Nigerian oil theft soars to feed underground industry

April 21, 2013 by M.j. Smith
A photo taken on April 11, 2013 shows a locally built dump for crude oil waste from an illegal oil refinery operated by oil thieves in Bayelsa State in the Niger Delta. Oil companies say crude theft has surged in Nigeria, with estimates the country loses some $6 billion (4.6 billion euros) per year in revenue

A trail along the river banks deep in the Nigerian swamps winds through forest before arriving at a clearing, where the ground is black from oil and soot, puddles shimmering with crude.

A makeshift refinery sits there, its drums and pipes resembling a junkyard contraption but apparently capable of producing usable fuel from stolen , part of a major underground industry Nigeria says it is now trying to stop.

"The whole thing is the resilience of the people," one man with knowledge of the illegal operation proclaims, defending what he says is local communities' right to benefit from the vast in the country's Niger Delta region.

Oil companies such as Shell say crude theft has surged in Nigeria, with estimates that the country loses some $6 billion (4.6 billion euros) per year in revenue as thieves sabotage and syphon off pipelines in the vast wetlands of the delta.

The illegal refineries are only one part of the illicit industry in Africa's biggest oil producer, and concerns have grown over its alleged international dimension.

Authorities, oil firms and say the chain of culprits and the stolen crude itself can sometimes reach far beyond Nigerian shores.

"I've always said in my speeches that I believe that there are a lot of international syndicates involved," Mutiu Sunmonu, managing director of Shell's Nigerian division SPDC, told reporters recently.

"And you don't do an operation of this scale without involving a lot of people, both locally and overseas."

Nigerian officials have pushed for international help in what they call a campaign against "blood oil".

Creeks devastated by spills caused by oil thieves in the Niger Delta in Nigeria, March 22, 2013. Oil companies say crude theft has surged in Nigeria, with estimates the country loses some $6 billion (4.6 billion euros) per year in revenue

But even if international networks have gained a foothold in the lucrative , authorities say it could not happen without Nigerians involved.

Suspicions regarding the major players have long spread, but determining the truth is difficult in a country where even the legitimate oil industry operates in a largely opaque manner.

Allegations have been levelled against high-level Nigerian political figures as well as the military itself, though such accusations have always been firmly denied.

In terms of foreign involvement, the military says one suspect recently claimed he worked with someone in Lebanon, while a number of foreigners have been arrested, including West Africans but also recently Indians.

"They have people who are collaborating with them," said Lieutenant Colonel Onyema Nwachukwu, spokesman for a military task force in the Niger Delta region.

"They are Nigerians, and they are people who have thorough knowledge of what the industry is about."

The problem is dauntingly complex, ranging from poor youths in the swamps distilling oil in the middle of the night in dangerous conditions to the higher-level smuggling of boatloads of crude outside of Nigeria.

It touches on the feeling among many residents in the delta that few have benefited from the oil wealth in Nigeria, viewed as one of the world's most corrupt nations and where most of the population lives on around $1 a day or less.

Protesters march against corruption in the streets of Port Harcourt, the commercial hub of Niger Delta Rivers State on January 10, 2012. Oil companies say crude theft has surged in Nigeria, with estimates the country loses some $6 billion (4.6 billion euros) per year in revenue.

Decades of oil pollution have at the same time poisoned creeks in a region where fishing had been a major source of livelihood, often with few repercussions for those at fault.

Shell, Nigeria's biggest oil producer, says most spills happen due to sabotage, but activists accuse the company of not doing enough to prevent and clean them.

Violence had previously taken hold in the Niger Delta that saw pipelines blown up, oil facilities attacked and foreigners kidnapped. Militants claiming to be fighting for a fairer distribution of oil revenue as well as criminal gangs were responsible.

A 2009 amnesty deal greatly reduced the unrest, mainly through payments to former militants, but many analysts warn underlying conditions that led to the violence remain unaddressed.

Criminality, including oil theft, has remained a problem since then. Some make no apology for the illicit crude industry, referred to locally as "bunkering".

A local chief in the delta says his community is no longer involved in bunkering—but only because soldiers have engaged in a crackdown. He says local refining allowed the impoverished community to benefit from cheap fuel.

"This has motivated our people to be doing the local bunkering ... They stopped us," said Senior Karibo of the Peremabiri community in Bayelsa state, located more than an hour by boat from the state capital Yenagoa.

The military says it has increased patrols. Makeshift refineries have been burnt down by soldiers, and locals say refining operations now mostly occur at night.

Nwachukwu shares emails from patrol units on their findings, including one where locals are warned that those involved in the illicit trade will be shot on sight.

He insists such "community relations" are only meant to frighten and that troops have not shot anyone apart from gangs they have clashed with.

According to Nwachukwu, nearly 2,000 suspects were arrested in 2012 in connection with the task force's operations, but they are often released on bail and return to the same activity.

He says the man claiming to work with someone in Lebanon offered bribes to soldiers after his arrest and even signed a paper committing to bring more money. Despite such evidence, he was later released and is now walking the streets, Nwachukwu said.

"What we do is arrest the suspects. When we hand them over, what happens? Let me tell you what happens," he says, before trailing off.

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1 / 5 (1) Apr 22, 2013
Thinking also of the popularity of 419 scams, it seems criminal activity is endemic.

Fix the income disparity. Give people an environment in which they can find wealth without having to resort to criminal activity (and where the leaders, as role models, aren't seen as corrupt) and the problem will go away. Pointless to say, though - it's understand this isn't going to happen.
1 / 5 (1) Apr 22, 2013
Oil companies such as Shell say crude theft has surged in Nigeria, with estimates that the country loses some $6 billion (4.6 billion euros) per year in revenue

As opposed to the state sanctioned crude theft that is Shell's business model in Nigeria?

I get that these makeshift refineries are illegal. But Shell complaining about cheating people out of what is theirs? Seriously? That's rich.
1 / 5 (1) Apr 23, 2013
6 Billion in losses!! It would probably cost less if they gave these people their due. Not to mention the cost to the environment. Shameless corrupt government.

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