Unrest in Nigeria may send gas prices even higher in U.S.

IWHREKAN, Nigeria — Want to know why the price of oil is climbing again?

For part of the answer, drive three hours from Port Harcourt, the capital of Nigeria's oil-rich delta region, past swampy rivers with fishermen in dugout canoes, down a bumpy dirt track to Iwhrekan, where 1,000 villagers live in run-down concrete and mud-brick buildings.

On July 21, 2005, a pipeline in the area ruptured. Streams of black goo oozed into farmers' fields and a fishing creek. Because of a complicated dispute between villagers and Royal Dutch Shell, the oil has not been cleaned up. Black residue still covers thousands of plants.

Residents are angry. "We will face Shell," said village chairman Daniel Oweh, surrounded by agitated young men. "The next stage will be violent."

Such threats increasingly are being carried out — helping drive oil to $66 per barrel this week. Four international oil workers were taken hostage by armed men in speedboats last week. Production in Nigeria, the United States' fifth-biggest oil supplier, has dropped by nearly 10 percent.

It could get worse. "The loss of more Nigerian oil could send the price to $80 or $95 per barrel or higher," said David Goldwyn, a former U.S. assistant energy secretary who now consults in the region. Given the instability, he said, "The likelihood of a significant disruption" to Nigeria's output of about 2.6 million barrels per day "always has to be counted as relatively high."

Tensions over Iran also are driving the global price higher. Iran is the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC) and exports about 4 million barrels a day. Oil markets are jittery over fears Iran might cut exports if hit with U.N. sanctions for resuming its nuclear program, which it announced it would do last week.

Nigeria, meanwhile, is Africa's largest oil exporter. By some estimates, one-fourth of U.S. imports will be from Africa in 10 years. Nigeria is not, however, in the same league as Iran or Saudi Arabia, which exports about 10 million barrels per day. "Unlike [an attack on] Saudi Arabia," Goldwyn said, "the world could manage around a major attack on Nigerian oil suppliers." Still, what happens in the country reverberates to gas stations across the world.

Militants calling themselves the Movement for the Emancipation of the Niger Delta are holding the four hostages — an American, a Briton, a Bulgarian and a Honduran. They have threatened even more aggressive moves against oil workers and their families. Shell has evacuated 330 employees.

Already, two attacks in recent days on some of Shell's roughly 1,000 oil wells and 80 pumping stations caused a drop of 220,000 barrels a day in output.

On Monday, one of the four hostages read a list of the captors' demands, including local control of the Niger Delta's oil wealth, payment of $1.5 billion by Shell to the Bayelsa state government to compensate for pollution, and the release of three men including two ethnic Ijaw leaders, one of whom is Mujahid Dokubo Asari, a militia leader who is in jail on treason charges.

The dispute grew out of a disagreement over which contractor should clean up the oil spill. In the wake of the accident, the village council appointed a contractor to do the job. Shell appointed another, but villagers chased him away when he arrived. The reason: The village-appointed firm had agreed to do such things as fixing the village's defunct water wells and providing plastic chairs for residents to sit on.

Then, villagers say, the Shell-appointed man came late one night with a bevy of drunken soldiers — and Shell's approval — and ransacked the village, leaving one teenager hospitalized and four houses and two cars destroyed.

Shell, in a statement, denies inviting "any security agents into the community" and says the villagers have impeded cleanup.

Residents are becoming more and more angry — despite having the choice to allow the cleanup.

"Is this road fitting for an oil-producing community?" village chairman Oweh asked, pointing to the bumpy dirt track that is his village's main street.

Yet Shell and other oil companies paid $27 billion in government royalties and taxes in 2004. This is one of the world's most corrupt countries, however, and much of the oil money disappears into personal accounts of officials.

Analysts say the violence is part of growing political rivalry between the regions in Nigeria, Africa's most populous nation, ahead of 2007 presidential elections. An Ijaw uprising before 2003 elections hit 40 percent of Nigeria's production.

There are fears that rising fundamentalism in Nigeria's Muslim north could combine with discontent in the southern oil region to bring international terrorist targeting of oil facilities. Al-Qaida leader Osama bin Laden even mentioned Nigeria as a potential target in a 2003 video. So far, though, there's no evidence of a north-south connection, Goldwyn said.

Still, in a sign of the country's growing importance, the U.S. military has beefed up its presence. And first lady Laura Bush was in Nigeria on Wednesday, announcing $163 million in U.S. aid for fighting AIDS. Whether it will all have an impact on Iwhrekan villagers is unclear.

Asked how long they're willing to live with the oil mess — to try to force Shell to capitulate — an articulate thirtysomething named Paris Eyarienoro declared "forever" if that is what it takes.

Additional information from The Associated Press and Reuters