A report on oil theft called “Private Gain, Public Disaster: Social Context of Illegal Oil Bunkering and Artisanal Refining in the Niger Delta,” details how the economic sabotage could be reduced to the barest minimum, since completely wiping them out would be an impossible task, writes BISI OLANIYI in Port Harcourt
Crude oil was first discovered in commercial quantity in 1956 at Oloibiri in Ogbia Local Government Area of Bayelsa State, with Nigeria now losing huge revenue through crude oil theft/illegal bunkering, illegal refining and pipeline vandalism, leading to the pollution and degradation of the environment.
The activities of oil thieves and illegal bunkerers, made the Federal Government of Nigeria to put in place the Joint Military Task Force (JTF), now codenamed Operation Pulo (Oil) Shield, with its operatives combing the creeks of the Niger Delta, but the criminals, backed by powerful persons, are still beating the security personnel, who at times collude with the oil thieves.
A University of Port Harcourt’s (UNIPORT) Professor of Economic History, Ben Naanen, and Patrick Tolani, who is the Chief Executive of Oxford, United Kingdom-based Redeemers Relief Agency International, in their new book: “Private Gain, Public Disaster: Social Context of Illegal Oil Bunkering and Artisanal Refining in the Niger Delta,” which is the report of three years of research on oil theft in Nigeria, which they conducted, exposed illegal bunkering and refining, especially in the region rich in crude oil and gas and how they could be reduced to the barest minimum, since completely wiping them out would be an impossible task.
The presentation of the research report, which took place at the Ebitimi Banigo Auditorium of UNIPORT, was chaired by the Pro-Chancellor and Chairman of the Governing Council of the university, Gesi Asamaowei, an engineer.
The Bayelsa State’s Commissioner for Environment, Iniruo Wills; a member of the House of Representatives from Rivers State, Dr. Dakuku Peterside, who represents Andoni-Opobo/Nkoro constituency was represented by Benebo Alabraba; the Southsouth Zonal Operations Controller of the Department of Petroleum Resources (DPR), Mrs. Onyebuchi Sibeudu, and many eminent personalities were also in attendance.
Asamaowei, in his remarks, urged the Federal Government and the security agencies to frontally tackle illegal bunkering and refining of crude oil in the Niger Delta.
The UNIPORT’s Pro-Chancellor also stressed that more attention should be focused on agriculture, rather that wholly depending on crude oil, which is non-renewable, describing the 122-page book as well-researched.
Naanen, who is also a Trustee of the Port Harcourt, Rivers State-based Niger Delta Environment and Relief Foundation (NIDEREF), while speaking on the occasion, disclosed that the project started in 2011 and was almost abandoned, in view of the cost implication, while the research resumed in 2013.
He noted that the research focused on Rivers, Bayelsa and Delta States, notorious for illegal bunkering and refining of crude oil, with Akwa Ibom State not considered, in spite of currently having the highest production of crude oil, but offshore, while the illegal activities take place onshore.
Naanen, the pioneer General Secretary of the Movement for the Survival of the Ogoni People (MOSOP) and the former Chairman of the MOSOP Provisional Council, also stated that the research was risky, in view of the involvement of militants and cultists in the theft of crude oil and illegally refining it or sold to international buyers.
The UNIPORT don (Naanen) said: “Nigeria loses more crude oil than any other country in the world – more than seven per cent of daily production. The Federal Government of Nigeria and the oil companies suffer huge financial losses, an estimated $6 billion per annum. Oil theft especially victimises the poor.
“To reduce illegal bunkering and illegal refining, the socio-economic origin of oil theft must be addressed through a decisive attack on poverty, particularly through job creation, targeted at the youths, who are involved in oil theft.
“The pipelines should be protected through community-based surveillance. A special judicial mechanism should be established to expedite prosecution of oil theft cases.”
Naanen, an indigene of Bodo-Ogoni in Gokana Local Government Area of Rivers State, also lamented that Nigeria’s economy is dangerously dependent on crude oil, while stating that the consequences of oil theft are grave and widespread.
