By Chidi Orazulike
With an official production figure of 2.4 million barrels per day, Nigeria ranks as Africa’s biggest Petro-state, raking in billions of dollars in petroleum revenue. However, there are indications that the nation maybe producing more than the official figure while the rest is lost through the unscrupulous activities and manipulations of criminal cartels who engage in oil theft. The crime occurs at the most basic level when pipelines rupture or spring leaks, allowing local inhabitants to siphon off the oil. Many leaks occur throughout the Niger Delta for purely technical reasons. An estimated 70 percent of the pipelines in the Niger Delta are over 30 years old, have exceeded their technical life-span, and are laid near to the surface. Nigerian crude is a high-quality, light low sulfur grade referred to as ‘Sweet’, which is highly prized by oil consuming nations because of its high gasoline content and relatively cheap processing costs.
In most cases oil thieves breach a pipeline at night with the result that the oil company shuts down the flow in the line when the drop in pressure caused by the breach registers on the gauges at the flow station. While the flow is shut off for the company to inspect the line, find and repair the breach, the thieves excavate the pipeline some distance away and install a tap underground through which they deliver a constant supply of oil to their own facilities. As the supply is constant, no fluctuation in pressure is registered at the company’s flow station when the flow resumes after the repairs to the initial breach. Technical advice on the installation of the tap or ‘hot-tapping’ as it is known, is allegedly often provided by either a former oil company employee or a currently employed company insider who also provides information on security patrols and schedules.
Recently, Shell Petroleum Development Company of Nigeria Ltd (SPDC) raised an alarm over activities of oil thieves on the new Nembe Creek Trunkline (NCTL). According to the company’s Managing Director, Mutiu Sunmonu, on the 24th of December 2010, the line was shut down because of leaks caused by two failed bunkering points, “since repairs were completed, more than 50 theft valves have been discovered. In one case, some 17 illegal bunkering points were found within a distance of 3.8km.”
Individuals transfer oil extracted illegally from facilities into containers and onto barges or lighters, which then take the oil to tankers. This process of “bunkering” is what has given the business of oil-theft in Nigeria its common name.
WHO ARE THEY?
While the conventional image invoked at the mention of an oil thief is the hooded Niger Delta militant who may burst pipelines to steal oil, they nevertheless have accomplices who are neither from the Niger Delta region nor even know the location of the pipelines. While the former may be of very rugged and of violent disposition, the later operate with more stealth in their suits and uniforms, in some cases working hand in glove with the militants as ‘field operatives’.
Information from the international whistle blower, Wikileaks, indicate that the process of “bunkering” and off-loading oil at terminals or tankers requires a network of accomplices to provide protection from the security forces of the oil companies and the Nigerian State to transport, transfer and sell the oil at international market prices. Leaders of armed bands arrange “internal” protection when they steal oil, while those outside militant groups bribe official security forces to “look the other way” during loading and transportation of specific barges or when tankers tie up at terminals.
A report on illegal sale of crude oil, commissioned by the Coalition of Party Leaders of Nigeria (COPLON) under former President Olusegun Obasanjo’s administration in 2003 indicated collusion between naval officers and oil thieves. The report stated that the illegal oil ‘bunkerers’, who are organized in a union and regulated by a group referred to as the Grand Council, worked in close co-operation with the leadership of the Naval Base NNS Okemiri. It noted that following the Nigerian Federal Government’s decision to target the activities of militia and illegal oil bunkerers in the Niger Delta, a message code named “Go Blanket” was passed from an officer of NNS Okemiri, advising the illegal traders on July 6, 2003 to temporarily suspend their activities.
Another report from a Norwegian security analyst firm, Bergen Risk Solutions, contends that the “dirty job of stealing oil” is driven by the relatively low cost of fuel production in Nigeria. “Corruption and organised crime seems to be at play…There is already not only a market for stolen oil but also an established network to service this market. Official collusion is not only probable, it has well established and ‘proud’ traditions. Given that corruption is rampant in Nigeria and elsewhere in the Gulf of Guinea, the claim that government officials are involved in the trade of stolen oil – also offshore Benin – might well be true.”
