Nigeria, naval sources said at the weekend, is losing about N250 billion monthly to maritime crimes, such as piracy, bunkering, smuggling, poaching, oil theft, human trafficking and other transnational crimes. In a year, experts say N3 trillion is lost to economic sabotage. Assistant Editor (News) OLUKOREDE YISHAU probes how this huge cash is lost.
Till this day, the village and the villagers are still counting their losses. For 48 hours, the flames refused to go away. Not far away from the scene in Bodo village, Rivers State, illegally-installed equipment that would allow huge amounts of oil to be siphoned overseas through large barges in the sea had leaked crude oil and was inflamed by yet-to-be-identified source of fire. 6,000 barrels of crude oil found their way into the creeks and waterways. Many people died.
Industrial pipelines capable of transporting thousands of barrels of oil a day have been found in the swamps in the Niger Delta. With this, thousands upon thousands of crude oil barrels are stolen through the waterways. A Catholic priest, identified simply as Father Obi, in an interview with The Guardian of London, provided an insight into how this maritime crime works.
Obi said: “From the moment I got to the scene (the next day) I was suspicious. The scene had been hurriedly deserted. Shell must have known what was going on. The military must have known. Everyone knew there was complicity. I am personally sure that Shell knew that its oil was being stolen. If the managers did not know, then those who they put in charge (of the operation) seemed to know. This (theft) could not have happened without the collusion of the authorities and the military.”
He raised posers bothering on complicity: “Why was a massive barge able to hold 10,000 barrels of oil being loaded at 2am with crude? Why did another catch fire? Why were excavators there? Why were local observers arrested the next day, their cameras confiscated and memory cards destroyed? Were the thieves being protected by the military? Was the company paying workers to clean up oil spilled in the process of theft they themselves were engaged in? Did Shell know its oil was being stolen from under its nose?”
Managing Director of Shell Mutiu Sunmonu, said: “Unknown persons continued to reconnect illegal bunkering hoses at Bodo West even as our pipeline team was removing crude theft points.”
Shell spokesperson Philip Mshelbila said: “One has to understand there is this accusation that the oil industry employees are behind this, but there are thousands of people who have the skills who may have been working with the industry over the years. These people are outside and some of them may be for hire. There is a sophisticated organisation, clearly it is not just local. There has to be a wide network.” The Bodo incident is significant because it shows how maritime crime, especially oil theft, has reached an industrial scale, involving commodity traders, international criminals and a whole network of people.
President Goodluck Jonathan said 300,000-400,000 barrels of oil per day is lost through maritime crime. This represents more than 10 per cent of the country’s production. The country and oil companies, according to the Presidency, lose close to N250 million a month to this crime. This amount is just 10 per cent of what is lost to all the facets of maritime crime.
Presidential aide Ken Saro-Wiwa jnr said: “The figures are huge. (Oil theft) could destabilise Nigeria. The business is worth billions of dollars a year. It is on an industrial scale, and involves commodity traders, international (criminals) and a whole network of people. There are some allegations that the oil companies themselves are implicated.”
Mshelbila added: “We (Shell) are losing 40-60,000 barrels of oil a day. This is just what we know is stolen from the trunk lines. We have to shut down lines, so, taken together it’s probably 300,000-400,000 barrels a day. We are seeing more illegal connections, more frequent shutdowns than one year ago.”
A report by Chatham House indicates that oil is being stolen not just from pipelines but from tank farms, export terminals, refinery storage tanks, jetties, ports, pipelines, and wellheads.
The report said: “Officials and private actors disguise theft through manipulation of meters and shipping documents. Proceeds are laundered through world financial centres and used to buy assets in and outside Nigeria, polluting markets and financial institutions overseas, and creating reputational, political and legal hazards.”
The report established that much of the stolen oil is exported to foreign refineries or storage facilities, in the U.S., Brazil, China, Singapore, Thailand, Indonesia and the Balkans. The proceeds, said the report, are laundered through banks in Dubai, Indonesia, India, Singapore, the US, the UK, and Switzerland.
Not about oil theft alone
The maritime crime industry is not limited to oil theft. Smuggling, piracy and bunkering are top on the list of the crimes described by a senior naval officer, Air Vice-Marshal Eko Osim, as economic sabotage perpetrated through the water. Air Vice-Marshal Osim, at the weekend, said the country loses N250 billion monthly to maritime crime. This comes to N3 trillion annually, far in excess of what the country spends on education and health, which are in dire strait.
