NIGERIA: Nigerian oil industry helpless as militants declare war on Obasanjo

Villagers in Okerenkoko, once a peaceful settlement along a creek in Nigeria's oil-producing delta region, have feared for weeks what a big military operation against a guerrilla insurgency could bring.

"Helicopters have been flying over us, and there have been navy boats shooting warning shots in the air. Some people have fled and not come back," says Talbort Babanimi, a fearful village elder.

Okerenkoko's fishing community lies in the middle of the Niger Delta's labyrinth of swamps and creeks; the village is also near the centre of a military campaign to stop attacks by militant groups on oil and gas facilities, including on a major export terminal operated by Shell, Nigeria's largest oil producer.

Shell halted 455,000 barrels a day of oil production, or 19 per cent of Nigeria's output, after pre-dawn raids on installations in the western delta over the past three days. The Anglo-Dutch company closed 340,000 barrels a day of production from facilities feeding its Forcados export terminal, and halted another 115,000 barrels from a nearby offshore field.

As a precautionary measure, Shell said it was evacuating staff from remotelocations in the eastern delta.

Fresh attacks on Monday destroyed a crude oil installation and a Nigerian military houseboat. Some oil industry officials said mass evacuations could take place if the attacks intensified.

The new wave of violence in the area and the abduction last week of nine foreign oil contractors in the world's eighth-largest oil exporter have rattled international oil markets. On London's futures market on Monday, benchmark Brent oil jumped $1.46 a barrel to $61.35 on fears that Nigeria's problems could create a shortage of oil. The US market was closed.

Nigeria's military has been desperately trying to hunt down the soldiers of the Movement for the Emancipation of the Niger Delta (Mend), a militia that has claimed responsibility for the attacks. Mend said on Monday it was declaring a war on President Olusegun Obasanjo.

The group claims it is fighting for the rights of the delta's majority Ijaw tribe, many of whom say they have been cheated of oil wealth pumped from their land by the central government and oil companies. They say they have also been politically marginalised in rigged elections.

Mend also claims loyalties from many armed groups across the delta and appears to have become a formidable fighting force over the past six months. But its command structure and backers are unclear. "Our movement is fluid and therefore capable of flowing with ease between states of the Niger Delta," Mend said.

The military has had little success in fighting the insurgents and protecting oil installations. Many of Mend's threatened strikes have been accomplished. The web of mangrove waterways offers hiding spots for speedboats with armed attackers ready to launch rockets on unsuspecting oil workers at flow stations and unprotected oil wells. About 14 soldiers have been killed over the past two months.

"It's easy to avoid the navy, and soldiers," says Harry, a boatman in the area, as his boat edged beside a fishing boat loaded with oil drums used to store stolen oil.

This weekend's attacks, militants say, were sparked by operations by the Nigerian army near Okerenkoko that bombed oil barges suspected of being used for stealing crude oil. Militants also claim the army machine-gunned villages.

Stolen crude oil helps militant groups buy arms. But the job of the military task force in the delta is made harder by the fact that some army and navy personnel and political figures are also involved in the theft from wells and pipelines.

Nigeria's forces in the delta do not have sufficient boats or manpower to patrol the wetlands. The military also uses local militiamen as scouts, who have been involved in uprisings in the past. Security analysts say the military is riddled with corruption and not disciplined enough to protect the oil industry or local communities. Police employed by the Nigerian state to protect oil facilities often have their salaries handled by the oil companies. "They take on the character of mercenaries who are protecting companies perceived as despoiling the environment," said Nowa Omoigui, a lecturer at Nigeria's national war college.

The upsurge in violence is the worst in the delta for three years. Heightened political tension across Nigeria in the run-up to presidential elections next year threaten to feed into the delta's crisis. In the run-up to elections in 2003, an Ijaw uprising forced oil companies to shut down 40 per cent of Nigeria's oil output.

The delta violence coincides with unrest in Nigeria's Muslim-dominated north where at least 30 people were killed in violence related to protests over controversial cartoons of the Prophet Mohammed.

President Obasanjo has not yet dispelled suspicions that he may run for a third term in office. He is due to step down next year.

John Negroponte, US intelligence chief, said this month that a third term for Mr Obasanjo could threaten to unleash "major turmoil and conflict" and "could lead to disruption of oil supplies, secessionist moves by regional governments, major refugee flows and instability elsewhere in west Africa".

• 190 Natural Resources