The Criminals Undercutting Nigeria’s Oil Industry

Earlier this month 100 people died because of an explosion at an illegal refinery in Nigeria, a tragic event that highlighted a major problem facing the country’s government.

Illegal oil bunkering has long been a problem in Nigeria, with estimates suggesting roughly 10 percent of the country’s daily oil output is lost due to vandalism and theft.

While the government has moved to shut down as many illegal refineries as they can, critics claim that they need to focus on providing alternatives for those people who have been pushed to steal oil.

Illegal refineries have been plaguing Nigeria for years. The government has repeatedly tried to curb clandestine refining activities and has reduced the number of operations substantially in recent years. But several clandestine refineries still exist, presenting a clear danger to those working informally in the oil industry.

Nigeria drew global attention this month as 100 people died because of an explosion at an illegal refinery in the Abaezi forest in the southeast of the country. In addition, many of the vehicles waiting to purchase the fuel were burnt. This is just the most recent of incidents. In October, around 25 people were killed at a different illegal refinery in the region.

Due to high unemployment and poverty rates across the Niger Delta, illegal refining activities have become commonplace. Locals tap the crude oil from pipelines of oil majors running through the region to refine and sell. This has had the twofold impact of causing many deaths, due to the dangerous nature of the activities, and polluting the environment across the region. The crude is highly flammable, meaning the slightest spark can cause a huge explosion and widespread devastation.

The scale of the issue is clear, with Nigeria losing approximately 200,000 bpd, or 10 percent of its daily output, due to vandalism and the tapping of oil pipelines. In 2019, it is estimated that Nigeria lost around 40 million barrels of crude, equivalent to around $2.77 billion.

In addition to the structural problems in the country, many locals are simply fed up with international companies coming in and taking national resources, while they see little of the profits being reinvested in the region. Many believe that if Big Oil comes in and pollutes the land, then they should be able to do the same, earning revenue from Nigeria’s natural resources.

Illegal ‘oil bunkering’, as it is known, is viewed as Nigeria’s most profitable private business. The crude being siphoned from pipelines can earn locals $15 to $20 per barrel. In addition, there are few costs involved as the government and oil majors have already invested in largescale oil infrastructure across the Niger Delta.

Nigeria’s oil industry has existed for over 60 years, with international energy firms investing heavily in developing the sector over that time. It currently has 18 operational pipelines and is the world’s 11th biggest producer. The petroleum industry contributes around 9 percent of Nigeria’s GDP. With an industry this big, it’s no wonder that communities living in poverty are dissatisfied with the reinvestment seen in the country over the last decades, leading them to take the situation into their own hands. The Nigerian government has been working hard to curb this major criminal industry. Earlier this year, the government attempted to curb the trend of illegal refining, particularly as the impact of the activities on air pollution is worsening across the Rivers state region. The government succeeded in halting operations at 128 of 142 illegal refining locations identified by destroying the sites. The next month, reports suggested that the military had deactivated 30 more sites across the Rivers, Bayelsa, Delta and Abia States.

It's clear the government is cracking down on illegal operations, but it doesn’t seem to be enough to put a stop to these types of activities. With such widespread poverty, many simply move from one illegal refinery to the next, well aware that they can make a decent living from tapping oil pipelines despite the high risk involved.

Some environmental groups are now pressuring the government to open small-scale refineries to create jobs and encourage locals to find formal work in the oil industry. They believe that simply destroying illegal refineries will not put an end to illegal operations without replacing them with better working opportunities.

At the beginning of the year, Governor Nyesom Wike provided around $1.1 million in funding to support 23 local governments in fighting ‘oil bunkering’. He suggested that destroying the sites was the only way to stop operations. But little effort has been made to create new opportunities across the oil regions.

While Nigeria presents perhaps the worst case of oil bunkering, similar issues are faced by several governments around the world. In Mexico, for example, oil theft has been on the rise as oil prices have increased. Oil theft or huachicoleo supports violent crime in Mexico as it is often driven by criminal gangs due to the lucrative nature of the activities. The situation led President Andrés Manuel López Obrador to make curbing huachicoleo a core pledge of his 2018 election campaign. Meanwhile, oil theft in Colombia increased last year as supplies of Venezuelan gasoline were halted.

