, but Africa is special (in the bad sense) as it was the US and UK oil companies who encouraged the use of weapons in what were really trade disputes.

P,

Oh my word. Welcome to Africa, home to the NRA's dream world of weapons availablity. Pistols in Africa are more expensive than Ak-47s because pistols are largely used by criminals, and the AK-47 was issued to more people. A pistol might cost $50, but then an AK costs $10. Road side stalls sell them. But why stop there? Feeling happy? Its easy to pick up something belt-fed with tracer rounds. Feeling even happier, something in the RPG line. In Africa, weapons are cheaper than fireworks and a lot less regulated.

Of course there is an alternative explanation of who is supplying the locals with weapons: we are. In 2003 the US sold around $4m dollars worth of weapons, but thats chickenfeed compared to the British who sell roughly £50m ($75m US) a year - up tenfold since 2000. This includes armoured vehicles, large calibre artillery and state of the art communications and radar systems. This year China increasingly is selling arms to Nigeria, including patrol boats for the Niger Delta, and rumour has it copies of Sidewinder missiles (Israel copied the Sidewinder and renamed it the Python, China bought them from Israel, then we think they may have sold them to Nigeria). China denies that it sells arms for political influence (cough, yeah, right).

Fun fact: Nigeria has no serious national neighbouring enemies.

Please note that this count is heavily skewed by the fact that light arms (functionally anything thats man portable) isn't required to notify the British government under an open license so the actual count could be a lot more.

Mind you the oil companies themselves directly supplied weapons and air support to the Nigerians (during the dictatorship period). In return the Abacha government ran a Mobile Police unit called the "kill and go squad" who were used to target... anti-oil protesters.

So Gbomo is fitting right in with how oil operations and policies work in Nigeria. He who lives by the sword...

[Cliff Nickerson]

I wanted to mention a little local event that you may find interesting:
Aparaently someone shot up the transformers that feed a local aluminum factory. Luckily a routine inspection caught them before they went out of service, so the repair only cost $12 million. And this was probably a drunk teenager with nothing better to do, rather than an intentional act to disable the local industry (an American owned multinational).
So, those rifles could prove very, very useful in systempunkt attacks. Had this event happened imemdiately after the inspection rather than shortly before, things would have been much worse. (The engineers at the plant said that if the plant had lost their power supply, the company would ahve scrapped the plant rather than spend all the money it would take to start it up again.) That million-percent return on investment is very real.

[John Robb]

Interesting. That brings up a new set of systempunkts: factory restarts. Aluminum is very energy intensive and operates at razor thin margins. The equipment is usually old and likely hard to restart in the event of shutdown. I suspect there are other manufacturing systems of similar levels of vulnerability.

[jimbo]

Vet, get with the programme. It is common place to use "anonymizing" servers to send and receive email and Usenet. Do you really think these folk are so stupid they won't be in that loop?

For ten bucks a month you can join to.

Don't make such ignorant comments, please.

Further, the use of other techniques, such as adware or spyware, make it entirely possible to send and recieve email from hundreds to hundreds of thousands of compromised computers easily.

[P-]

"So, those rifles could prove very, very useful in systempunkt attacks. ..."

They're absolutely vital if you're thinking about getting the job done. That simple most rudiment piece of weapon gives you leverage that a normal commerce wouldn't have, leverage with a dose of fear.

But that what i wasn't trying to get at. For what's worth, if your source of income can be seen only or derives mainly from attacks on oil infrastructure, than attacking some piece of equipment in an aluminium plant that has nothing to do with oil is an effort of diminishing returns.

Somebody has got to feed them not just with guns but AMBITION!!

In a capitalistic world who in the country doesn't have one? AMBITION!

You need an education for that!... at the very least if not some basic grasp of good communication. I mean that President Deng who coined the "OPEN DOOR" policy for China,
he probably didn't wake up in China on morning and realized that... Well he may have a cadre of economic advisors but they tooo would require some form of education level is needed.

To make a long story short, it is interesting of what possible parties, may it be countries, financiers, dummy corporation vis-a-vis countries are going to feed these transnational crime organizations that will take hold in failed states.

If it is our interest to take an active role, participation for the sake of national security, WOULDN'T WE??? (Just hypothetical)

I mean really WOULDN'T WE?

Chile the 1970's. Guatemala the 1950's. Nicaragua the 1980s and don't forget the failed coup in Venezuela??

I'm not rying to paint a negative picture of our government that's not my point. I'm trying to understand to bigger picture(yeah and to create something even more fantastic in the fiction world) but the point here is ambition.

Nigerian oil terrorost will be only Nigerian oil terrorist so long as they do not have ambition.

