Indigenous firms in Nigeria’s oil and gas sector are suffering from the rising militancy in the Niger Delta. Austin Avuru, the Managing Director and CEO of Seplat Petroleum Development Company, on 2 August, disclosed that 70% of crude oil production from traditional onshore and shallow water terrain has been shut in by the militancy. He revealed this while speaking at the 2016 Nigeria Annual International Conference and Exhibition (NAICE) of the Society of Petroleum Engineers (SPE). He said that for upward of five to six months, some companies have not been able to produce anything.

Gas production has also been affected, with Avuru warning that the current crisis is disrupting plans to improve gas production to generate 15,000MW of electricity by 2020. He expressed doubts that the government will resolve the Niger Delta crisis anytime soon – an indication that he may not see much hope for the government’s current strategies in tackling the militancy issue in the region. He did not suggest any solutions to the challenges, though in a different speech on the same occasion, the chairman and managing director of Chevron Nigeria Limited, Clay Neff, advocated for increased transparency by all stakeholders in the region as a way of resolving the Niger Delta crisis.

The impact of the militant activities on oil and gas operations in the region can be seen in the results of Seplat and Oando, two of the biggest indigenous players, which recently released their half year 2016 results. Seplat announced a loss of US$61 million for the period ending June 2016, citing a 21% drop in crude oil production over period due to militant activities as a contributing factor.

Oando released its results on 2 August, announcing a N27 billion (US$85 million) loss for the six months ended June 2016. The company also cited a 25% decline in crude oil production, due to militant attacks, as a contributing factor, though a foreign exchange loss of N28.6 billion (US$90 million) on dollar denominated facilities, as a result of the naira devaluation, was a major reason to the company’s loss.

Transcorp Transnational Corporation of Nigeria Plc subsidiary Transcorp Power, which manages one of Nigeria’s largest power plants in Ughelli with a capacity for 750MW, announced, on 5 August, the suspension of a US$1 billion investment plan to build a 1000MW plant citing uncertainty of gas supply and funding issues. The company’s Ughelli plant currently generates an average of 300MW and dropped to as low as 70MW earlier this year due to gas shortages resulting from militancy attacks in the Niger Delta. The attack on the Shell operated Forcados Terminal has resulted in a sharp decline in gas supply leading to a 1,500MW drop in Nigeria’s power generation capacity.

All of the IOCs operating in the country have also cited the Niger Delta crisis as part of the reason why their profits fell or they made losses. Sources tell Nigeria Politics & Security that the recent alleged attack on ExxonMobil facilities has led to the company laying off a large number of workers following the shutdown of its shallow water operations. Many indigenous oil servicing firms have also been forced to shut down, due to the low level of activities in the oil industry.

The Federal Government took two initiatives during the week to show some goodwill towards militants blowing up oil assets in the region. Piriye Kiyaramo, spokesperson of the Niger Delta Amnesty Programme, announced on 2 August that the Federal Government has restored the payments of the N65,000 (US$200) per month amnesty stipends that were stopped in February. And on 1 August, President Buhari approved a 10-member Board of Trustees and a 13-member Governing Council to manage the cleanup of Ogoniland as recommended by the United Nations Environment Programme (UNEP).

There are also unconfirmed reports that former president Goodluck Jonathan has agreed to reach out to militants in the region to persuade them to stop attacking oil assets. The former president visited Buhari at the presidential villa on 3 August and later spoke to the media calling for peace in the region, though it is not certain if the discussions at the meeting with Buhari included issues on the Niger Delta. Despite the peace initiatives, there was a reported attack on the Trans-Ramos pipeline operated by Shell in Delta State on 1 August. No one has claimed responsibility for the strike.

However, before this attack, there had been a lull in strikes in recent weeks, which security sources are attributing to the recent surge in deployment of soldiers to the region, a move which has reduced copycat attacks. The office of the National Security Adviser (NSA) may also have made a major breakthrough in stemming attacks on oil facilities as he announced on 4 August that five security operatives were arrested for diverting explosives, meant for mining and quarries, to militants. The stopping of this collusion could be an important step in stemming further attacks in the region.