Nigeria has the most widespread activities of illegal oil refining worldwide, causing the government to lose billions of dollars every year as well as wreaking havoc on the environment. While the government attempts to tackle the crime, the failure to reinvest oil revenues into the Niger Delta region or offer formal job opportunities continues to encourage locals to seek informal work in illegal refining, no matter the cost.

By Felicity Bradstock

Oilprice.com

Related stories: Explosion at Nigerian illegal oil refinery kills more than 100

Nigeria number 1 in crude oil theft

Video - Black Snow: Nigeria’s Oil Catastrophe

 

Oil theft known as “bunkering” and the refining that comes with it are sickening and killing Nigerians living amid the pollution. It’s also creating one of the world's most severe ecological disasters.

Related stories: Video - Niger Delta Greenland Justice Mandate claims responsibility

Video - Shell due in court over damages the oil company has caused in Nigeria

 

 

Explosion at Nigerian oil vessel sparks fears of major spill

A vessel with a storage capacity of two million barrels of oil has exploded off the coast of southern Nigeria’s Delta state, raising fears of an environmental disaster and concerns about the fate of its crew.

Shebah Exploration & Production Company Ltd (SEPCOL) said on Thursday that flames had engulfed the Trinity Spirit following the blast a day earlier. The floating production, storage and offloading vessel can process up to 22,000 barrels of oil a day, according to the operator’s website.

The vessel was located at the Ukpokiti Terminal, along the coast of the oil-rich Niger Delta region.

Joe Sunday, an assistant boat driver, said he was in one of the two speedboats out at sea on Wednesday morning to pick some crew who were due to take time off from work but could not reach the vessel because it was consumed by fire.

“We drove round to see if we could see people but we did not see anybody and the fire was still blazing,” Sunday told Reuters news agency at a port in Warri.

Tiby Tea, chairman of Maritime Union for Nigerian Ports Authority in Warri, confirmed that two boats sent out to the vessel could not find anyone.

“At this time there are no reported fatalities but we can confirm that there were 10 crewmen on board the vessel prior to the incident,” SEPCOL Chief Executive Ikemefuna Okafor said in a statement.

An investigation was under way to determine the cause of the accident, he said, adding that the company was working to “contain the situation”.
 

Oil spill fears

Nigeria’s regulatory agency for upstream operations, NUPRC, said the explosion had led to a “major fire” and that it had “commenced investigations into the incident”.

“The commission will take necessary measures to ensure that all safety and environmental measures … to safeguard lives and the environment are put in place,” spokesman Paul Osu said.

Idris Musa, director of Nigeria’s National Oil Spill Detection and Response Agency (NOSDRA), told the AFP news agency they were also on site responding to the incident.

Environmental activists were, however, worried about the potential impact.

“There will definitely be a spill,” said Mike Karikpo of the local NGO, Environmental Rights Action/Friends of the Earth Nigeria.

“This is a facility that handles over 20,000 barrels per day … the oil will reach the surrounding communities.”


Since the 1970s, the oil-rich Niger Delta region has accounted for an overwhelming majority of Nigeria’s earnings.

But the region continues to suffer the multiplier effect of decades of environmental degradation, which has eroded livelihoods and deprived residents of basic essentials such as access to clean drinking water. The area’s mangroves and swamps have become uninhabitable for many species and the average human life expectancy is also 10 years lower in the Delta than elsewhere in Nigeria.

Although Nigeria is Africa’s largest crude producer, operating costs are high due to frequent accidents and widespread insecurity, although most accidents take place on land.

There have also been attacks on oil installations in the past, piercing pipelines to take crude oil and increasing kidnappings to obtain a ransom.

Nigerian pirates are also active across the wider and resource-rich Gulf of Guinea region, disrupting shipping in a vast area stretching from Senegal to Angola.