Of course, Nigerians do not need to think of the probability of official collusion in the illegal business of oil theft. A classical example is the celebrated case of the sudden disappearance of the MT African Pride, which was seized on suspicion of being used to smuggle crude oil out of Nigeria. The vessel was arrested by the Nigerian Navy on August 8, 2003, but was, however, declared missing in custody of the Western Naval Command on October 10, 2004, causing huge national embarrassment, with the Nigerian Navy and Police officials blaming each other. The then Chief of Naval Staff, Rear Admiral Samuel Afolayan and other top brass of the Navy were accused of complicity over the missing vessel. Even the former Minister of State for Defence (Navy), Dr. Olu Agunloye, was mentioned in connection with the MT African Pride saga. The case climaxed with the conviction and dismissal of two senior officers of the Nigerian Navy, Rear Admirals Francis Agbiti and Samuel Kolawole, both of whom were on the verge of retirement after 34 years of service.
Sadly, that shameful episode did not bring an end to such criminal escapades. Recently, a Nigerian ship, MT Madina was reportedly arrested in Ghana for allegedly carrying crude oil stolen from Nigeria to a private jetty in Accra, Ghana. Although the ownership of the vessel was yet to be ascertained, members of the Indigenous Ship Owners Association of Nigeria (ISAN) were quoted as working to unravel its ownership. As at press time, the ship’s captain and his crew were reportedly still under detention by the Ghanaian authority.
In recent times however, there has been a significant decrease in reported cases of oil theft that involves the participation of militants and increase in what might be termed “Legal Oil Theft.” The term refers to the lifting of crude oil beyond the licensed volume. The crime is usually conducted through fraudulent Bills of Lading, which transfers contractual rights and liabilities to the owner. Therefore, the possession of a Bill of Lading is a proof of entitlement to the goods. Since the process of oil transportation involves a private carriage where the vessel charterer accepts commercial control over a vessel for a specific period of time or for a specific purpose, the shipper and charterer issue the Bill of Lading. This paper chain for Bills of Lading for transport of crude oil provides ample opportunities for theft of oil by those with a legal license to lift oil. The process is facilitated with the involvement of the ship captain, staff at the point of loading and oil company personnel.
The fraudulent issuance Bills of Lading contributed in no small measure to the mindboggling ballooning of the subsidy funds disbursed by the government in the past. Findings at the recently concluded hearings at the oil subsidy probe by the National Assembly reveal that the claim by some licensed importers that Nigeria imported and consumed about 60, 000 tons of fuel per day could not be substantiated. Facts available to the National Assembly showed that the country’s effective consumption was about 30,000 ton per day, a 50% hike by the criminal cartels that held the collective till to ransom. Invariably, out of the N1.7 trillion paid for subsidy in 2011, about N850 billion went to the oil thieves from the national purse.
Already, there are speculations that the expected report of the Oil Subsidy Probe Committee allegedly indicted not only the Minister of Petroleum Resources, but also some high ranking officials of the NNPC, PPPRA and DPR. This, of course, is a subject for further investigations by OGP.
Perhaps, the most dangerous effect of the massively organized oil theft business is the criminality and corruption it fosters. The crime amply fed the rise of militant movements in the Niger Delta region and gave them prominence. By early 2005, they had graduated to Kidnapping. It would be recalled that the current wave of kidnapping began with the abduction of expatriate oil workers by the Movement for the Emancipation of the Niger-Delta (MEND) in 2005. The group had claimed that it kidnapped the oil workers as a means of alerting the world to the many years of injustice, exploitation, marginalization and underdevelopment of Niger-Delta region. But today, most analysts believe that the kidnapping was nothing but a reaction by the so-called militants and their sponsors to the threat of driving them out of business. Unfortunately other unscrupulous groups have since taken over the kidnapping business, making millions of dollars without caring about the underdevelopment of the Niger Delta region.