Nigeria has total length of crude oil pipelines of 4,350 kilometres, which must be protected against oil theft and vandalism.
The first Port Harcourt refinery, with capacity of 60,000 barrels per day (bpd), was inaugurated in 1965, while the second refinery in Port Harcourt has the capacity of 150,000 bpd.
The Warri refinery in Delta state, inaugurated in 1978, has capacity of 125,000 bpd, while the refinery in Kaduna, which was put in place in 1980, has capacity of 110,000 bpd and it is linked to Niger Delta oil fields by 600 kilometres of pipelines, but designed to process imported heavy crude oil.
Only 20 per cent of the total crude oil allocated to the four refineries for domestic consumption is utilised, making Nigeria to depend on imported petroleum products and artisanal refining to fill the gap.
In 2012, according to the report, crude oil contributed 96.8 per cent of Nigeria’s total export earnings, 60.5 per cent of gross government receipts and 37 per cent of the Gross Domestic Product (GDP), yet the country loses to crude oil theft, more than $6 billion worth of its crude oil production or 6.25 per cent of its total export value.
Crude oil, the strategic backbone of the Nigerian economy, is what large scale oil thieves target at disconnecting, with the nation bleeding painfully and tragically from the pipelines, with the country appearing helpless and unable to curtail the danger.There does not seem to be adequate appreciation of the danger, not even among the top oil bureaucrats at the Federal Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation (NNPC) and the Department of Petroleum Resources (DPR), among other stakeholders.
Crude oil theft has international dimension, while artisanal refining locally also calls for concern.
The theft of crude oil or illegal bunkering in national parlance and its corollary – artisanal refining – are fundamentally social problems.
An artisanal refining unit is a simplified petroleum distillation unit, which is conceptualised like a crude school science project. It can also be likened to the production of the local dry gin, commonly called “Ogogoro.”
The aim of artisanal refining is to boil barrels of stolen crude oil with naked fire in a metal constructed sealed tank. The crude evaporates and passes through two parallel pipes, connected to the tank through a wooden constructed cooling water bath. The refined product then drips out slowly into a container at the other end, with different products emerging at different intervals.
Delta State has the highest number of artisanal refining sites, according to the researchers, and they can be easily seen in creeks, forests and villages.
It was also revealed that it takes about three days to get up to five drums of refined petroleum products. After the refining processes, the products are filled into rubber and metal drums for transloading and storage, from where they are transported to their final destinations.
Since most of the artisanal refining sites are located near the creeks, the refined products are usually transported through the waterways to the neighbouring towns and villages, while transportation of large volume of crude oil to mother ships offshore is done by the use of barges.
The barges and Cotonou boats are usually anchored within the creeks, where they are filled with the required volume of crude oil, before they are transported and transferred into the mother ship, which can be in the coastal waters of Ghana or Benin Republic.
It is unlikely to visit jetties within any of the communities involved in illegal bunkering, without seeing piles of drums and rubber containers used for transporting the petroleum products.
Most of the locally-produced petroleum products (through artisanal refining) are transported to the cities, where they are probably mixed with the regular products and sold in conventional filling stations. The dominant product is diesel.
Since the tolerance of diesel engines in high, it is usually not easy to detect locally-refined diesel from the regular product.
In Port Harcourt, the researchers observed that the main point of entry for the locally-refined products is the Akpajo Sandfill Jetty, stressing that most of the refined products coming from Bodo-Ogoni in Gokana LGA and the neighbouring communities are brought to the Akpajo Sandfill jetty, where buyers from the Port Harcourt city and other parts of Nigeria assemble to buy and resell to members of the public.
A major driving force of the thriving illegal bunkering business in Nigeria is market demand. There is a huge local and international market for the crude oil stolen from Nigeria.
While the stolen crude oil is sold in countries within the West African sub-region and Europe, the locally-refined petroleum products are mostly sold in the local villages and towns, but now getting to Onitsha in Anambra State and Lagos.
The researchers disclosed that the weekly boat that sails from Ekeremor in Bayelsa State to Onitsha, usually carries illegally-refined petroleum products, while a drum of locally-refined diesel goes for N7,000 in the creeks and as much as N12,000 to N15,000 in the cities.
