Holding an oil-rich country hostage

In the run up to the Nigerian elections, kidnappings have become a big business.

Leonard Lawal, Fortune

FORTUNE (Lagos) -- Blesso Amakiri, a logistics manager at Smit Nigeria in Port Harcourt, canceled an order for a new SUV in early March. Amakiri, 42, whose company operates tugboats in the oil-rich Niger River delta, reckoned he might be laid off, now that more than a fifth of Nigeria's oil production has been shut down by unrest in the region. Late last month he lost his job.

Amakiri's sense of foreboding isn't uncommon in the delta, where kidnappings have become a booming business in the run-up to the April 21 election to choose a successor to Nigerian President Olesegun Obasanjo. More than 50 oil workers have been kidnapped so far this year, compared with 31 in all of last year. Most have been released after the payment of ransoms.

Evaluating the options

Rebels in the area have warned foreign oil workers to leave Nigeria, and although oil companies don't like to talk about it, many are reevaluating their operations. Willbros, an American firm that had been operating in the delta for four decades, sold its assets to a Nigerian company earlier this year. Royal Dutch Shell (Charts), the biggest and most visible foreign oil company, wouldn't comment, but many of its workers have gone home, and its CEO, Jeroen van der Veer, recently said the company needed to "consider new strategies to combat deteriorating security."

The delta has long been a wellspring of unrest because its riches have been siphoned off, leaving its residents with polluted waterways and unrelenting poverty. It hasn't helped that both Obasanjo and his embattled vice president, Atiku Abubakar, now a candidate to succeed him, have been implicated in scandals involving the misappropriation of millions of dollars from the government's Petroleum Technology Development Fund. Both men have denied the charges.

Now, with production down by more than 500,000 barrels a day, the region is suffering even more. The economy has lost $5 billion in revenue; power generation is at its lowest in years, with blackouts affecting the entire country; and thousands are out of work. "Without these companies we will suffer," says Walter Worima, who runs a taxi service in Port Harcourt, the largest city in the delta. "My cabs are idle, and I have sent some of my drivers away."

Ransoms as lifeblood

In place of oil money, ransoms have become the lifeblood of the economy. The government and the oil companies deny that they are paying for the release of kidnapped workers, but the rebels and their supporters say otherwise. "These huge ransoms are now the driving force in the hostage-for-money business," says Tive Denedo, executive director of Media Rights Agenda, an organization in Lagos that promotes freedom of the press. "One kidnap will establish you for life, so why waste time being a rig hand?"

Whether the kidnappings will fall off after the elections and the oil will start flowing again is anyone's guess. Obasanjo's handpicked candidate, Umaru Yar'adua, has promised that more oil revenues will stay in the region. Abubakar, who is fighting to stay on the ballot in the face of corruption charges, has promised to release Mujahid Dokubo-Asari, the leader of the Niger Delta People's Volunteer Force, who is on trial for treason in the nation's capital.

But those are campaign promises that many in the delta, who are eking out a living on a dollar a day, have heard before. "Elections or no elections, I have to find a means to survive," says Nkechi Okogene, a hairdresser and mother of two in Port Harcourt who lost a job as a dancer at a club that shut down when the foreigners fled. "I can't afford to meet my basic necessities." Top of page