Directly related to the crime and corruption is the huge economic losses inflicted on the Nigerian economy by the oil vandals. Earlier this year, Ian Craig, Shell’s Director for Sub-Saharan Africa revealed that “Nigeria loses about 150, 000 barrels of crude oil per day to oil thieves. Under the current crude oil price regime this translates to about $1.8 million or N2.88 billion every day. He said Nigeria could produce 4 million barrels of oil per day, but big changes would be needed for this to happen.”
Besides, not only are these enemies of the Nigerian state bleeding the country dry, they are also compounding the woes of the already fragile environmental situation in the Niger Delta region. Indeed, Shell had earlier submitted that more than 75 per cent of all oil spill incidents and more than 70 per cent of all oil spilled from SPDC facilities in the Niger Delta between 2006 and 2010 were caused by sabotage, theft and illegal refining. The activities of the actors in the criminal game appear to have strengthened the old argument of oil companies that criminality rather than negligence mainly accounts for environmental crisis in the Niger Delta.
The far reaching effects of the spillages are unquantifiable. Environmental reports on the effects of oil spillage indicate that major oil spills heavily contaminate marine shorelines, causing severe localised ecological damage to the near-shore community. Oil destroys plants and animals in the estuarine zone. It settles on beaches and kills organisms and other marine lives like fish, crabs and other crustaceans. Oil endangers fish hatcheries in coastal waters and as well contaminates the flesh of commercially valuable fish. It poisons algae, disrupts major food chains and decreases the yield of edible crustaceans. It also affects coast birds, impairing their flight or reducing the insulation property of their feathers, thus making them more vulnerable to cold.
Oil on water surface also interferes with gaseous interchange at the sea surface and dissolved oxygen levels will thereby be lowered. This, no doubt, reduces the life span of marine animals. And in a bid to clean oil spills by the use of oil dispersants, serious toxic effects are exerted on plankton thereby poisoning marine animals. This can further lead to food poisoning and loss of lives.
As the Federal Government grapples with developmental issues in Niger Delta, the battle against oil thieves has also taken the center stage.
The Federal Government is not unaware of the deadly consequences of this illegal trade. In responding to the situation, the Joint Task Force (JTF) in the Niger Delta, codenamed Operation Restore Hope, has been restructured and is now known as Operation ‘Pulo Shield’. In February, Agency reports noted that ‘pulo’ is an Ijaw name for “oil”, meaning that the task force is also codenamed ‘Operation Oil Shield.’ The composition of the outfit had also been expanded to include other agencies like the National Intelligence Agency (NIA), Nigerian Prisons Service (NPS), Nigerian Customs Service (NCS), Nigerian Immigration Service (NIS) and the Nigerian Maritime Administration and Safety Agency (NIMASA).
Others are the Presidential Committee on Maritime Safety and Security (PICOMSS), Nigerian Ports Authority (NPA), Economic and Financial Crimes Commission (EFCC), the NNPC and other oil producing companies. The operational scope of the task force covers the nine oil producing states of Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo and Rivers.
The Federal Government has also awarded a contract to a private firm to patrol Nigeria’s waterways against pirates and other criminals along the coastline from Calabar to Lagos. However, the contract has been dogged by controversies over the propriety of handing the security of the nation’s coastline to a private security firm reportedly with links to Government Ekpumopolo, an ex-commander of a faction of the dreaded militants in the Niger Delta region.
The security contract valued at $103.4 million (about N16 billion) was awarded to Global West Vessel Specialist Nigeria Limited (GWVSNL) a company in which Ekpomopolo, also known as Tompolo is said to have a vested interest.
However, it is clear that the federal government has a responsibility to do more in its efforts to bring the menace of oil theft under control, if not eliminate it entirely. The constituted agencies should not only be created, but must also be empowered and equipped to effectively dispense their duties. Any culprit, whether in the creeks, the cozy comfort of their offices or in the corridors of power, must be brought to book and prosecuted.