Al Jazeera

Video - Nigeria gas flaring: Government plans to pass bill to tackle issue

For more than half a century, the practice of gas flaring - the burning of gas produced as a by-product of oil extraction - has affected the lives of thousands of people in Nigeria. Now the government wants to pass a bill to tackle the issue and raise new revenue from the wasted natural gas.

Related stories: Video - Shell due in court over damages the oil company has caused in Nigeria

Video - Oil theft in Nigeria on the rise

Video - Nigeria oil union suspends 3 day strike over job cuts at oil companies

Oil spills in Nigeria could potentially kill 16,000 babies a year

China invests $16 billion in oil sector in Nigeria

Video - Four Nigerian farmers sued Shell for the oil pollution

 

 Dutch court orders oil giant Shell to pay Nigeria farmers for oil spills in Niger delta.

 Related stories: Oil spills in Nigeria could potentially kill 16,000 babies a year

China invests $16 billion in oil sector in Nigeria

New inquiry on oil spills in Nigeria launched

Africa's richest man Aliko Dangote is building the world's largest refinery in Nigeria

 

Nigeria Shell employees causing oil leaks for profit: Dutch TV

Nigerian employees of the Anglo-Dutch oil company Shell ordered the deliberate vandalisation of oil pipelines for personal gain, a documentary in the Netherlands has reported.

Dutch television documentary programme Zembla, together with Dutch environmentalist organisation Milieudefensie, reported in a programme to be aired on Thursday that “multiple witnesses declared that SPDC, a subsidiary of Shell, caused the oil leaks”.

“According to sources, Shell employees profit from these intentional oil leaks by pocketing money from clean up budgets,” Zembla said in a press release summarising an 18-month investigation of various leaks between 2010 and the present day.

Zembla added the SPDC, along with the Dutch embassy in Nigeria, were aware of the accusations but had failed to address them.

Oil spills in Nigeria have a decades-long history, making companies like Shell, whose headquarters is based in the Netherlands, a frequent target of criticism and protest from human rights and environmental groups.

Millions of litres of oil have leaked into the Niger Delta since Shell began oil extraction there in 1958. Zembla said the “greatest oil disaster in the world is unfolding in the Niger Delta”.

Shell says that 95 percent of leaks are as a result of sabotage. It denies responsibility for the leaks, which it blames on local criminals and organised gangs.

Accusations ‘credible’

However, residents in the Ikarama in the Nigerian state of Bayelsa told Zembla that Shell employees encourage local youths in the villages to sabotage pipelines in the area and then split funds allocated for the cleanup.

“If a clean up is necessary, these same youths are then hired to perform it,” Washington Odeibodo told Zembla.

A former Shell security guard, who claimed to have been responsible for sabotaging pipelines in the past, said Shell supervisors and employees “split the money from the clean up”.

“The recovery department from Shell sabotages the pipelines. If the clean up will take seven months, they’ll stop after only three months,” he added.

According to Zembla, one saboteur said they committed the vandalism “out of hunger”.

In May, Nigeria’s National Bureau of Statistics said 40 percent of people in the West African nation live in poverty, in a country that has Africa’s biggest economy.

Cees van Dam, a professor of International Business and Human Rights at the University of Rotterdam, said allegations in Zembla’s report were “credible”.

“In the Netherlands, this would certainly be considered a criminal offence. Intentional destruction of property, intentional environmental pollution, these are serious issues that no single company would accept from its employees,” he said according to the statement.

Who knew?

The documentary-maker claimed it was in possession of documents confirming SPDC was aware of the allegations.

However, Shell had so far not responded to queries about steps taken to address the issue.

“SPDC takes these kinds of accusations very seriously. If we find any evidence that supports these accusations, we will report it to the Nigerian authorities,” SPDC said according to Zembla’s statement.

Zembla said the Dutch embassy in Nigeria was also aware of the accusations, which were highlighted for two years, and confirmed by the European nation’s Ministry of Foreign Affairs.