The involvement of women in the whole process of illegal bunkering and artisanal refining is more or less secondary, because they are generally not involved in obtaining crude oil or in the refining process.
Women, however, play pivotal roles in the transportation and marketing of the refined products, as well as cooking and provision of sexual services for the predominantly male operators.
Children, mostly orphans and aged between 10 and 13, also work in the illegal bunkering sites and run errands at the camps, while absentee owners of illegal refining sites always appoint managers to run the operations.
The JTF estimated in 2010 that there were 1,500 illegal refining operations in the region, with Bodo Creeks in Gokana LGA harbouring over 1,000 youths, who were directly involved in illegal refining, which might have been higher now.
The JTF claimed that in 2012, it destroyed 4,349 illegal refining units. Illegal bunkering business represents a substantial informal economy, whose value has never been captured, since it is regarded as illegal.
The study reveals that there are three main sets of actors involved in illegal bunkering: those who compromise the pipelines by breaking and installing taps on them to procure crude oil for sale; those who buy the crude oil for export and the local operators who process stolen crude oil into low quality fuels for the domestic market, with the three sets of actors referred to as oil thieves or illegal bunkerers.
Rivers, Bayelsa and Delta States account for 80 per cent of Nigeria’s onshore oil production and a predominant proportion of crude oil theft.
The researchers held consultations with the people and leaders of Niger Delta communities, while over 200 persons directly connected to the illegal siphoning of crude oil and artisanal were interviewed, while top officials of the leading International Oil Companies (IOCs), NNPC, the regulatory agencies, the JTF, police, navy and other security agencies in the Niger Delta and Abuja were also spoken with.
Naanen and Tolani also interviewed oil dealers in Europe, especially in Rotterdam, Aberdeen and London, as well as the people involved in the transportation and marketing of illegally-refined petroleum products in the Niger Delta and end users of the products, while direct observations of the refining processes were also made at many sites.
Urine samples were taken by the researchers from the youths directly involved in refining and copies of questionnaire were also given to them to assess their health status, while fish samples were collected from two heavily-impacted sites in Rivers and Bayelsa states and one less impacted site, to test the level of contamination of sea food and the potential effects on human consumers.
The samples were analysed at accredited laboratories in Nigeria and the results interpreted by an independent expert.
The researchers said: “Illegal bunkering and artisanal refining are rooted in the grim economic and social circumstances of the Niger Delta. Poverty is endemic and unemployment is high. Nigeria loses $6 billion to oil theft annually. 28,000 people receive incomes directly or directly from illegal bunkering.
“The illegal bunkering economy has an annual value of $9 billion. Those who export 80 per cent of the stolen crude oil are not poor people. They are connected to the political and military establishments, as well as the oil bureaucracy.
“Concerted international action to check the Nigerian crude oil theft is not feasible, because the stolen crude oil represents a minor fraction of international crude oil traffic and does not present any credible threat to the world’s economy and international security.”
The researchers said: “The notion that individuals and the people of local communities can engage in self help, by tampering with strategic national assets, such as the oil facilities, simply because they are located on their land, is fundamentally flawed.
“There are also those who tend to believe that coming from the Niger Delta is all it takes to live a comfortable life, because the region produces crude oil. What the youths need is the opportunity to develop their potential and grow, not pampering. The state and the oil companies have to make a creative use of the resources of the region to create the opportunity.”
While giving further insight into the menace of crude oil theft, Naanen and Tolani pointed out that some people have probably not thought about, in respect of the relationship between illegal bunkering and poverty is that persons who steal the larger volume of the crude oil for export, are not poor people.
They said: “They are driven primarily by the imperative of capital accumulation. These are operators who can muster the financial capital necessary for a high risk illegal international business, as well as the political capital to protect the business. These are not ordinary men.
“They are connected to the apex of Nigerian political, military and business establishment. They are known to the people who should know them, as they are not ghosts. Yet, there has been a systematic official refusal to reveal the identities of these supposedly mysterious oil barons and make them face the law.