Michael Frodl, who runs the US-based C-Level maritime risks consultancy, said: “In 10 days, a Nigerian pirate doing siphoning beyond the territorial waters of Nigeria can make more money than Somalian pirates can make in 10 months of holding hostages.”
In recent years, the country’s maritime environment has been increasingly threatened transnational crimes, which have been encouraged by insufficient patrol ship to fight maritime crime, illegal ship to ship transfer, insufficient platforms and shortfall in naval manpower. Worse still, there is lack of information gathering and sharing in the fight against maritime crime between the country’s security agencies. All these challenges have helped maritime criminals to devise various means to beat the law.
The U.S. and other western countries have helped the Navy with training and equipment, but the results are yet to be seen.
The seriousness of the situation becomes more glaring when statistics on it are considered. In 2010, there were at least 45 cases of sea piracy; 2011 witnessed 64 cases. The International Maritime Bureau, a specialised division of the International Chamber of Commerce, reports that 58 cases last year. As at last month, no fewer than 32 vessels had been attacked. These figures, however, do not cover unreported cases.
The President of the Nigerian Trawlers Association, Mr. Joseph Overo, said the industrial fishing sub-sector in the country has lost over N119 billion in the last eight years in fishing revenue to maritime crime.
Statistics released by the Nigerian Maritime Administration and Safety Agency (NIMASA), the country’s apex maritime regulatory agency, also shows that between February 2010 and February 2011 the country lost over N445 million to the activities of sea robbers.
The sophistication of maritime crime in the country has seen most attacks in the West African sub-region taking place in the Niger Delta, according to the United Nations Office on Drugs and Crime (UNODC). A report shows that “pirate attacks off Nigeria’s coast have jumped by a third this year as ships passing through West Africa’s Gulf of Guinea, a major commodities route, have increasingly come under threat from gangs wanting to snatch cargoes and crews.”
Significantly, pirates in the Niger Delta steal one commodity majorly: oil.
Last year, the increase in pirate attacks in West Africa made the London-based Lloyd’s Market Association, an umbrella group of maritime insurers, to list Nigeria and nearby waters as risky. The risky status has jacked up insurance costs and the result was a significant decrease in maritime traffic in the region. The decrease, says UNODC, affected the livelihoods of the country’s citizens, by increasing the cost of imports and decreasing the competitiveness of exports.
The porous nature of the maritime environment has made Shell plan to sell off four of its onshore oil blocks, which have witnessed constant theft. Other oil majors too have either sold some troubled oil blocks or are in the process of selling them.
Interestingly, this theft has encouraged shutting down of pipelines, which, in turn, has made the country produce about 400,000 barrels a day below its capacity of 2.5 million barrels a day, according to The Economist.
The Nuhu Ridabu Presidential Panel Report shows that over the last decade thieves had stolen between 6 per cent and 30 per cent of the country’s oil production. This tallies with the position canvassed by Martin Murphy, a professor at Georgetown University in Washington D.C. and a senior fellow at the Atlantic Council of the United States, a policy think tank, in his article “Petro-Piracy: Oil and Troubled Waters,” published in Orbis for the Foreign Policy Research Institute. He said: “Illegal bunkering (filling ships with fuel) is enormously profitable” in Nigeria, adding: “The scale of losses is staggering—more than $100 billion worth of oil has gone missing since 1960.”
Figures from the oil majors
Shell, in a document, paints a scary picture of maritime crime as it concerns their operations. The document says: “The unrest has turned into a worrying criminal movement, which feeds on massive thefts of crude oil. Heavily armed and well-organised groups attack oil and gas facilities in the delta, shut down operations, kidnap staff and sabotage pipelines.
“Barges take stolen oil to tankers waiting offshore for export. There is also a massive illegal refining business based on stolen crude oil. All these have reduced the amount of oil SPDC is producing, created environmental and social problems from oil spills and reduced government revenue that could be used to develop infrastructure and services.”
The oil major said accurately determining the volume of oil lost to the oil thieves would be an exercise in futility because of the country’s challenges with data collection.
It said: “How much oil is stolen is difficult to estimate and varies according to the source. In 2010/2011, there were 237 reported incidents of crude oil theft from SPDC facilities that involved vandalism, spills, fire or arrests. There were 187 in 2009/2010.