According to Zembla, former ambassador to the country Robert Petri, who left at the start of 2019, was recorded on video promising residents of Ikarama he would share the information with Shell.

The documentary-maker said “nothing came of the commitment”.

Responding to a query from Zembla, the ministry said: “Because of the premature departure of Robert Petri as ambassador to Nigeria, he hasn’t been able to follow through on his commitment.”

The ministry added his replacement was totally unaware of the allegations against the Shell workers.

Yet, Zembla said correspondence between an embassy official and the ministry showed the issue was being discussed earlier this year.

“Second Embassy Secretary from the Dutch post in Nigeria had been corresponding about these accusations as late as May of this year. When asked about this, the ministry supposed that their commitment had ‘slipped through the cracks’,” Zembla added.

“The ministry also stated that it was only after being questioned by Zembla that the current ambassador even broached the subject with Shell,” the statement said.

Al Jazeera

Related stories: New inquiry on oil spills in Nigeria launched

Video - Niger Delta Greenland Justice Mandate claims responsibility 

Oil thieves make away with $250m worth of oil from pipeline in Lagos, Nigeria

Widows of executed activists in Nigeria win case against Shell

The widows of nine Nigerian activists executed in 1995 got a major boost on Wednesday when a Dutch court ruled that it had jurisdiction to determine whether Royal Dutch Shell was complicit in the Nigerian government’s execution of their husbands.* The men who came to be known as the Ogoni Nine, were environmental activists who fought against widespread pollution in the Niger Delta.

The four widows accuse Shell of instigating a deadly crackdown by the military government of the time against peaceful protesters in Ogoniland, in the Niger Delta, the most valuable oil-producing region in Nigeria.

Shell denies any responsibility.

Africa News

New inquiry on oil spills in Nigeria launched

A major new inquiry into oil companies operating in the Niger Delta has been launched by the Archbishop of York, John Sentamu. The probe will investigate "environmental and human damage" in Nigeria's vast oil fields.

"This Commission will investigate the human and environmental impact of multinational oil company activity and is crucial to the prosperous future of the people of Bayelsa and their environment, Nigeria and hopefully to other oil-producing nations," he said.

Nigeria is Africa's largest oil producer. The country's crude oil production -- estimated at over 300 million liters per day -- makes up 70 percent of the Nigerian government's revenue.
This new commission, convened by Bayelsa Governor Seriake Dickson, says that it wants to make oil companies in the region more accountable.

"The world has looked on for too long without taking the necessary collective action to put a stop to the damage being done by oil companies in Bayelsa. We must put the environment and the health and wellbeing of our communities first," Dickson said in a statement Wednesday.

Big oil spills are common in the Niger Delta where over40 million liters of crude oil is spilled annually, resulting in human deaths and damage to the local ecosystem.
A 2018 study by the Journal of Health and Pollution found that more than 12,000 oil spill incidents have occurred in the oil-rich region between 1976 and 2014.

Pipeline corrosion and tanker accidents caused more than 50 percent of them. Other incidents can be attributed to operational error, mechanical failure, and sabotage mostly from militant groups, the study said.

Contaminated lands, water

The Niger Delta is a diverse region with rich mangroves and fish-rich waterways. Many residents try to make their livelihoods from fishing and farming.

Yamaabana Legborsi lives in Gokana in Ogoni, the most affected community, where residents have stopped oil companies from pumping oil from their lands.

The 32-year-old told CNN growing up the community posed both mental and economic challenges to him as a child.

"We could not play in the sand like other children else you are covered in black crude. My mother was especially worried it was not safe, so were other parents.

"We could not also eat the fishes that washed away from the river, you would see crude all around the water," Legborsi said.

The situation has not changed, Legborsi says, despite promises from oil companies clean things up.
"I cannot drink water from my borehole. You can perceive crude oil and kerosene. Many of the residents here drink well water, that is contaminated too," he added.

