• Friday, September 29, 2023
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Oil: The footprint of criminality

Oil: The footprint of criminality

Industry experts think Nigeria is facing something equivalent to a war, but this war is against its economy. The war is seen in the size of crude oil theft and illegal refining volumes that are going on. If oil is Nigeria’s mainstay, then losing about $1.32 billion in six months or 22m barrels in such period could truly destabilize its economy.

Put another way, an industry source said where a 24-inch pipeline is losing crude through an 8-inch pipe to a faraway vessel means that the oil industry through such pipeline is losing one third of its crude to thieves.

This why a briefing note by a major oil corporation last week in Port Harcourt indicated that pipeline vandalism has emerged as a huge industrial activity. Now, there are several players involved including escorted barges. Local and international markets have also emerged to serve as convenient receptors and off-takers.

Nigeria is thus said to have lost 22m barrels of crude to oil theft and vandalism and Shell Petroleum Development Company (SPDC) alone is estimated to lose 15,000 barrels every day. Slides shown by SPDC officials in Port Harcourt, Rivers State, last week, indicated that the daily loss may be conservatively put at 11,000 bpd, but inside sources said the figures could be as high as 20,000 bpd in some instances.

Experts put the 22m that the Nigeria National Petroleum Corporation (NNPC) had mentioned as loss in six months at $1.32 billion (at $60 per barrel), and that SPDC may be losing $900,000 or N275m every day to theft and spills.

The loss is said to go beyond revenue. It is also counted in lost time through shut-downs, environmental pollution, human lives, and wiping out of aquatic stocks. There is pollution and soot threatening to poison the food stock and blood streams of humans through leukaemia and skin cancers.

For instance, if pipeline is broken, an oil company has to carry out investigations as stipulated by regulation; supply the boats to go to site to see it; pay for containment; etc. It is said that some chiefs of host communities even ask boys to expand the spill point if it’s not flowing very much in order to point to large scale spill and make bigger claims.

The scale of spill is increasing yearly. Slides show that in 2017, Shell recorded 17 spills; in 2018, it went to 111; 2019 is expected to be even far more. The company had at some point to replace 1,160 illegal theft points. The oil corporations say the situation is so bad that the moment they pump crude, thieves tap and get supplies even before the oil company.

Read also: Nigeria’s oil rigs stagnate as OPEC records decline

Investment experts in the oil industry say the scenario gives the Nigeria oil industry a bad business reputation and makes it difficult to win more funds from their international headquarters. Other countries are also making pitch for funds. The guys from other countries simply point to the Nigerian situation against Nigerian managers. This is because investors are in it for profit. Shell officials in Port Harcourt cried out thus: “Stop blocking investments into the Niger Delta.”

Due to the scale of attacks, the pipeline teams in oil corporations say they have to meet every day (instead of monthly) to review attacks, showing that it’s very frequent. The degree is able to discourage investors and could make some oil giants to make final decision to quit. Nigerians are being warned not to think it is impossible.

Hurting the economy

A very top insider said in Port Harcourt recently that he and those like him feel very sad to repeat appeals to their fellow Niger Deltans only to see upsurge in attacks.

“We keep showing how this act is scaring away investors, hurting the industry and the economy, chasing away jobs and rendering the oil region not conducive for investments. Sometimes we feel like leaving this clime to a faraway country to work even in lesser positions just to have some peace. Most of our colleagues doing PR jobs in their countries can’t understand why we here spend on such subheads as awareness on pipelines. They wonder why any sane person needed to be told not to tamper with pipelines. They don’t understand why we have to vote for funds for scholarships to community people (when there is government in their places to plan for education); they don’t understand a lot of stuff we do here,” the insider said.

Some oil majors said by 1997, they had twice the size of workforce they currently have and they had planned for aggressive expansions. Instead, many oil companies are divesting and rolling back plans. Some wonder if the Niger Delta region actually is ready for development.

“This can be deduced from things we chase as a people, things we protest for or against, where we direct our protests, etc. You as a message maker begin to feel you are not making any progress,” one said.

One of them pointed to what the minister of the Niger Delta (Godswill Akpabio) said when he assumed office, that the NDDC owes over N2 trillion to contractors. Documents showed that Shell and SNEPCO alone paid in over $2bn in contribution so far to the Commission. Insiders wonder why nobody protests there to ask where the money has gone to. Instead, people keep making trouble asking why oil companies have not provided water, power, roads, schools, healthcare centres, scholarship, etc.

Understanding vansalism

Giving insight in PH, an expert from SPDC, John Okoje, said, “The situation is getting worse. They use barges, jerry cans, and trucks; and almost everybody is getting involved. As Shell is busy trying to repair and remediate one, another is busting out.

“In the past15 years, it has developed into organised crime, and all manner of interest groups are getting involved. We seem to be chasing shadows because people are now more desperate. It leads to shut-downs for assessment, etc.”

How they do it

“This is how they do it. They use hacksaws, drillers to holes, bombs to blast holes, etc. Shutdown is rampant in both the affected and non-affected areas, and you have to mobilise so many people; from the regulators, community, NGOS, etc for action.

