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What does piracy off Nigeria mean for global business?

October 26, 2013 at 12:00 AM EDT
Hari Sreenivasan speaks with maritime risk consultant Michael Frodl about the recent capture of two Americans off of the coast of Nigeria by armed pirates, and what economic and political implications a rescue could entail.
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TRANSCRIPT

HARI SREENIVASAN: We want to take a closer look now at a story that broke a couple of days ago. The capture of two Americans off the coast of Nigeria by armed pirates. The incident occurred in the Gulf of Guinea, it’s a story with global business implications because Nigeria is Africa’s leading oil producers and a major supplier of cocoa and metals.

For more we’re joined from Washington by Michael Frodl, he’s the founder and head of C-level Maritime Risks…So Michael, right now there’s a lot in the air about Somalia and piracy, partly because of the movie Captain Phillips, and of course Somalia is on the east side of Africa. What are the parallels and what are the dissimilarities when it comes to what’s happening off the coast of Nigeria?

MICHAEL FRODL: Thank you for having me, first of all. Apples and oranges. I think when we look at the Somali case of piracy, it’s much more maritime based, it originated on the water and takes advantage of ships cargo going passed Somalia. Whereas in terms of Nigeria we’re looking at a form of criminality which is extended to the water but which is basically land based, based on the illegal black market for oil, and attack ships that actually operate around Nigeria, go into and operate close to shores so it’s very different models. 



HARI SREENIVASAN: So Nigeria’s oil production has also made it a haven for a huge fight. I mean there’s a political movement there to try to get people out. Is there a possibility that these two are interconnected, the crime that’s happening offshore and what’s happening with oil on land?



MICHAEL FRODL:  Quite so. The group that we’re looking at right now is possibly connected to the kidnapping. It’s called the MEND, which stands for the movement for the emancipation of the Niger delta. It had agreed to a truce a few years ago, the militants had put down their guns and gun benefits as well as education. But it seems to come back up again, and it’s basically organizing people from the Niger delta who are upset at the amount of oil that’s pumped out of their part of the country and how little money they have from the national government in Abuja to show for it.



HARI SREENIVASAN: Though, is this lucrative enough? Is that why this keeps happening?



MICHAEL FRODL: In terms of the kidnapping, yes definitely. And also what’s called “bunkering” which is the stealing of gasoline products from pipelines. We have criminal groups that are operating loosely with political as well as other agendas. And they’ve been self-financing doing this sort of kidnapping plus stealing of petroleum products and reselling them right back into the market for years now.



HARI SREENIVASAN: And what are some of the safety issues or tactical issues from the U.S. perspective to get these hostages out?



MICHAEL FRODL: There are many things that could go wrong. We were worried about identifying the group to find out if they’re disciplined. There could be a rivalries and fights among the gang members. There could be other gangs that would want to kidnap these two Americans because they have high resale value. We could also look at the problem in terms of a botched military response. If the Nigerian or any other government were to move in too quickly, it’s very possible that people could get killed in the operation, and kidnappers in that part of the world have been known to kill their hostages when they fear they are going to lose them. 



HARI SREENIVASAN: And we couldn’t do this without Nigeria’s governmental support?


MICHAEL FRODL:  Definitely now that it’s on the ground operation this is not, again, a Captain Phillips sort of rescue operation hundreds of miles out in international waters. We’re talking about two Americans who are now on Nigerian soil.