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Large-scale theft of oil costs Shell $4.5bn a year

  • @BawdenTom

A surge in oil theft in the Niger Delta is costing Royal Dutch Shell up to $4.5bn (£2.8bn) a year in lost revenues, according to new figures.

Against a backdrop of much resentment against Shell in the region following decades of polluting oil spills, the company estimates that up to 100,000 barrels of oil a day are now being illegally extracted from wellheads and the network of pipes that criss-cross the Niger Delta, as oil hovers at around $125 a barrel.

This so-called "bunkering" of oil – by local communities as well as organised criminal gangs – equates to 36.5 million barrels a year, worth about $4.5bn at today's prices.

Bosun Oyenuga, the operations superintendent at the Agbada flow station, near Port Harcourt in the Niger Delta, said: "Oil theft has recently gone up... the cost of oil is going up. We've had to shut down four times this month already because of failed bunkering."

In addition to the rising price of oil, Pat Agbo, Shell's head of spills response in the Niger Delta, said gangs were becoming better armed and more efficient at extracting oil, enabling them to steal greater quantities.

Since the military dictatorship ended in Nigeria in 1998, Shell has been subjected to frequent theft of oil from its pipelines. However, the company says it has noticed a substantial rise in recent months.

Critics of Shell's legacy in Nigeria say that at least some of the bunkering is motivated by the need for cash – and in some cases revenge – after so-called operational oil spills caused environmental damage which deprived communities of their fishing and farming livelihoods.

"I don't think that is the correct assertion," Mr Agbo said, in response to that accusation.

The Bodo community is one community in the Niger Delta which claims Shell has destroyed its livelihood.

Defenders of Shell say the government and army is turning a blind eye to bunkering and could do much more to prevent it.