Experts from the United Nations Environment Programme, (UNEP) in the first scientific survey of the area found that people in Ogoniland had "lived with chronic oil pollution throughout their lives."
UNEP researchers in the 2011 report said it would take 30 years to clean the oil mess left behind.
Oil companies expected to clean up spills within 24 hours under Nigerian law have also been accused of falling short of this obligation.

In a 2018 report, Amnesty International accused Shell and Eni, the two major operators in the Niger Delta, of negligence in their response to oil spills in the area.

The campaign group said the companies' "irresponsible approach" to oil spills had worsened the environmental crisis in the Niger Delta, an allegation both companies have since denied.

Shell in an emailed statement to CNN last year said the report failed to acknowledge the complex environment in which the company operates in the region.

"Shell Petroleum Development Company of Nigeria, in collaboration with government regulators, responds to spill incidents as quickly as it can and cleans up spills from its facilities regardless of the cause. We regularly test our emergency spill response procedures and capability to ensure staff and contractors can respond rapidly to an incident," Shell said at the time.

The response time to an oil spill depends on the security situation and the company's ability to access affected areas in the swampy region, the company said.

CNN 

Related stories:  Video - Niger Delta Greenland Justice Mandate claims responsibility

Oil thieves make away with $250m worth of oil from pipeline in Lagos, Nigeria

Nigeria's Ogoniland residence desperate for clean water

In the Ogoni region, 90 percent of the underground water is not fit for human use because of oil pollution. A big clean-up is under way in Ogoniland, but local communities say they have already become victims of water contamination.

Bodo villages dispute with Shell over oil spills in Nigeria back in UK court

Lawyers for the Bodo community in Nigeria’s oil-producing Niger Delta, which was devastated by two major oil spills a decade ago, went to court in London on Tuesday to fend off what they said was an attempt by Shell to kill off their litigation.

The Bodo oil spills have been the subject of years of legal wrangling. In 2015, Shell accepted liability for the spills, agreeing to pay 55 million pounds ($83 million at the time) to Bodo villagers and to clean up their lands and waterways.

Oil spills, sometimes due to vandalism, sometimes to corrosion, are common in the Niger Delta, a vast maze of creeks and mangrove swamps criss-crossed by pipelines and blighted by poverty, pollution, oil-fuelled corruption and violence.

The spills have had a catastrophic impact on many communities where people have no other water supply than the creeks and rely on farming and fishing for survival.

At the same time, oil companies have run into problems trying to clean up spills, sometimes because of obstruction and even violence by local gangs trying to extract bigger payouts, or to obtain clean-up contracts.

After years of delays, the clean-up in Bodo is currently underway and litigation in the London High Court is stayed, or on hold.

Lawyers for SPDC, the Nigerian arm of Shell, argued on Tuesday that the litigation should be struck off in October 2018, or at the latest a year later, and that it should only be re-activated if SPDC failed to comply with its obligation to pay for the clean-up.

Lawyers for the Bodo community said that was unacceptable, because the clean-up could go wrong for any number of reasons and that under Shell’s proposal the villagers would be left without the recourse of going back to court.

“The effect of what Shell is trying to do is to kill off the case,” said Dan Leader, the Bodo community’s lead lawyer, on the sidelines of the hearing. “It’s only because of the pressure of litigation that the clean-up is getting back on track.”

But Shell’s lawyers, citing an earlier judgment, compared the stayed litigation to a “gun in the cupboard” that the Bodo community’s lawyers wanted to be able to hold to Shell’s head at their convenience, for years on end.

They said the litigation was a hindrance to the clean-up because it gave some local community members the impression that there was still the possibility of a bigger payout, incentivising them to block the clean-up rather than cooperate.

“The previous persistent delays to the clean-up process clearly demonstrate that litigating Nigerian oil spill cases in the English courts does little to resolve the complex underlying security and community issues which can frustrate attempts to clean up areas impacted by oil pollution,” an SPDC spokeswoman said.

“We hope that the community will continue to grant the access needed for clean-up to progress as planned.”

A judgment on the litigation issues is expected on Friday.

Reuters