Niger Delta’s crude oil theft: A region’s pressing burden

EBENEZER ADUROKIYA writes on the issue of crude oil theft in Delta State, the implications and efforts to stem it.

 

Illegal bunkering and oil theft have continued to threaten the growth and survival of the Nigerian economy, just as they have continued to cause pollution of the environment in the Niger Delta region. The combination of crude oil theft, illegal refining and pipeline vandalism has become a major threat to Nigeria in meeting the government’s revenue projections in recent times.

“Illegal bunkering,” as a term, encompasses all forms of oil theft, diversion and smuggling of oil and unauthorised loading of ships. One common process requires tapping into oil pipelines and wellheads and transporting the oil elsewhere to be sold internationally or refined locally. To access the oil, a small group of hired welders will rupture a pipeline or wellhead at the dead of night and establish a tapping point from which the group can operate.

Oil theft and illegal bunkering occur throughout the Niger Delta. Leaks in pipelines in the Niger Delta are often caused more by oil theft and less of pipeline corrosion, and operators have, frequently, declared force majeure on exports of key Nigerian crude grades. Oil spills and explosions are regular occurrences in the Niger Delta, as pipeline vandalism, from bunkering, leaves pipes, especially vulnerable to leaks, spills, and major accidents.

 

Economic and environmental losses

Although estimates of how much oil is stolen per day in Nigeria vary, the British think-tank, Chatham House, reports that over 100,000 barrels of oil are estimated to be stolen per day. Also, the United Nations Security Council estimates that Nigeria lost $2.8 billion of revenue to oil theft in 2017. It has also been reported that on a daily basis, oil companies in Nigeria lose between 300, 000 and 400, 000 barrels of oil to theft. Theft is believed to account for roughly 15 per cent of the total number of barrels produced per day.

Oil export revenue accounts for 70 per cent of Nigeria’s total government revenue and 95 per cent of the country’s export income. Only 5, 000 to 10, 000 barrels are stolen per day in Mexico, which produces a comparable amount of oil as Nigeria. It is saddening that despite efforts, including huge resources, expended on security by the Nigerian government to curtail bunkering, oil theft and pipeline vandalism have yet to abate.

An underground crude oil reservoir in one of the illegal refinery camps in Delta State

It has been reported that roughly a quarter of stolen crude oil is sold locally. Illegal artisanal refineries located in the Niger Delta usually “cook” the crude into separate petroleum products. The product yields two per cent petrol, two per cent kerosene and 41 per cent diesel. The remaining 55 per cent of crude goes to waste, most of which is dumped into nearby river or into a shallow pit, resulting in environmental and health hazards.

The impact of these criminal activities on the safety of the people and the environment is huge and unimaginable. The impact also includes degraded local environments and pollution of the environment at tap points. Over 50 per cent of the crude oil siphoned in the process due to high pressure, besides waste of oil residues, is pumped into the creeks, rivers, farmlands, ponds and lakes, thereby further blighting the environment. The degradation done to the environment, occasioned by the illegal bunkering and oil theft, has considerably reduced arable land for farming and has devastated the primordial fishing livelihood of folks in the communities.

 

Impact on oil & gas industry

Every international oil company and indigenous operators in Nigeria has suffered in one way or the other by the activities of oil thieves, who engage in illegal bunkering and “local refining” operations. The activities of these hoodlums, as earlier stated, continue to cause significant damage to the environment. Just recently, an indigenous company declared force majeure on Nembe Creek Trunk Line, due to a fire suspected to have been the result of an illegal third-party breach. It was reported that the incident caused Nigeria’s oil production to fall eight per cent per day. The Nembe Creek Trunk Line is one of the two key pipelines of Nigeria’s Bonny Light crude grade capable of transporting 150, 000 bpd to the export terminal. Shortly after, one of the international oil companies declared force majeure on Bonny Light exports, while exports of Amenam, operated by another oil company, were also under force majeure.

There have also been several incidents of third-party interference, tampering with mechanical components and the installed barriers on crude oil well heads, with evidence of illegal bunkering from the wells.  For each incident, the oil companies take steps to immediately re-secure the wells. But the criminal activities persist and sometimes result in explosions and, or fire incidents.