“This refusal speaks loud about the official identities of most of these illegal bunkering kingpins. Nigeria loses about 145,000 barrels of crude oil per day to oil theft-related incidents, which is more than the production of many individual oil exporting nations.”
The researchers also noted that politically, the capture of oil revenues had become the driving force for political contestations in Nigeria, with illegal bunkering aiding the process, while Nigeria is passing under the control of persons with varying measures of legal and illegal interest in the oil and gas industry, a political trend they described as “petrocracy.”
In combating illegal bunkering, they stressed that the Federal Government and the IOCs had tried many measures, ranging from criminalisation, advocacy and pipeline surveillance to the deployment of JTF personnel, which they said had not yielded the tangible results, in view of lack of implementation.
On the high level political and military structures, three categories of operators were identified in the illegal bunkering and artisanal refining business: the tapping or bunkering point owners, who drill holes in the pipes and siphon crude oil for sale; the big players who buy the stolen crude oil from the bunkering point owners and export it and the artisanal refiners who purchase the stolen crude oil or occasionally steal it directly and process it into low quality fuels for the local market in the Niger Delta region and beyond.
Artisanal refining is now undergoing structural changes, featuring concentration and centralisation, making possible oil theft on an industrial scale. The huge storage steel tanks being constructed and other requirements, including security insurance in case of arrest, require considerable starter capital of about N1 million.
A major implication of this change is that many of the small operators of the past now work for the powerful “big boys” and financiers, who can muster the capital requirement and necessary law enforcement contacts for the protection of the business.
Workers and other people with legitimate livelihoods are investing in the illegal businesses of artisanal refining and bunkering, in order to provide for themselves an additional and more rewarding income stream.
The industry is also undergoing technical innovations, while expanding its commodity chain. Well paid specialists now drill the holes and install valves on them for siphoning crude oil from pipelines.
In Bodo-Ogoni, the researchers gathered that the fee for drilling a tapping point is between N250,000 and N300,000, part of which goes to the operatives of the JTF, with the changes giving the illegal bunkering and refining business the grounding for sustainability.
It was also confirmed that the nationals who are mostly involved in moving stolen Nigerian crude oil are mainly non-English speaking, while it is common to sight Lebanese, Cameroonians, Pilipino, Romanians, Thais and Ghanaians, with the recipient refineries of crude oil stolen from Nigeria being in the United States of America, Brazil and the Gulf of Guinea.
Among the many initiatives recommended by the researchers to mitigate illegal bunkering and refining, three specific areas that require immediate action were emphasised, including addressing the socio-economic foundation of illegal bunkering, through the attack on poverty and job creation targeted at the youths, who must be made to come out of the creeks.
Also imperative is pipeline protection, through community-based surveillance programme, which will replace the present private contractor surveillance system, since the ineffectiveness of private contractors, according to the researchers, is glaring, with some of them implicated in the theft of crude oil.
They noted that with community-based surveillance, the people of the various Niger Delta communities would take over the protection of the pipelines, while in exchange for the role, they would receive development support from the IOCs, through the Global Memoranda of Understanding (GMoU).
The third approach is to ensure speedy prosecution of oil theft cases, by setting up a special judicial mechanism, exemplified by special courts.
Naanen and Tolani said: “Nigeria has no excuse importing refined petroleum products. The country should control the petroleum products’ market in the ECOWAS (Economic Community of West African States) sub-region, as a way of diversifying the economy, creating quality jobs and earning foreign exchange.
“There should be policy reform to promote cottage/modular refineries that will contribute to addressing the local supply disequilibrium, build local capacity in the downstream sector and empower the local communities through job creation. Emphasis must also be placed on good governance.
“The ten per cent community equity, recommended in the Petroleum Industry Bill (PIB), will create a sense of belonging in the Niger Delta. However, the management of the fund will be problematic. Effective and agreeable management mechanism should be designed. Otherwise, the fund will fuel crisis in the communities.”
The Federal Government of Nigeria must show strong political will to tackle the menace of illegal bunkering and artisanal refining, in order to move the nation forward.
