On the MEND

By Fester:

MEND is a Nigerian insurgent/oil smuggling group that has effectively closed between a fifth to a third of Nigerian oil production potential for the past few years.  Their overt goal is to divert more oil revenue into the oil produce states' economies while a tacit goal may be to get rich smuggling oil.  MEND has been increasing the size and scope of their operations recently. 

Via Agence France Press:

The attack on Bille-Krakrama pipeline, which feeds the key Bonny export
terminal in southern Rivers State, was carried out shortly after
midnight Thursday.

This and other attacks, as well as future potential attacks against the brittle production network may be able to shut down the entire domestic energy market and force the government into an impossible position of credibility loss.

From the Nigerian Guardian:

Yesterday, the government admitted that it had no more crude for its refineries to process for local consumption.

Consequently, the Warri and Port Harcourt
refineries have been shut. The Kaduna Refinery, though functioning, has
no crude to process because the Warri plant, which feeds it is shut due
to a damage to major pipelines. The only stock, which was reserved,
will be exhausted in the next 15 days, the Nigerian National Petroleum
Corporation (NNPC) said yesterday.

The corporation's Group Managing Director
(GMD), Mohammed Sanusi Barkindo, who painted the pathetic picture of
the industry, said in the next 15 days, it will run out of crude for
domestic consumption.

The Nigerian government has very few options.  The first and their preferred option is for Alien Space Bats to abduct anyone involved in pipeline sabotage and publicly guarantee the pipeline security so that repair crews can get back to work in the next few days.  This is unlikely. 

The dilemma is that system sabotage is so cheap to execute and capital non-intensive MEND can credibly shut down the domestic pipeline system (and their own smuggling revenue streams) in the face of a large search and destroy sweep mission that will look good on TV but do nothing for security on the ground.

The Nigerian government can either concede the primary political goals of MEND and hope that there is enough internal policing and social cohesion to have all actors associated with MEND adhere to the agreement, or they can see their budgets blown up.  If local refined product production is shut down, the Nigerian government can either spend valuable hard currency on imports or see their entire urban economy come to a standstill.  The Nigerian government is in comparatively decent financial shape as they had been running decent size current account surpluses for the past few years so there may be cash reserves available to finance a few months of imports but MEND will have the ability to keep Nigerian hard currency cash flow negative for as long as they would like.