Nigeria’s Greasy, Sleazy, Billion-Dollar Oil Theft Industry
In January 2019, security operatives conducting surveillance on oil installations in Lagos State, nabbed Mr. Shuaibu Ogunmola, an alleged kingpin of oil pipeline vandalism in Lagos State, who it claimed was responsible for loss of millions of litres of petroleum products daily.
Ogunmola, who had been arrested some time back and released under questionable circumstances, had been on the watchlist of the security operatives for several months following his nefarious activities, mostly around the Atlas Cove and adjoining communities.
He had operated a thriving oil theft racket for decades, hacking pipelines in some island communities in Amuwo-Odofin Local Government Area of Lagos State, along the strategic System 2B pipeline network Right-of-Way. His activities had through the years, led to loss of millions of litres of products along the Lagos Atlas Cove strip.
Ogunmola, who the Nigerian Navy and the Nigerian National Petroleum Corporation, NNPC, described as the ultimate godfather of oil thieves in Ilashe and adjoining settlements, consigned portions of his territory and offered operating rights to other thieves to operate and bring in returns at agreed rates and terms at the detriment of the country.
From proceeds of the crime, Ogunmola, it was alleged, had acquired a luxury hotel in Ilashe community, along the Badagry Creek and was living an ostentatious lifestyle of wealth and opulence.
This is coming several years after the menace of oil theft — comprising both crude oil and petroleum products theft — reached alarming proportion and was brought to the knowledge of the populace.
Despite the many cries, dangers, effects and campaigns against the crime over the years, Nigeria is still reeling under the burden of this illicit activity.
Nigeria’s former finance minister, Dr. Ngozi Okonjo-Iweala, had in 2012, brought the attention of the international community to the large scale crude oil theft in Nigeria, when she disclosed that Nigeria was losing about 400,000 barrels of crude oil per day, translating to over $1 billion monthly.
Almost a decade after, the menace seems unabated as the Nigerian economy is still at the mercy of cabals, who are enjoying the backing, patronage and protection of the country’s political elite; as well as criminals and saboteurs who are daily fuelling organized crime, insecurity and crisis in the Niger Delta.
Declare state of emergency on crude oil theft , expert tells FG(Opens in a new browser tab)
As a result of this, Nigeria is currently bleeding from the massive loss of revenue to crude oil theft and vandalism that had continued unhindered in the country and which seems to have defied all solutions.
Putting it in perspective, the Nigerian Security and Civil Defence Corps, NSCDC, had stated that between 2003 and 2005, over 2,258 cases of oil pipeline vandalism were recorded; while Shell Petroleum Development Company, SPDC, disclosed that since 2012, it has removed more than 160 illegal theft points from its facilities.
In addition, the Nigerian Navy in 2013, stated that Nigeria was losing $20 billion annually to crude oil theft, estimated at 55,210 barrels of oil lost per day, while the Nigeria Natural Resource Charter, NNRC, noted that N3.8 trillion was lost to crude oil theft, sabotage and pipeline vandalism in 2016.
On its own part, energy data firm, Oil Price Reports, stated that between 2011 and 2014, Nigeria lost over $25 billion to crude oil theft, while the United States Institute of Peace, had in 2009, declared that $100 billion was lost from illegal oil bunkering between 2003 and 2008.
From the NNPC reports, between May 2018 and May 2019, the country lost N188.8 billion to crude oil and petroleum products theft.
Specifically, the report noted that in the 13-month period, N4.557 billion worth of crude oil was lost; petroleum products losses stood at N27.49 billion; while pipeline repairs and management costs gulped N156.76 billion.
The NNPC further stated that between May 2018 to May 2019, 2,014 vandalised points were recorded on its vast pipeline network across the country.
The NNPC lamented that products theft and vandalism had continued to destroy value and put it at disadvantaged competitive position.
Modus Operandi: Small and large scale theft
Shuaibu Ogunmola, who is allegedly a small-scale petroleum products thief, executed his illegal trade by digging holes metres away from the NNPC’s products pipeline, which essentially serve as storage tanks for products directly siphoned from the lines at a hack point.
