Half of country's production runs through rebel-held areas, leaving the government open to exploitation The grin of Governor Peter Odili flashes down from a series of billboards along the roads of Nigeria's oil-rich Rivers State. But below the glossy signs on Port Harcourt's main highway, an overwhelming stench drifts up from open drains choked with rubbish. Meanwhile, young children dash in and out of the traffic fumes, hawking fruit, drinks and newspapers. Many of them are so poor they can only afford to buy a couple of apples or chocolate bars to sell at a time. Although Nigeria, Opec's seventh largest producer, is predicted to receive US$27 billion in oil revenues this year, it is still one of the poorest 25 countries in the world. Politicians squander the money on luxuries and self-advertisement, while the majority of people scrape by on less than a dollar a day. Amnesty International estimates that 500 people have been murdered last month in Port Harcourt alone. In desperation, many Nigerians are turning to rebel leaders like Alhaji Dokubo Asari, who claims to command 2,000 men. His threat last week to 'blow up pipelines and flow stations' around Port Harcourt, Nigeria's premier oil-producing city, contributed to prices of over US$50 per barrel. Half of all Nigeria's onshore production runs through rebel-held territory. Although the majority of Nigeria's oil is exported to America and western Europe, China is becoming an increasingly important trading partner. Two Chinese firms have been commissioned to build power plants in the country this year. Asari has not hesitated to target multinationals in his struggle. His Niger Delta People's Volunteer Force said they were fighting for fairer distribution of oil revenues; self-determination for the Ijaw people, Nigeria's fourth largest ethnic group; and a conference to decide whether Nigeria was a viable nation. The country is divided along ethnic and religious fault lines. On Saturday, President Olusegun Obasanjo announced that Asari and Ateke Tom, a rival militia leader allegedly backed by the Rivers State government, had both agreed to disarm. None of the rebels' demands have yet been met, but talks are due to resume on Friday. Despite the truce, none of the 300 staff oil company Shell evacuated during the crisis have returned. 'These people are volunteers. Asari does not pay them. If they don't like the deal, they can just walk away with their guns,' said one local analyst, shouting above the noisy celebration of Asari's homecoming this weekend. 'What's on paper so far isn't very substantial ... they've had hints from [President] Obasanjo but they've had that before,' added the expert. Governor Odili is furious with Asari for undermining his authority, warned the analyst. Last Friday he told a journalist that the 'gang leaders' had been arrested, sparking a near riot. 'These gangs were originally armed by the government to intimidate people during last year's elections,' said Sara Igbe, formerly a senior official in the Rivers State government. 'I recruited Asari myself, then when the government lost control of him, Ateke Tom was used to try to assassinate him. The government built this monster and now they have turned on it.' Asari's threats are part of a long tradition of attacks on oil installations and employees. A recent report commissioned by Shell said the company would have to shut down its operations in the Niger Delta within five years. According to the International Maritime Bureau, the Niger Delta waterways are already the most deadly in the world. Similar clashes around Warri, a city 140km east of Port Harcourt, shut down 40 per cent of Nigeria's oil production last year. Fighting between the Ijaws and the Itsekiris over oil revenues, and representation in local government, claimed thousands of lives. Further violence will push petrol prices even higher. Concerns over Russia's prosecution of oil giant Yukos and instability in the Middle East have increased the strategic importance of West Africa as an alternative source of oil.