[Gyges]

"by Chip Cummins (a citation from him would have been nice)"

Is there any difference between Chip Cumins and Jason Blair?

http://en.wikipedia.org/wiki/Jayson_Blair

[John Robb]

LOL. I wouldn't say that. Ideas are free. Regardless, it is cool that you can read a Wall Street Journal front page scoop two years earlier on this weblog.

[fizure]

When I saw the article in right hand corner of the Journal's frontpage I actually was thinking "perhaps John Robb will be mentioned in this article"--seeing that practically the theme of this blog is open source guerilla forces swarming to induce market reactions... Alas, we are treated instead to another underedited, understated and disconnected WSJ article related to "energy and terrorism" The journal is in my opinion the best newspaper in the US (aside from its ridiculous op-eds)--and they have recently been focusing on energy, with commodity prices and interest rates slowly build up momentum... But I'm awaiting some more in depth and "out of the box" reporting from the WSJ--perhaps with oil going up to 70 now, and most likely hitting 100 within the next five years, we'll see some more inspiring energy related coverage in the WSJ--I'd like to see them "tap" you for an article!

All best,

[daCascadian]

P- >"...I mean really WOULDN'T WE?

Chile the 1970's. Guatemala the 1950's. Nicaragua the 1980s and don't forget the failed coup in Venezuela??

I'm not rying to paint a negative picture of our government..."

It is just how the world has/does/will continue to work UNTIL enough people wake up and demand a change (which may never happen)

Things will, eventually, change but to what ???

Stay Tuned !

"...it's the ideas that count, not the number of trees you kill to print them." - Phil Carter@Info-dump.com

[Echo_Waltz]

Do you think that Obomo and his ilk can ultimately prevail against the Nigerian military? Granted, the corrupt government can hardly marshal an effective show of force now, but it seems like the various rebel groups are all too splintered to marshal effective broad-based support from a traditional, Galula and Kitson-esque counter-terror view.

Plus, if they continue to seriously threaten oil output, perhaps we'd see a infusion of aid or advisors by worried Western governments into Nigeria.

[Adam]

Echo,

Not sure it matters if we think that Gbomo can win, what matters if he thinks he can win. Even so I do think that the example of Iraq shows that oil installations and facilities are especially vulnerable to insurgency so I cannot say he's wrong.

Whether the Nigerian central government can do anything is something of an awkward point. First corruption in Nigerian governments is something of a tautology and corrupt governments start on the back foot when acting against their populations. That said the military may well take over (again) if oil revenues are threatened as these provide their bribes. Certainly the West would support such action as they have in the past. We know that the Nigerian military have done, and will do, horrific things to their nation to make sure that they are alright, though whether that stops a guerilla campaign is another matter entirely. In the past the most the Nigerians have had to murder is a few local lads who wanted some nice things from the oil companies in exchange for the oil company destroying where they lived. Taking on semi-professional guerillas is another ball game entirely.

There is an except to the military takeover option however. It depends on how deep the message of Bin Laden has reached. We know that the military in Nigeria is dominated by Muslims, and we know that traditional Sufi Islam in Nigeria is increasingly influenced by Saudi and Pakistani thinking, so its just about possible for a relgiously inspired Islamic military coup to occur.

In such a case the new government may not care about the Wests desire for cheap oil, and that'd be awkward. The West might want to be really careful about who it selects to overthrow the current (democratic, like anyone cares) government of Nigeria as the options may not be as favourable as we may hope.

[John Robb]

They have also knocked out nearly 30% of production. To me, that is significant.

[Echo_Waltz]

Yeah, I think that's a really good point. I suppose if they succeed, like in Iraq, in breaking down population services, oil production and creating anarchy, it would probably trigger a coup of some kind.

Considering the recent communal violence between Muslims and Christians, the Bin Laden idea is interesting. If the military decides to mount an Islamic coup, it would be quite original, considering the formation of similar Islamic governments were accomplished as a result of political revolution (Iran) and grass-roots partisan war (Afghanistan, although aided by ISI).

[Adam]

Echo,

It wouldn't be the first Islamic military coup. The earliest in the 20th Century to my mind is Iraq, in 1958, beating the Khomeinis and Afghans by 20 years. This coup was overthrown by another coup in 1963, etc...

Mind you the 1958 Iraq coup was - arguably - a good thing (in 1066 and all that terms) as it eliminated the old monarchy (in the we-bayonetted-all-the-kids sense), stuffed the British who ran the old monarchy, and introduced polical reforms (Communist party unbanned, then banned, but tolerated. Kurds encouraged to continue to exist under the "two nations" police).

I am not sure that a Nigerian coup would have quite the same positive spin.