These holes which are cast in drums receive products simultaneously from the labyrinth of pipelines connected to the trunk line directly linked to the ruptured NNPC line.
The products harvested are later scooped or transferred into jerry-cans and drums and are sold to ready buyers who usually throng the beachside, from where the products were shipped in boats to Cotonou, which has a firmly established market for smuggled Nigerian fuel.
Ogunmola successfully divided the Ilashe pipeline axis into three ‘oil fields’ under the operating titles of Shuaibu Point, Dele Point and Bashiru Point, from which he awarded ‘operating licence’ to other vandals who pay ‘licensing fees’ and ‘taxes’.
Similar trend is recorded in communities crisscrossed by Nigeria’s over 5,000 kilometers pipeline network, where one form of petroleum products or crude oil theft are going on daily on a large scale.
In the Niger Delta, with the rise of illegal artisanal refineries, crude oil theft had recorded significant rise. In most cases, these oil thieves, in connivance with security operatives, former NNPC and oil companies’ staff, and communities among others, drill small holes into the pipelines, while the commodity is siphoned into barrels and taken by specially crafted boats, to illegal artisanal refineries littered across the Niger Delta.
Perpetrators of this vice are more sophisticated than the ordinary thief, as they make use of advanced drilling equipment and tools and enjoy the protection of security operatives, who are sometimes on their payroll.
On a larger scale, after identifying an active pipeline and vandalizing the facility, these thieves, who are members of an organized cartel, bring in small ships that anchor near these pipelines, drill and siphon crude into these ships, which is then taken to larger oil tankers on the high sea.
This process is repeated multiple times till the tanker is full. It is done using multiple siphoning points with the use of hoses which are up to two kilometers long.
The barges can take up to 3,000 to 18,500 barrels of crude oil, while the tankers can take from 31,000 to 62,000 barrels of crude. The stolen crude oil somehow manages to evade detection of the authorities, while the vessels used in this illicit venture navigate the country’s waters and manage to leave the country with the stolen commodity without arrest. The stolen crude oil are normally sold on the international market.
In another yet advanced crude oil theft strategy, oil companies and vessel operators under-declare the quantity of crude oil lifted from Nigeria and the volume in their vessels, and sell the excess in the international black market.
Culpability of security operatives
It is a constant refrain that crude oil and petroleum products theft would not thrive if it does not enjoy the support of security operatives and in most cases, members of the host communities. However, nothing had been done in this regard.
Director General of Nigerian Oil Spill Detection and Response Agency, NOSDRA, Mr. Idris Musa, had accused security agencies and some oil producing communities of aiding and abetting crude oil theft in the country.
He said, “Most times, security posts are just a stone throw from crude oil theft and illegal bunkering sites, yet these illegalities continue unabated in these locations. In some other cases, you would see oil theft and illegal crude oil sites here and you will see settlements near there, yet, how do these things happen?
“For those of you who are very conversant with the field like most of us, when you go in with your Hilux, in not less than five minutes after you enter those areas, you see up to 15 to 20 motorbikes following you, asking you what you are looking for in their land; but then, tankers go to the same place to perpetrate bad activities, they are never found, they are never seen.”
Musa also identified high number of unemployed youths and armed ethnic militias in the region, as well as ineffective and corrupt law enforcement as some of the factors fueling crude oil theft in the country.
It is also noted that a number of times, when these criminals are caught, before they are even presented to the courts for trials, phone calls would had been made to the security officials for their release.
Transparency International’s viewpoint
Transparency International, in a report published in June 2019, titled: ‘Military Involvement In Oil Theft In The Niger Delta: A Discussion Paper,’ disclosed that there had been indications that some members of the military Joint Task Force, JTF, are complicit in, and often benefit from, precisely the pursuit they are mandated to eradicate: the illicit oil industry.
In the report jointly published with Civil Society Legislative Advocacy Centre, CISLAC, the global transparency body argued that members of the Nigerian armed forces have enabled and benefitted from the illegal trade in a number of ways.
It said, “Often this benefit comes from providing ‘protection’ – both ensuring military officials turn a blind eye to illegal activity and protecting oil thieves’ access to extraction points from rivals – in exchange for financial bribes.
