-an inside look at the stolen crude oil trade in Nigeria’s
Niger Delta
In the creeks of Nigeria’s Niger
Delta, home to the world’s third largest wetland, more than two million barrels
of crude oil are pumped and exported daily, but an estimated 30,000 to 300,000
barrels are also stolen. The Niger Delta is home to about 31 million people,
belonging to 40 different ethnic groups, bound by fishing, farming and hunting.
Since 1958 however, the people of the
Niger Delta have also been bound by the misery of crude oil exploration. Farmlands have been destroyed and water ways
overtaken by thick slicks of crude oil. Amnesty International estimates that nine
million barrels of crude oil has been spilled in the region since the first oil
well was dug.
An oil bunkering scene in the creeks of the Niger Delta.
The degradation of the Niger Delta
environment was revealed in a 2011 study by the United Nation Environmental
Programme (UNEP).
“In some areas of the Niger Delta,
there was heavy contamination present, 40 years after an oil spill occurred”
Surface water throughout the Niger
Delta creeks contain hydrocarbons with floating layers of crude oil varying
from thick black oil to thin sheets, according to the UNEP study. It cites community
actually drinking water from a well that is contaminated with benzene, “a known
carcinogen, at levels 900 times above the World Health Organisation (WHO)
guidelines.
Life in the Niger Delta is no longer
the same.
Forced out of their traditional way
of life, the people of the Niger Delta have found a new way to survive. Under
the cover of darkness, in the midst of the forests, a trade is booming. Wooden
Canoes once used for fishing have become transport vehicles for barrels of stolen
crude oil.
Crisscrossing the wetlands of the
Niger Delta are long pipelines carrying millions of barrels of crude oil. These
pipelines tap into a fraction of the 34 billion in proven crude oil reserves in
the Niger Delta. The region also holds another 186 trillion cubic feet of gas
reserves, the eight largest in the world.
The exposed pipelines are the source of stolen crude oil. A copy of a report obtained by this reporter, describes how crude oil is stolen
from the exposed pipelines. Hacksaws are used to damage to pipelines. This
forces the Oil company to shut down oil flow on the affected pipeline to reduce the
impact of any oil spill on the environment. As soon as this is done, the oil
thieves install bunkering points on the hacked portion of the exposed pipes and
attach hoses and suction instruments to the pipes. As soon as oil starts
flowing on the pipelines again, they
siphon the flowing crude to waiting locally made barges; said to be able to
store up to 40,000 barrels of crude oil at a time and large canoes called
“Cotonu boats”.
The oil thieves have two markets for
their stolen oil, the local refineries in the creeks and offshore large tankers
waiting patiently for such cargoes. The obtained report confirms that the portion that is sold to the local
refineries in the creeks is refined into diesel, transferred to a storage depot
and then sold in the local Nigerian market.
A local journalist familiar with the
Niger Delta says the stolen and locally refined diesel is sold at about N150
(59 pence) per litre compared to the official price of N190 (75 pence) per
litre for the imported none locally refined diesel.
“In this region, if you want to be a
small-time bunkering baron, you raise N10m (£39,000) and pay to a syndicate,
then you get supplies as your share. Many people in the big dark jeeps you see
here are in it. People introduce themselves as being in 'oil' business. That is
it. It is no big deal here.”
Corrupt security agents are behind
the trade, he says, explaining how large barges of stolen crude oil are able to
move around the creeks unchallenged.
“If you go to Bonny Island, some
soldiers lodge N3m (£12,000) daily in their accounts. My bank source tells me
that some top brigade commanders get N25m (£98,000) lodgements at a time. There
is piecemeal payment to security operatives and also one time pay-offs. Has government agencies questioned the source
of money?”
The exact number of barrels of crude
oil stolen is not certain. But various reports put it between 30,000 to 300,000
barrels of crude oil every day. Ian Craig, Shell’s director for Sub Saharan
Africa told an oil and gas conference in Abuja in December 2011 that Nigeria
could be losing as much as 150,000 barrels of crude oil a day to the oil
thieves.
Tony Attah, Vice President at Shell
in Nigeria in an emailed response to this reporter’s enquiry disclosed that the
“theft of equipment or leaks caused by crude oil thieves drilling into
pipelines or opening up wellheads to steal oil, accounted for 74% of all oil
spill incidents and 73% of all oil volume spilled from our facilities in the
delta between 2007 and 2011.”
