JOURNAL: Opportunities in Nigerian Outcomes
Port Harcourt, Nigeria. There have been two large robbery/raids on corporate compounds in the past week. The first was on Agip's (an Italian oil company) headquarters where seven were killed. The most recent was on Saturday when Daewoo's (a South Korean conglomerate) compound was raided and $285,000 was stolen. The objective of these raids and recent kidnappings, beyond the immediate financial gain, is to coerce corporations. It's working.
In further signs that this movement is adopting global guerrilla methods: 1) they have released the foreign hostages after a payment of $770,000. The moral damage to the marketplace was already maximized (Shell has withdrawn 500 employees and hundreds of contractors have fled), and a bloodless release makes it easier for corporations to deal with them in the future. 2) the group has set a GOAL (!) of a 30% reduction in Nigerian production by the end of February!
Naturally, the research analysts at the major global banks/hedge funds and government agencies are scrambling to understand the implications of this new wave of violence -- given that the fate of several major corporations, a trillion dollars of oil, and the world's oil price is at stake. Unfortunately, this effort may fall short given that the type of warfare that is evolving in Nigeria (and other places) is very new and complex. To really take full advantage of this opportunity (for financial speculators) or to mitigate the risks (corporate participants that want to limit their downside risk), a team that combines expertise in the oil market, regional knowledge, and this new form of warfare (this analyst has built an excellent track record by anticipating outcomes in Iraq, Nigeria, and Russia) should be assembled to build an actionable model and potential scenarios. Further, this model could even be built as a service delivered via a private Web site for a hefty subscription (also something I have tons of experience with). The potential profit here is limitless and the downsides are catastrophic. Things are starting to move in earnest.UPDATE: It appears that some global hedge fund managers think the same thing (although their scenarios need lots of work).