“A Chatham House report has suggested that JTF officers have stood guard at illegal tap points and provided armed escorts to ships loaded with stolen crude. Similarly, a 2015 report from the Stakeholder Democracy Network, SDN, reports JTF members’ active involvement in oil theft, from providing security to local oil thieves as they install taps that divert oil from pipelines, to collecting ‘transportation taxes’ for vehicles transporting oil and demanding ‘regional security payments’ from illegal oil refineries for ongoing protection.
“SDN’s community interviews suggest that military involvement in oil theft approaches the systematic, with high-ranking officers reportedly overseeing the deployment of units to protect illegal refineries, and key information being passed on as units rotate in and out: ‘JTF and pipeline vandals are working hand in hand… They have the boys’ phone numbers and feed them with useful information. Even when their commander is transferred, they leave the phone numbers of the boys in their file for the new commander.'”
Transparency International further noted that investigations had similarly suggested that soldiers know the locations of the illegal cooking pots, are often paid off not to close down oil theft rings, and maintain an overview of the illegal operations.
“A more recent analysis quotes one worker employed by an illegal refinery pointing out a Nigerian military helicopter flying over the site of his operation after flames and smoke – all by-products of the oil refining processes – had been released into the air. There was, however, no investigation and no attempt to close down the illegal cooking pot.
“The interviewee reported that he works with the ‘navy, marine police, NSCDC and the army’, paying them in order to allow passage or to enable operations to be run smoothly and without interference, a relationship that only turns sour if one tries ‘to get crude oil without putting them in the know.
“In October 2018, the Navy was forced to deny allegations that personnel collected huge bribes from oil bunkerers in exchange for allowing them to operate freely in Bille coastal communities in Rivers State,” the TI report disclosed.
Furthermore, the Nigerian Natural Resource Charter, NNRC, declared that crude oil theft had defied all efforts to eradicate it because proceeds from the illicit activity had been fuelling crimes in the Niger Delta and was also being used to finance local and regional elections in the oil-producing region and the country in general.
The election link
The NNRC, in a report on crude oil theft, disclosed that it had been observed over the years, that prior to any election in Nigeria, cases of crude oil theft and pipeline vandalism skyrocket in the country.
The global extractive industry watchdog also stated that oil theft tends to rise during periods of high crude oil prices and in periods of increased production, as well as when militants groups are signaling the need for renegotiation of their amnesty payoffs.
It blamed the rising trend of crude oil theft on the absence of a comprehensive law or agency dealing with pipeline security, as well as the fact that several organizations overlap with each limited roles.
The NNRC further highlighted the rise on the decentralized role of various agencies involved to curb the challenge; as well as acts and laws that were not in line with current realities.
Despite the complicity of some security operatives, several arrests are still being made and many of the suspects still being prosecuted.
In addition to the arrest of Shuaibu Ogunmola in January this year, troops of the 81 Division of the Nigerian Army, had in May 2019, arrested five oil thieves at Akute, Ogun State, while troops from the same military formation arrested 15 pipeline vandals at Ilara and Imagbon areas of Ikorodu, Lagos and also arrested six person caught vandalizing oil installations at Fagbile Estate, Isheri-Ijegun, Lagos.
In October 2018, officers of the Nigerian Security and Civil Defence Corps, NSCDC, arrested 35 oil thieves and oil well head vandals in Rivers State; while in September 2018, officers from the Nigerian Navy arrested 14 suspects with nine trucks laden with petroleum products and crude oil in Rivers state.
In December 2018, NSCDC said it had arrested a total of 132 suspected oil thieves in Rivers state, impounded 15 vehicles, 36 trucks loaded with petroleum products; 20 boats and two vessels; four barges and 170 drums.
In July 2019, the officers of the Nigerian Navy in Rivers State arrested five suspects, who are specialists in oil pipeline vandalisation and products theft.
Reasons, impacts of oil thefts
However, despite the various arrests, the menace of crude oil and petroleum products theft continued unabated, according to the NNRC, due to the fact that existing laws do not constitute a major deterrence and there is widespread connivance and complacence of government and military officials.
