Nigerian Oil Theft Reaches $6bn Annually

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Nigeria’s oil companies are battling a surge in crude oil theft, with estimates suggesting that the oil-rich country loses some $6 billion annually in revenues due to bunkering. Oil theft is a lucrative black market in Nigeria, Africa’s top oil exporter, as well as neighbouring countries.

Bunkering, as oil theft is commonly known in Nigeria, involves siphoning crude from pipelines into makeshift vessels and has turned into huge a business that is damaging the country’s investment profile as well as international oil companies operating in Nigeria.

Speaking at the IMF-World Bank meetings in Washington last week, finance minister Ngozi Okonjo-Iweala estimates that the government loses $1 billion in revenues each month to oil thieves.
Because of the size of the theft, Nigerian government officials acknowledge that tackling oil theft requires taking on the powerful people and organisations that promote and protect the illegal activities.
Industry experts also point out that stolen oil on ocean barges require at least the tacit approval of some of Nigeria’s army and navy personnel that have been paid to protect the pipelines.
"Obviously, bunkering cannot happen without a certain level of official collusion," presidential spokesman Ken Saro-Wiwa Jr. said in an interview last year. "Like any large scale crime anywhere in the world there is an element of collusion on both ends of the line."

In an unusually critical public statement, Mutiu Sunmonu, managing director of Shell’s Nigerian division, said the “massive and growing problem of oil theft and illegal refining in the Niger Delta … has reached unprecedented levels.”
In an open letter published on Shell’s website, Sunmonu said the size of the problem indicated a “well financed and highly organised criminal enterprise” that uses “influence, corruption and violence to protect [its] interest.”

Together, thieves drain an estimated 60,000 barrels of oil a day from Shell's local pipelines. But volumes of oil stolen from Shell and other oil companies in Nigeria have reached a total of 150,000 barrels a day, or 7.5 percent of the country's crude-oil production, said Shell, citing a United Nations figure.
Shell has sought help from the Netherlands, British and European Union governments to investigate — and if needed prosecute — those abroad benefiting from the trade, said diplomats and people involved in Shell's efforts.
The company plans to shut one pipeline this month to combat theft. Other, however, plan to shut down their pipelines completely to prevent illegal tapping and potential spills from its pipelines.
Last month, Italy’s largest energy group Eni SpA declared force majeure and ordered the closure of its onshore activities in the Swamp Area, located in the Bayelsa State in Nigeria. The decision, it said, was made due to “intensified bunkering, consisting in the sabotage of pipelines and the theft of crude oil, which has recently reached unsustainable levels regarding both personal safety and damage to the environment.”