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Nigerian Oil and ArmorGroup Print

December 28, 2006

The "Nigerian Oil" section of the Breakingviews column (scroll down) in today's Wall Street Journal Europe doesn't mention portfolio holding ArmorGroup International (ARG/LN).

But it's relevant to us shareholders:

The explosion of a pipeline in Nigeria that took at least 265 lives hasn't moved the oil price, or the shares of foreign oil companies that do business there. It turns out that the pipeline supplied petrol for domestic consumption, and wasn't used for foreign energy exports. But as foreign companies increasingly bet on Nigeria to expand their bottom lines, the blast is a reminder that doing business in the country is risky.

The piece, which I encourage you to read, ends with this:

The tragedy in Lagos highlights the dangers of doing business in a country where the people are so poor that they are prepared to take extraordinary risks to make some petty cash. But if political and social instability gets any worse, foreign oil companies could find the costs of investing in Nigeria don't justify the returns.

Well, sure. And that's why firms like ArmorGroup are finding work outside supporting the US and UK military. If the much-anticipated long-term commodities boom is underway, ArmorGroup is positioned to benefit. That doesn't guarantee anything, of course. But it's a nice add-on to the business of helping over-stretched armies and providing security to NGO humanitarian missions.

You can see a case study of ArmorGroup's activities in Nigeria on the company's website. 

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