“Thieves connect kilometres of pipes (or galvanised pipelines) to faraway vessels. You may patrol the surface but their pipes are now buried so you won’t detect it. They have developed both local and international markets. There are companies that now run on illegally refined supplies while there are buyers out there at the international market to off-take the Nigerian stolen crude. Tankers supply the local market while vessels service the international routes.

“One type of boat known as ‘Cotonou Boat’ which was used for trading along the coast has now emerged as preferred boat to run illegal crude business. It has a large hull and they pump crude into it and sail off. It is a new economy, an organised crime. There are altercations sometimes between security agents and escorts of stolen crude.

“Technical skills now abound. The people doing this are not ignorant persons. They are like flies; as you swat them, they come again from all directions. Some persons drill holes and cause damage on the big pipelines just to cause oil to start spilling. You must shut down. Some cut up the pipe to make iron works. It’s that bad.”

Pipelines of misery

Briefings indicate that Shell’s pipeline activities these days are aimed at preventing spills. The company said in the space of just seven years, they have replaced 1300 km out of 4000 km. Studies have shown that 90 per cent of spills is caused by interference. This is why most industry operators sneer at reminders that oil major should operate with international standard, saying other stakeholders should also operate at such standards. They may mean that regulators and host communities should also use global standards to run the industry and table any grievances, instead of breaking pipelines.

Shell in particular says it uses full transparency in oil spill reporting.

“It’s in our website too. People even use it against us but we will continue. It’s better that way,” it said.

Bodo cleanup

This is said to be an example of transparency. “It is now going to phase two and we have been very open and transparent about it. Some 800 youths have been lined up to work with the contractors at the rate of N4000 per day but the youths are demanding for feeding allowance which is not less than N3000 each per day. The demands are flying right and left including the chiefs.”

HYPREP (Hydrocarbon Pollution Remediation Project) is said to be up and running, explaining the $1bn fund. Shell officials said it is not easy to do $1bn worth of work but it may be easy to spend $1bn. It requires many processes. $180m was paid by Shell JV in 2018 and another $180m for 2019 is said to be ready if the cash call is made. The first $180m has not been exhausted, they said. Remember that spending $180m is not same thing as doing work worth $180m. Shell says it’s always ready but will have to wait for cash call.

Injury to environment

Another expert at the briefing, Mukaila Ojikutu, poured lamentations: “Our rivers of wealth, health and beauty are crying for mercy against human induced pollution. There are irredeemable consequences and losses. Poverty as the excuse is not true because poverty is not only in Nigeria. 11,000 bpd is equal to about 5,000 workers deprived. Surface water pollution is here, aquatic resources contamination is here, destruction of endangered species and natural habitat are the outcome with destruction of farmlands. Heavy smoke forms a canopy in the sky due to carbonated combustion causing poor visibility for planes.

“Smoke is later washed into the ground to form accumulated bio-forms. Now, strange sicknesses will appear in about 15 years’ time. We have investigated this and submitted technical report on soot. We are using our pay to buy pain in the market. Bio-accumulation is real.”

For those putting up poverty as an excuse, the experts want them to remember that the oil region has 13 percent allocation every month, three per cent from every oil producing company to being contributed to the NDDC, they have the Ministry of Niger Delta, Amnesty programme dishing funds to the people, and companies dedicating huge CSR (corporate social responsibility) budgets to the region per year. Investors and other people are said to be getting tired of the poverty excuse.

Effect on people

An insider, Trevor Akpomughe, ER manager, corporate lands management, said, “Encroaching on pipeline Right of Way (ROW) is bad. Tell people, tell the government. We use the SSSS formula as approach: security, signage, sensitisation, and surveillance. These are things we do to contain the situation.”

Igo Weli, Alice Ajie: Pondering and worrying

Shell’s external relations division is led by top experts led by two Niger Deltans, Igo Weli (GM) and Alice Ajie (deputy GM). Weli said, “Can someone invest into this kind of scenario? This is a real challenge. Shell left Gabon. So, leaving any country is not impossible. Investors are not your Nigerian government. They are business people. Toyota is setting up in Ghana but I hope we know that their target is Nigerian market. This is a matter of self pity.”

Ajie chipped in: “The GM is a man of passion and he has talked as a Niger Deltan. We are all touched by the deteriorating scenario. Remember, ask not for whom the bell tolls. It tolls for me. It is our problem. It’s a tragedy of the moment. This country is bleeding to death from criminality. It’s sad. The heart bleeds.”


Newsmen seemed gripped by the sheer force of tragedy revealed to them, not that it is new, but that the danger is looming larger every day. Some wondered if it’s proper for the nation to keep sleeping and slumbering when war seems to have been levied on its economy. Some wondered if the Nigeria National Petroleum Corporation (NNPC), and the Federal Ministry of Petroleum that collect 55 percent of oil proceeds would not consider a national weekly television (and maybe radio) programme of at least one hour each episode in all registered stations to bring in the experts to convey the message exactly the way the newsmen heard it. They said it is needed so that Nigerians can see what exactly is happening, the size and urgency of the threat and demand for action. It would help let Nigerians who still regard the vandals and illegal refiners as heroes to realise that these are enemies to the nation and enemies to everyone.