“The effects of this industrial scale theft are devastating for both the people and the environment. This is evident from the thick smoke from illegal refineries that line the shore. The land, the shorelines and the water are heavily polluted with oil as a result of these activities. The scale of these operations is not hidden. The perpetrators of these crimes have set up barge building yards and storage depots for the stolen crude.This is not petty theft undertaken by desperate individuals struggling to make a living. These are well-funded crimes that may be connected with an international syndicate.”
For the Nigeria Agip Oil Company (NAOC), it estimates that it loses an average of one million barrels of crude oil to theft monthly. The Managing Director of NAOC, Ciro Antonio Pagano, told the House of Representatives Committee on Petroleum (Upstream) that this translates to a loss of N16 billion monthly.
Bleeding the economy
For the Director-General of NIMASA, Mr. Patrick Akpobolokemi, what is obtained in the Nigerian waters is sea robbery not piracy in the true sense of the word.
He said: “What has come to be known as Nigeria piracy is the hijacking of ships by hoodlums who attack their targets, mainly tanker vessels with force, divert the vessel to a hidden place in the sea, siphon its products into their waiting vessel and then let off the hijacked vessel.”
He said the criminals have extended their tentacles to the waters of Benin, Togo and Liberia, arguing that they started operating in the Niger Delta area, Lagos and Cameroun waters, making the IMB to rate Nigeria as second most dangerous in the world, after the failed state of Somalia. And the economy is bleeding for this.
The bleeding also extends to the ordinary consumers. Maritime crime, which has engendered insurance surcharge on Nigeria-bound cargo, has translated to high cost of goods to final consumers. Maritime experts also believe that another downside of this economic sabotage is that it has not encouraged Foreign Direct Investment (FDI) into the country’s maritime sector. But, what has made it tick?
What aids maritime
crime/way out
Marginalisation of oil-bearing communities and corruption are two factors that have been identified as aiding maritime crime.
Dr. Christian Bueger, a Cardiff University researcher and editor of Piracy-Studies.org, an online research portal, in an interview with Africa Renewal, said: “Piracy tends to be conducted or supported by marginalised communities that have not been participating in economic development.”
Chatham House, a British research group, reported in September that “corruption and fraud are rampant in the country’s oil sector. Lines between legal and illegal supplies of Nigerian oil can be blurry.”
Also, maritime crime is aided by the fact that affected countries hardly share information on what’s happening on their coastlines. Little, said experts, is also done in the area of joint training activities to develop procedures and learn how to use technology. In a country like Nigeria, experts say there are no strong legislations to prosecute criminals, while money for capacity building is meager compared to the challenge at hand.
The country is yet to act on the recommendation of the UN Security Council urging a reinforcement of domestic legislation and development of a comprehensive regional counter-piracy framework.
The maritime component of the Economic Community for West African States (ECOWAS treaty of 1993 intended to harmonise all maritime issues across the region is yet to have the desired effect.
Not a few are of the opinion that the Somalia approach, which saw the UN allowing international collaboration, may be inevitable to stop the economic sabotage in Nigeria
The Chairman of Sea and Cargo Logistics Limited, Mr. Raphael Christopher, believes foreign ships should be checked if maritime crime is to be curbed. He said many foreign ships on the country’s territorial waters engage in illegal businesses, adding that the Federal Government loses several hundreds of millions of dollars to these illegalities on the country’s waters.
Experts also believe that the country must quickly domesticate international laws, guidelines, and conventions. A bill to that effect is before the National Assembly. A Lagos-based lawyer and consultant to the government on the bill, Mr. Mike Igbokwe (SAN), said the law would help Nigeria to domesticate all international conventions and clip the wings of maritime criminals.
He said: “There has been a report of hijacking of vessels, cargo theft with violence on crews by robbers within the Nigerian territorial waters and off Nigerian waters. Some of the characteristics of these actions have been theft of crude oil. Recently, 23 sailors in Cyprus flagged ship were hijacked 63 nautical miles off Cotonou.
“Nigeria is now being categorised the same as Somalia as a result of these incidents. But the incident in Nigeria, even in the Gulf of Guinea, is not as high as that of Somalia where vessels are being hijacked for ransom. The Nigerian maritime stakeholders are worried at the increasing trend, as businesses are being interrupted, especially fishing trawlers.”
The treaties to be domesticated include the UN Convention on the Law of the Sea relating to piracy and the Convention for the Suppression of Unlawful Act against Safety of Maritime Navigation of 1988.
