Rising Terrorism Takes Toll on Niger’s Oil Sector

ADF STAFF

Security threats have grown steadily since Niger’s military seized control of the government in July 2023. While multiple terrorist groups have increased their attacks in the west, rebels and bandits in the east now threaten the country’s fragile economy.

Attacks on a critical pipeline have prompted the withdrawal of a Chinese state-owned oil company from its base of operations in an oilfield more than 1,700 kilometers from the capital Niamey, in the eastern desert region of Diffa.

The China National Petroleum Corp. (CNPC) said that “the security situation at the site has deteriorated” after “terrorist groups” carried out a “number of attacks targeting oil projects” in June.

“All construction projects on the Agadem site have been suspended, and the site’s employees have been placed on leave until the security situation improves,” the CNPC said in a July 21 note, according to Agence France-Presse.

The first-ever attack on security forces protecting the pipeline came on June 12 about 10 kilometers from the village of Salkam in the southeastern Dosso region. Six Nigerien soldiers providing security were killed by what the army described as “armed bandits” in the south. An anti-junta rebel group called the Patriotic Liberation Front (FPL) claimed the attack and said it also targeted the pipeline on the night of June 16 “as a first warning to the junta in Niamey.”

The FPL, which is calling for the reinstatement of Niger’s President Mohamed Bazoum as well as the cancellation of a $400 million loan from the CNPC to the junta, also has threatened to destroy roads between the oilfield and a Chinese-owned refinery in Zinder.

Niger’s military rulers confirmed the sabotage several days later, denouncing it as a “terrorist act
perpetrated by “malicious individuals.”

On July 18, an al-Qaida-aligned group known as JNIM kidnapped three Chinese employees of CNPC who were prospecting near the border with Burkina Faso, according to The Africa Report magazine.

Agadem oilfield began production in 2011. Its crude is exported along Africa’s longest pipeline, which spans 2,000 kilometers and links landlocked Niger to neighboring Benin’s ports on the Atlantic. Though the $2.3 billion pipeline is critical to both economies, relations between Benin and Niger have been uneasy since the coup. Under sanctions imposed by the West African bloc ECOWAS after Niger’s junta overthrew the democratically elected government, Benin closed the border with Niger.

Benin has since reopened its side, but Niger’s military rulers have refused to reopen their border “for security reasons” and have cut off the flow of oil through the pipeline. They reportedly are looking to transport Niger’s oil via Chad and Cameroon rather than passing through Benin.

“It is a completely messy situation and the only way for a resolution is if both administrations directly engage and resolve issues,” Ryan Cummings, director of Africa-focused security consulting company Signal Risk, told the Associated Press.

The pipeline’s closure is costing the CNPC an average of $9 million a day, while Niger is losing $1.8 million per day in oil revenues, according to The Africa Report. The hits to Niger’s economy come at a time when the military juntas in the region already were struggling with the financial implications of unchecked insecurity.

“We are seeing rampant inflation and delays to the export of raw materials due to the closure of borders,” Nigerien economist Henri Berenger N’Cho told France 24. “We are also facing a liquidity crisis and a deterioration of the banking sector’s portfolio, not only in Niger but across all states in the Sahel.”

The $400 million from the CNPC, taken by Niger’s military government while it was facing ECOWAS sanctions, was an advance on future sales of oil from Agadem and comes with a steep cost — it must be repaid in 12 months with 7% interest. Nigerien authorities have used part of the loan to pay civil servants’ salaries and provide for the country’s security, according to The Africa Report.

Since the coup, Niger’s military rulers have struggled to make debt payments and fund infrastructure, Cummings said, adding that it was unclear “whether they have the requisite fiscal capacity to keep paying for public services.”

“[Junta leaders] definitely have to be more cautious in handling the financial position of the country,” he said.