Nigeria's Oil Morass

But some U.S. human rights groups say that some oil company payments may simply fuel insurgent arms purchases. Last month, MEND advertised ahead of time that it would attack an oil installation. In an e-mail sent to reporters and others, it said: "An attack on the Nigeria oil industry that will cause an economic tsunami in the world oil markets is imminent. This will herald the real emancipation of the Niger Delta." An attack then took place on two pipelines, one for oil and one for waste water, southwest of the town of Warri.

Now MEND is threatening to widen its targets to reach outside the Delta -- perhaps to Lagos, Nigeria's commercial capital, or to oil installations offshore, where Nigeria's pumps another 2.2 million barrels of oil each day.

Oil industry sources say that MEND is really a coalition of smaller armed bands, but there seem to be half a dozen or so groups outside MEND's umbrella too. One example is the Niger Delta Vigilante Movement, whose leader, Ateke Tom, attacked a hotel in Port Harcourt on New Year's Day. In an interview with Newswatch, a Nigerian magazine, Tom said he was retaliating because government troops attacked and burned down his house and allegedly took $46,000 in cash. He did not say why he was keeping that much cash on hand, but he wanted it returned.

"It's a difficult situation," said Ajumogobia, the energy minister. "There are complications from criminal elements that have infiltrated the process and are trying to break the process."

He said that the government was going to triple its budget for the Niger Delta. It currently gives 13 percent of oil revenues to the governments of oil-producing states.

Analysts say that most of the money allotted for the Delta region doesn't get there. The former governor of Delta state, James Ibori, has been charged with 129 counts of money laundering and other financial crimes. Human rights groups say Ibori provided key financing for the campaign of President Umaru Yar'Adua last year and that Ibori's influence was one reason why the president recently took the country's top prosecutor off the job and sent him on a training program.

A Human Rights Watch report last year reported that the $1.3 billion for Rivers state had little impact on ordinary people. The governor had a $65,000-a-day travel budget, the report said, and $92,000 a day for "grants," "contributions" and "donations." One local government spent 2 percent of its share on its crumbling primary school and 30 percent on its own salaries and offices. Another local chairman claimed to have spent huge sums on projects, including a fish pond with neither fish nor water.

"There are a lot of opportunities for diversion and corruption," said Monica Enfield, a West Africa analyst at PFC Energy, a Washington consulting firm. "So you have communities with no hospitals, roads or schools, and that creates a lot of anger against the government and the operating companies there."