He puts the estimated cost of oil
theft at “around $4.5bn a year to the Nigerian state and operators in lost
revenue”
A special report by the United States Institute of Peace
(USIP) titled “Blood Oil in the Niger Delta” estimates that the loss to the
Nigerian economy from stolen crude oil between 2003 to 2008 could be as high as
$100 billion.
Despite the significant loss of
revenue to the Nigerian state, the government seem reluctant to deal with the
massive theft of crude oil taking place in the creeks. The government is not only scarred but may have been compromised.
Andrew Walker explains the reason for
the Nigerian government reluctance, in a report in 2009 for the BBC titled
“Blood Oil dripping from Nigeria” quoting a source close to the Nigeria’s
former president Olusegun Obasanjo as saying that “This is an industry that
makes £30m ($60m) a day, they'd kill you, me, anyone, in order to protect it”
"If the president goes after
them, they could destabilise the country, cause a coup, a civil war. They are
that powerful, they could bring the state down."
Toyin Akinosho, publisher of “Nigeria Oil and Gas” confirmed the fears expressed
by the BBC source in a phone chat with this reporter.
“It is not unusual to hear militants
in the Niger Delta boasts that they will make the government uncomfortable if
they are prevented from stealing crude oil. They always threaten that they will
blow up the pipelines.”
Nigeria earns 90% of its revenues
from crude oil exports. So blowing up the pipelines could collapse the
government.
But the inability of the government
to deal with the situation could also be traced to top level political
involvement in the oil theft trade.
Top level involvement in the stolen
crude oil business may explain how in 2004 a detained Russian Ship carrying an
estimated $2.6 million in stolen crude oil vanished. The Nigerian Navy detained
the ship and claimed they handed it over to the Nigerian police. The Nigerian
police claimed that they never received any ship from the Navy. The Nigerian
legislature launched an investigation into the missing the ship. The report of
the investigation was never made public.
Since then, several more ship detainments
have been reported in the media. In 2011, security agencies are said to have
arrested 145 people and seized among others 18 tankers, 22 vehicles, 16 barges,
and 35 locally made boats. Sources familiar with the stolen crude oil trade
however say these arrests target just the foot soldiers fronting for local and
international financiers.
There is evidence of well-established
international syndicates facilitating the stolen crude oil trade in Nigeria.
The route to the international markets for Nigeria’s stolen crude oil is a
collaborative effort between the foot soldiers in the creeks, the communities
hosting the oil wells and pipelines, the Nigerian Navy and security agencies,
and an international syndicate of oil thieves that finance the whole process.
The international syndicate involves
well established players in markets for stolen Nigeria crude oil in West African
countries like Sao Tome, Liberia, Senegal, Cote d’Ivoir, Gambia supported by
Moroccan, Venezuelan, Lebanese, French and Dutch Financiers.
The stolen oil is usually exchanged
for cash, illegal drugs and weapons from the ships lurking out at seas waiting
for the stolen oil to be delivered. The large tankers that buy the stolen crude
oil take them directly to spot markets like Rotterdam or directly to refineries
in places like Cote d’Ivoire a neighbouring West African country.
“There are large international
syndicates involved in this operation, which also handle the money laundry for
the international players” according to the USIP report mentioned earlier.
The report notes that the players in
the creeks are just the front end of a complex international trade in stolen
crude oil.
“While the Niger Delta youth may
handle the local tapping and loading, international players from Eastern
Europe, Russia, Australia, Lebanon, The Netherlands and France all play roles
in financing, transporting, and laundering the money associated with blood oil.
One money trail followed a path from Senegal and Cote d’Ivoir, through French
banks and French credit agencies to Syria and Lebanon.” The USIP report
revealed.
The report reveals deep involvement
in the stolen oil trade of Nigerian Lebanese (those of Lebanese descent, born
or naturalized in Nigeria) “especially those with good political connections”
Attah, Shell’s Vice President says
only international collaboration can stop the booming trade in stolen crude oil
from Nigeria.
“Nigeria needs the cooperation of the
international community to checkmate the organised crime syndicates engaged in
crude theft. Buyers can demand assurance
that the oil they buy comes from a legitimate source.”
The Nigerian state may be too compromised
to stop the massive oil theft taking place, unless as Attah suggests, the
international community intervenes.
