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OIL THEFT, ILLEGAL REFINING: Nigeria’s economy bleeds as illegal activities boom in Niger Delta – Investigation

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Oil traders await Nigeria’s May, June lifting programmes

By UDEME AKPAN

 

THERE are indications that oil theft and illegal refining have attain new heights in Nigeria as Shell Petroleum Development Company Limited (SPDC), with over 600,000 barrels daily output, recorded 39 oil spill cases in the second quarter (April – June) of 2020, according to data obtained from SPDC.

Although this indicated a drop of 61.5 per cent when compared to 63 cases recorded in the corresponding period of 2019, the frequency in which they occurred appeared very worrisome.
However, the data also showed that 15 cases were recorded in March 2020, all of which were attributed to mainly pipeline vandalism and oil theft.

On monthly basis, the data further showed that 19, 11 and nine cases were recorded in April, May and June 2020 respectively.

Report

In its current Briefing Notes, the company disclosed that in 2019, oil theft and sabotage resulted in 156 spills, adding: “In 2018, the figure was 109. The SPDC JV has a policy that when a leak is identified, the team responds to contain any spilled oil and clean up. In 2019, SPDC JV remediated 130 sites. The SPDC JV is working to eliminate spills from its operational activities, remediate past spills and prevent spills caused by crude oil theft, sabotage of pipelines or illegal oil refining. While SPDC operates to the same technical standards as other Shell companies globally, illegal activities continue to inhibit a normal operating environment.

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Past spills from operational and illegal activities have been well documented, resulting in a clean-up programme and, where appropriate, compensation. There is still much work to do to get the company to its target of Goal Zero in all spills (operational and third party vandalism). But through a solid strategy, active partnerships, closer community engagements, bold security and new surveillance equipment, the company is steadily making good progress.”

It also noted: “However, the challenge of preventing spills relating to sabotage and theft by third parties remains. These illegal activities accounted for 95 per cent of the SPDC JV spill incidents in 2019, a similar proportion to previous years. In 2019, there were 156 theft and sabotage-related spills over 100 kilogrammes, up from 109 in 2018.

This is due to factors such as increased availability of production facilities after a major export line repair in 2017, crude theft activities in an election year when government’s security agents can be reassigned, and the price of crude oil and refined products that is seen as an opportunity for illegal refining. Despite preventive efforts, spilled volumes from illegal activities increased to around 2,000 tonnes of crude in 2019, compared with around 1,600 tonnes in 2018.

“When a leak is identified, production is suspended, and efforts made to contain any spilled oil. We regularly test our emergency spill response procedures and capability to ensure staff and contractors can respond rapidly to an incident. In line with government regulations, a Joint Investigation Visit (JIV), team visited the spill site to establish the cause and volume of oil spilled. The team comprises representatives from SPDC, regulators, government security agencies, state governments and communities.”

Other cases

Many other companies have recorded similar experiences. For instance, in its latest report, the Nigerian National Petroleum Corporation (NNPC), which represents the Federal Government’s interest in the Joint Ventures with the International Oil Companies (IOCs), also stated: “The continuous vandalism of NNPC pipelines resulted in an increased cost of pipelines maintenance alongside loss of crude oil and petroleum products.”

Investigation

Investigation by Vanguard in some parts of the region, including Delta, Rivers and Bayelsa states, indicated that the stolen crude provides feedstock to numerous illegal refineries in the region. In fact, one of the youths, who pleaded anonymity, said: “The oil revenue is shared in Abuja, the Federal Capital. We cannot get there. Nevertheless, there is nothing wrong for us to take the one we see here.”

Causes

In an interview with Vanguard, the Ghana National Petroleum Corporation (GNPC), Professorial Chair, Oil and Gas Economics and Management, Institute for Oil and Gas Studies, University of Cape Coast, Prof. Omowumi O. Iledare, said: “Perhaps unemployment, greed and lack of respect for rules of law. Infrastructure deficiency makes legitimate business difficult.  These, however, are no excuses for criminality.”

He added: “The main solution is enforcement of rules of law, accountability and withdrawal of emoluments to community found liable. No society can thrive, if criminality is perpetuated without recourse. Yes, corporate social responsibility helps, but there must be a community accountability. Rewarding criminality perpetually breeds more criminality.”
Impact

Investigation by Vanguard showed that the oil spills, occasioned by pipeline vandalism and oil theft, which have severally affected Imo River pipeline, Adibawa flow station, Okordia-Rumuekpe Pipeline, Bomu-Bonny Pipeline, Nkali – Imo River 2 Pipeline, Gbaran Well 12T Flowline, Soku Well 14S Flowline, Imo River-Ogale Pipeline, Otamiri Wells 5L/S Flowline, NunRiver-Kolocreek Pipeline, Rumuekpe-Nkpoku Pipeline, Ukpeliede Manifold and Imo River Well 31S 6’’ Flowline, culminated in the loss of commercial crude oil and, by extension, revenue to stakeholders, including Shell and the government.

Experts said these and many other incidents call for serious attention, especially as it has been estimated that oil companies in Nigeria lose between 300,000 and 400,000 barrels of oil to illegal theft, thus affected the industry and the nation’s economy.

Advice
In an interview with Vanguard, President, Global Education and Infrastructure Services (GEISE) LLC, Charlotte, North Carolina, USA and member, Education Caucus, United Nations Commission on Sustainable Development, New York, USA, Prof Hilary Inyang, added: “Definitely, environmental pollution is a contributor to the low life expectancy of about 54.6 years estimated for all parts of Nigeria. The conditions are worse in some areas of the Niger Delta because of the large number of both legacy oil pollution sites and more recent oil spills which my assessments put at about 2900 in 2010 when I spent two years in Nigeria on the issue.”

He added: A deep analysis should show that it would cost more than $50 billion to clean up more than 2500 sites in the entire Niger Delta, even with the recognition that there have been more spills than spill sites. It would also take more than 50 years, even if that money was available.”

Vanguard

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