Nigeria’s Oil Thieves Roar Back as Militants Kept in Check

Credit: George Osodi/Bloomberg.

Just as Nigeria gets to grips with militants who brought the nation’s oil industry to its knees a few years ago, another group of longstanding foes are slowly making a comeback: thieves.

Saboteurs including thieves caused an 80% increase in the number of spills in 2018, Royal Dutch Shell, the largest international producer in the West African country, said in a report last month. By contrast, there have been no militant-related halts to operations since 2016.

The disruptions underscore how hard it will be for Nigeria to fully rid itself of security challenges that have plagued the nation for decades. Overseas crude shipments represented by far the nation’s largest source of export income, with about $43.6 billion of sales last year, according to ITC Trade Map, a venture between the World Trade Organization and the United Nations.

“Oil theft is a severe drain on Nigeria’s revenue,” said Cheta Nwanze, the head of research at SBM Intelligence, a Lagos-based consultant. “The losses to theft could easily fund Nigeria’s budget deficit.”

Eight Times

On one level, theft is probably a more palatable option for Nigeria and the companies operating there than attacks by militants. About 100,000 B/D are being taken out of pipelines, whereas militancy halted at least eight times that amount at one stage 3 years ago.

The increase reflects a belief among local communities that multinationals don’t really own the barrels in the first place, according to Ledum Mitee, a lawyer and minority rights activist.

“They believe the oil is theirs and the government is the thief,” he said. “People now realize that instead of just cutting pipelines to spite the government, they can make money out of it.”

Big Employer

It’s also akin to an industry. Theft employs at least 500,000 people in the country, according to Mitee, former head of the Nigeria Extractive Industries Transparency Initiative.

Much of the stolen crude is processed in tiny, makeshift refineries comprising hundreds of cauldrons, each of which can hold as much as 150 bbl of oil, according to Nwanze. The world’s biggest refineries handle more than 1.2 million bbl each day.

Unlike politically driven militancy, where fighters say they represent impoverished people in the Niger Delta region, stealing crude is considered a less risky option for those involved.

Multiple incidents of force majeure, a legal measure that allows companies to forgo their contractual supply obligations, have happened this year in Nigeria—even if the precise causes often remain unclear.

Read the full story here.

ADVERTISEMENT


SUBSCRIBE

Don't miss our latest HSE content, delivered to your inbox twice monthly. Sign up for the HSE Now newsletter.  If you are not logged in, you will receive a confirmation email that you will need to click on to confirm you want to receive the newsletter.

 

UPCOMING HSE EVENTS

 

 

HSE Now is a source for news and technical information affecting the health, safety, security, environment, and social responsibility discipline of the upstream oil and gas industry.