Dec 28 (Lagos) - Oil and Gas stocks continued to get slammed today even as global crude oil prices rose . US crude us actually higher today by 1.5% and Brent crude is also higher by almost 1%.
So what caused fear in minds of investors today in Nigeria?
The emergence of yet another militant group in the Niger Delta calling itself WANDE which is short for WAR AGAINST NIGER DELTA EXPLOITATION. The group threatened to disrupt oil and gas operations of major Oil and Gas Companies unless the region got attention from the government.
That is enough to make investors sell oil and gas stocks and in fact stay away from the sector. Everyone remembers the damage caused by MEND group in past and the disruptions they caused. Even the Niger Delta Avengers made it difficult for Oil and Gas Companies in recent past.
The Nigerian Government has had to pay huge amounts to such militant groups in forms of amnesty to keep them calm and not indulge in violence. With elections around the corner, it could be time for such opportunistic groups to emerge and demand more payments and bring the Nigerian government to its knees as such groups have done in past.
It would be better for the Federal Government to pay these militants quickly so that economy does not suffer damage because from past experience such outfits are definitely capable of blowing up pipelines and ensuring that the Government does not realize revenue from crude oil production.
Military action in the Niger Delta would be detrimental to economy and peace in the region. Already Nigerian army is stretched and lacking in equipment to fight with any organized insurgency. The war planes that Nigerian air force has acquired are out-dated technology from third world countries that no serious military power would even think about acquiring. Basically Nigeria is not ready for any kind of serious war-like effort and FG should settle with WANDE before economy suffers.