Oil Thefts Threaten Nigeria’s Economy, Environment

The first drops of crude float in the languid muddy currents of Nigeria’s oil-rich southern delta, then slowly grow into the splatter of a massive crime scene.

Oil thefts, long a problem in the Niger Delta, are growing at an ever-faster rate despite government officials and international companies offering increasingly dire warnings about the effect on Nigeria’s crude production. Some 200,000 barrels a day – representing about 10 percent of Nigeria’s production – are siphoned off pipelines crisscrossing the region.

While drums end up leaking in villages and used to make crude kerosene and gasoline, the major thieves appear to belong to international criminal gangs that sell it into world markets, analysts and experts say. And the same Nigerian politicians and military leaders now targeting the small-scale local refineries that dot the delta likely are the ones benefiting from those massive thefts.

“This oil that you are buying is bought is the same thing” as blood diamonds, said Patrick Dele Cole, a former Nigerian ambassador now spearheading a group trying to call attention to the thefts. “It is bought at the expense of people’s blood in the Niger Delta.”

Oil is the lifeblood of Nigeria’s economy. Since the company that would become Royal Dutch Shell PLC discovered the first commercially viable well in 1956, oil earnings grew to account for some 80 percent of all government revenue in Nigeria, a nation of more than 160 million people. While corruption sees much of that money frittered away, it still provides needed funding for projects in the country.

A government-sponsored amnesty program largely halted militant attacks in the delta in 2009, allowing production levels to return to more than 2 million barrels of oil a day. But while production grew amid the relative peace, the level of thefts grew quietly and quickly across the region of winding creeks and mangroves about the size of Portugal.

Locals call the practices “bunkering,” which sees thieves use hacksaws and blades to cut into the pipes. When the companies see the pressure drop on their lines, they dial back the pressure on the lines just long enough for thieves to attach spigots to the lines. As the pressure rises back up, the thieves simply divert some of the oil out of the line to their own uses.

In Diebu, a village in Bayelsa state, the home of President Goodluck Jonathan, children ran and played around leaking drums of stolen crude oil. The crude likely came from lines run by Shell and Italian oil company Eni SpA, though residents there demanded money from visiting journalists to see the sites of the thefts. Many here view the thefts as their opportunity to have a taste of a commodity that built Nigeria’s sterile central capital of Abuja, a city of gleaming towers and massive highways. In Diebu, the locals pointed out a large clinic of empty rooms without medicine and a local doctor’s quarters that appeared to have squatters inside. The dilapitated schools had large holes where windows were supposed to be.

Amid the neglect, locals rationalize the thefts with a simple question: If governors, politicians and everyone else stole the money, why shouldn’t they steal a taste as well?

“We are bleeding,” said one man working at a nearby illegal oil refinery, who gave his first name as Prince. “We need this one to balance out our life.”

But that balance comes at an environmental cost as well. Operations at local refineries, which produce crude gasoline, kerosene and diesel fuel, see oil spilled everywhere, soaking the ground into a mix of mud and crude that can swallow a leg up to the knee. Large dug-in pits hold the crude until it passes through makeshift piping to create fuels sometimes so volatile they can explode at will. Massive fires that send plumes of smoke towering into the air fuel the process.

“It is the only job we are doing,” said an illegal refiner who gave his name as Ibeci. “There is no other job.”

Nigeria’s military, which maintains a presence in the delta since the militant attacks, has begun targeting illegal refineries in the region. Local refiners like Ibeci say they now work only at night, as the smoke plumes draw soldiers to their operations during the day.

The military claims to have dismantled dozens of such illegal refineries, though Associated Press journalists in the region in May came across multiple sites where the ground was still warm from refining the night before. Lt. Col. Onyema Nwachukwu, a military spokesman for the region, declined several interview requests regarding the military’s efforts in the region.

But as Nigeria’s government focuses on illegal refineries, Cole said the vast majority of the thefts actually see the oil taken out of the country into eastern Europe, South America and Asia for sale. Cole’s organization, which received initial seed money from Shell and later received support from the Dutch government, wants there to be stricter monitoring of oil entering international markets, as well as testing done to ensure that such stolen crude can’t be slipped into the system.

However, he acknowledges the true challenge facing the effort: Those supporting the thefts include Nigeria’s military and the nation’s political elite.

“There must be some kind of collusion,” Cole said. “The whole thing started really because of the political need to raise a lot of money during the elections. The whole idea of selling oil illegally was sponsored and maintained by our political leaders. There is no doubt about that.”