Nigeria’s election threat to oil output

BARCLAYS energy analyst Miswin Mahesh sees a “huge risk” of oil production in Nigeria being disrupted by political instability arising from elections scheduled for March 28.

The vote is set to be the most closely contested since the end of military rule in 1999.

President Goodluck Jonathan’s People’s Democratic Party and former military ruler Muhammadu Buhari’s All Progressives Congress are the leading contenders – each won 42 percent support in a survey of 2 400 adults polled by Afrobarometer in December in 33 of the nation’s 36 states .

“We are not sure how it will play out on the political front,” Mahesh, based in London, said on Friday. “Nigeria will do whatever it takes to maintain its production. The risks are still there. There is a genuine risk that we might see some disruptions.”

Nigeria’s daily output of about 2 million barrels of oil makes it the continent’s largest producer. Crude generates more than 90 percent of the nation’s foreign exchange earnings.

About 800 people were killed and at least 75 000 forced to flee their homes after elections in 2011 that brought Jonathan to power. Gunmen attacked an opposition rally in oil-producing Rivers state last month.

Uncertainty over who would control Africa’s biggest economy after the elections and whether they would reassess oil firms’ contracts was a bigger threat to output than an insurgency being waged by militant group Boko Haram, Mahesh said.

The fighting had largely been “constrained to the north of Nigeria, whereas most of the oil is in the south”, he said.

Teneo Intelligence, a New York-based risk advisory service, said that while it expected the vote to go ahead despite speculation that it might be delayed further or annulled altogether, its credibility was not assured.

“Developments on the ground suggest that the election results could be significantly compromised, potentially triggering clashes,” Teneo said – Bloomberg