 

The third-party interference at Ojumole Well

A recent instance of a third-party interference was the case with one of the oil companies – Chevron Nigeria Ltd (CNL), operator of the joint venture between Nigerian National Petroleum Corporation (NNPC) and CNL. It was gathered that at about 10:00 p.m. on Thursday, April 18, 2019, a fire was observed at the Ojumole Well No. 1, an idle and plugged well with no flowline connected to it. Ojumole field is in NNPC/CNL JV’s Western Niger Delta area of operations.

A Joint Investigation Visit (JIV) to the site of the incident on Saturday April 20, 2019, by a team made up of regulatory agencies, community stakeholders and CNL, determined that the fire incident was caused by a third-party interference. In other words, it was not caused by old, corroding pipelines, but hoodlums who specialise in rupturing oil pipelines out of either perceived agitation or creating business for contractors. It was reliably gathered that an environmental monitoring by an independent, accredited environmental consultant is ongoing in the area, while the company is frantically working with contractors to safely put out the fire as quickly as possible.

Condemning the act, representatives of the impacted communities of Ikorigho, Ojumole, Zion Ikorigho, Otumara, Ajegunle, Ilueri and Bowoto in Ilaje Local Government Area of Ondo State, who were part of the JIV team, expressed shock at the damage and condemned the saboteurs.

In a joint statement signed by Rev. Ola Judah Akinyomi, Engr. Owolemi Aiyeran, Chief Ayadi, Most Snr AP. Wale Tomiye, Comrade Igbekele Orisa, (Youth Chairman) and Comrade Monday Mabanmi (an ex-militant in Ikorigho land), the “fire incident was caused by oil thieves who have been coming to steal crude oil from the facility.”

The representatives, who disclosed that they were part of the Joint Investigation Visit to the site of the sabotage, said “We are already working with Chevron to ensure that our people remain safe and that the fire is put out as soon as possible. We, therefore, advise our people not to go near the area where the fire is burning so as not to hamper the efforts to put out the fire or be in harm’s way.”

A vandalised wellhead supplying crude oil into the reservoir

While engagements with relevant stakeholders including the government, regulatory agencies and community leaders and efforts in putting out the fire are ongoing, focus must not be lost on the cause of such incidents and the need to educate people of the host communities on the implications of the criminal activities of illegal bunkering. As it is today, it has become a norm to lampoon oil companies any time such incident occurs and, perhaps, stereotype and label them as negligent, but the people, from among whom the perpetrators thrive, are hardly cautioned over their criminal activities. The perpetrators of illegal bunkering are, after all, not spirits; they live amongst the people and even pride themselves in their illegal business.

 

Way out

Some analysts have maintained that one solution to the issue of illegal bunkering is the establishment of modular refineries in the Niger Delta. The military-solution option however holds sway in the region, but not without its dire consequences on the government, the people and the environment. The Federal Government has expressed its commitment to pursuing the goal of establishing modular refineries. It will be recalled that a total of 38 licences had been issued to prospective operators, ranging from high-scale refineries of 50, 000 to 100, 000 barrels per day. Reports show that out of these, about 10 of the modular refineries have advanced and they have all secured permit to build.

While security agents, especially the operatives of the Operation Delta Safe (OPDS), have been trying hard to curtail the lucrative illegal business in the region over the years with a considerable success, their methods of executing their mandate in the creeks have only further worsened the already polluted environment and ecosystem akin to what operators of illegal refineries do. Seized and leaking barges and vessels of stolen crude oil remain transfixed in jetties of the naval bases in the Central Naval Command further degrading the ecosystem. As the operatives invade illegal refinery camps in the woods, products distilled from crude oil, their waste and the facilities are either set ablaze or turned over into the river, compounding the woes of the environment. This, therefore, calls for a more scientific and environmental-friendly means of stamping out the menace on the part of the security agents in close synergy with IOCs and other relevant stakeholders.

It should be noted that until illegal bunkering is reined in, the Nigerian economy may continue to suffer the loss of revenue from thousands of barrels of oil daily. Perhaps, more importantly and too often overlooked, the Nigerian people, especially generation yet unborn, will continue to cope with the consequences of their destroyed environment.

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