These, it claimed, have allowed oil theft to skyrocket over the last 10 years. Crude oil theft has impacted the country negatively, especially as it has polluted the land and contaminated the water with Benzene carcinogen at levels around 900, higher than the World Health Organisation’s, WHO, approved level for drinking water.
It has also led to a rise in the activities of bush refineries and brought about a major devastation of land and water in the Niger Delta region, to the extent that the cleanup of Ogoniland is estimated to cost $1 billion for 1,000 square kilometers.
The Ogoni cleanup it was estimated, would take over two decades to complete, that is, to restore the vegetation to its original state, while the extrapolated costs of cleaning the entire Niger-Delta was estimated to be in excess of $3 billion.
Reports had it that crude oil thefts have led to decline in school enrollments and increased child malnutrition; reduced the life expectancy of the average Niger-Delta inhabitant to 40 years compared to 54.5 years national average; and brought about an increase in the consumption of contaminated food with high levels of traceable metals and hydrocarbons.
Furthermore, the NNRC noted that the advent of bush refineries has caused unrest and threat of violence due to struggle for control rights and high registration fees; while control rights infighting has led to arms proliferation among rival gangs.
The NNRC disclosed that these criminal gangs enjoy support from locals due to under development of the region and minimal government support and infrastructure; while it alleged complicity by highly placed civilians and military personnel who secure release of arrested vandals.
It added that crude oil theft had engendered loss of economic activities and jobs to neighbouring countries due to insecurity; displacement of civilians due to clashes between militants and military forces, with their properties destroyed during clashes.
Professor Obafemi Ajibola, Managing Director/Chief Executive Officer of New Nigerian Foundation, NNF, maintained that every Nigerian should be interested in putting an end to the menace, because it is a national issue that affects everyone and involves loss of lives.
He said, “These revenue losses and environmental effects are significant and should not be overlooked. In addition, oil theft has become an enterprise involving institutions, security personnel, criminals and communities, and because it has a value chain, it does not respond to one line of intervention.”
A social development consultant, Mr. Niyi Awodeyi, noted that most of the children in the Niger Delta, instead of focusing on their education, are attracted to the crude oil theft business.
To curb crude oil theft in the country, NOSDRA chief executive, Idris Musa advocated more resources and tools for security operatives to perform their work effectively; as well as the periodic transfer of security operatives to avoid getting influenced by oil thieves and proper orientation for security operatives to minimize corruption.
He also called for the real-life satellite monitoring/surveillance programmes for crude oil and replacement of aging pipelines and other facilities.
Musa highlighted the need for a national database of oil fingerprint, which would be linked with such databases internationally, such as the Eurocrude System.
According to him, the national database of oil fingerprint would mark Nigerian oil with covert molecular fuel markers, that would be virtually impossible for thieves to detect and also allow regulators to determine if fuel sold at dispensing stations are from illegal sources or not.
In his suggestion for a more sustainable approach, Musa called for the certification of Nigerian crude oil going into the international market, as this can track down oil thieves and can enable the Federal Government block the market for stolen crude, thereby serving as a disincentive to the syndicates.
He further called for public exposure of illegal supply network after arrest; collaboration with international security outfits such as the Interpol, to track stolen oil, the thieves and their sponsors.
To address oil theft, the Federal Government said it had commenced the tracking of Nigeria’s crude oil output and was currently working with the Economic and Financial Crimes Commission, EFCC, to track vessels illegally lifting crude oil from the country.
It claimed it had acquired the capacity to monitor vessels operating in Nigeria and through its monitoring of these vessels, it had observed irregularities in the movement of some of the vessels mandated to lift crude oil from Nigeria.
It said the data observed from the activities and from the movement of vessels would help determine the various loading points of the vessels, the dead weight of the vessels and the volume of crude oil lifted from the country by the vessels.
It added that the tracking programme would be extended to the downstream sector, to determine the volume of Premium Motor Spirit, PMS, also known as petrol, imported into the country; the quantity of the products brought in by each vessels; the depots the commodity are stored, up to the points of retail to motorists.