Africa's oil theft crisis

Shell is losing billions as organised crime in the Niger Delta steals and spills its oil. But it is not blameless, says Tom Bawden

Matthew shook his head as he flew the Shell helicopter over the Niger Delta. It's difficult to see why at first, because the mangrove swamps immediately below appear to be a pristine and lush mix of green and blue. But on closer inspection, a large volume of the water arteries that criss-cross the delta are covered in a greasy film.

And swooping closer to the ground, there are clear signs of oil spills and fire remains on the land, which have charred and tarred the environment.

Shell has an infamous reputation for spilling oil in Niger Delta after 44 years of polluting leaks from its 6,000km network of pipes in the region, which some local communities claim have destroyed their fishing and farming livelihoods.

But since the military dictatorship ended in 1998, a new source of oil spills has emerged. Locals and organised crime syndicates have been stealing oil by sawing into the pipes and siphoning it off in an often messy process known as bunkering. And the practice is on the increase.

"They are destroying every part of the forest – look they've just started operating there," says a despairing Matthew through a headset microphone that drowns out the din of the helicopter blades.

He is pointing below to the seedy mixture of spilt oil and the charred earth that results when the crude is refined by heating it in a home-made device made from a barrel and some pipes. The resulting low-quality fuel is typically used to fuel the diesel engines that provide most of the region's notoriously intermittent power supply.

"To the left, to the right, everywhere. This is all messed up. Illegal activity everywhere," Matthew added, as he flew a group of journalists on a carefully choreographed tour of theft-related oil spills.

As the biggest foreign producer in Nigeria, Shell is a key target for oil thieves but the theft cuts across country's entire hydrocarbon industry, as well as depriving the government of billions of dollars a year in lost taxes.

The state-owned Nigerian National Petroleum Company is bigger than Shell and consequently loses even more oil to theft, while companies such as France's Total, Italy's ENI and Chevron of the US have also seen oil theft eating into their profits.

Once stolen, the oil, which Shell claims accounts for 70 per cent of its spills in Nigeria, makes its way by barge along one of the region's many tributaries. Some is dropped off for sale or use locally and some is loaded on to trucks and transported across Nigeria.

Shell suspects that a large and growing portion, however, is sent further afield. In these cases the barges tip their black liquid cargo into larger ships moored off the coast and destined for thirsty Asian markets, such as Singapore. Although it doesn't have proof, the company suspects that organised crime gangs from eastern Europe are central to an oil racket that is becoming increasingly sophisticated.

Shell says oil theft is now so rife that it costs its Nigerian business, a joint venture with the government, which Shell runs, up to 100,000 of barrels of lost oil a day, worth about $4.5bn (£2.8bn) at today's prices. Shell has a 30 per cent stake in the venture, known as the Shell Petroleum Development Company of Nigeria.

NNPC has a controlling stake in the venture, while Total and ENI have 10 per cent and 5 per cent. But the true scale of the damage across Nigeria is higher still, with Shell estimating that about 150,000 barrels of oil a day are lost to theft across the country. To make matters worse, asked if bunkering is on the rise, Mitiu Sunmonu, the chairman of Shell's Nigerian operation, says: "There is no doubt in my mind."

The mounting oil theft is of such grave concern in Nigeria that Austen Oniwon, group managing director of NNPC, warned in March that if the trend continues the country could follow in the path of Mexico and Colombia where, he contends, the vast amounts of money that can be made from crime had allowed criminals to wield huge power.

"If we fail to curb this trend we are inadvertently empowering these criminals to take over our local government areas and then they would move on to take charge of the states since they now have resources to decide who gets to power. One day we may, as well, wake up to discover that they have taken over the entire country," he said.

In conversations with Shell executives in and around Port Harcourt, the centre of the country's oil industry, a variety of theories emerge as to why oil theft is on the up. Firstly, at a near-record high of around $112 a barrel, the price of oil is very high, making its theft far more lucrative. Three years ago, it was less than half the price, at about $55.

Shell's head of spills response in Nigeria Pat Agbo, a dapper man known to his colleagues as "the cleaner", says bunkerers are becoming better at stealing the oil as their experience grows. At the same time, the proceeds from their crimes mean they are increasingly well equipped with tools and weapons, he contends, echoing Mr Oniwon's comments.

Other Shell staff suggested bunkering was attractive to a host of former militia men washing around the region without gainful employment.

Whatever the cause for the rise, Shell is becoming increasingly frustrated about the theft-related oil spills, which reflect badly on the company and, because it has pledged to clean up all spills, is costing it tens of millions of dollars in costs on top of the lost revenues.

"It is certainly very frustrating," said Mr Sunmonu. But, crucially for his credibility as a crusader against bunkering, he acknowledges that Shell's legacy of so-called operational oil spills in the Niger Delta is part of the problem.

"I'm of the firm belief that the issue of the environment has become a very political subject so I'm not surprised people ignore the fact that the bulk of the pollution is caused by third parties," Mr Sunmonu said.

Shell is also aware that, while 70 per cent of spills may be related to bunkering, that still leaves 30 per cent that aren't. Most recently, it reinforced its legacy as a giant oil spiller when it was forced in December to shut down its Bonga oilfield 120kms from the Nigeria coast after an environmentally damaging spill of around 40,000 barrels of crude leaked into the ocean.

This spill, the worst in the area for a decade, came four months after a report by the United Nations lambasted Shell and the Nigerian government for making a significant contribution to 50 years of pollution in Ogoniland, a region of the Niger Delta, in which more than 6,800 spills tipped up to 13 million barrels of oil into the area between 1976 and 2001. The report said the area, where Shell's Nigerian joint venture has dominated crude production, requires the world's largest ever oil clean-up, predicting it would take 30 years and asking the Shell joint venture to kick off the process with an initial contribution of $1bn.

Against this backdrop, the pollution-related court cases pile up. In March, a group of 11,000 members of the Bodo fishing community in the Niger Delta initiated a case in London's High Court against Shell in pursuit of tens of millions of dollars they believe they are owed in compensation for two oil spills in 2008..

Mr Sunmonu seems aware of the link between Shell's legacy of spilling oil in the Niger Delta and the growth of oil theft, in some cases by communities whose livelihoods have been hit by operational spills. And he seems determined to eradicate both.

"I'm not going to get distracted because people are playing politics with oil spills. The challenge for us is to eliminate operational spills. Then it will be easier for people to focus on fighting the criminal activities."

That appears to sum up the situation as well as anyone could. But eradicating these interlinked spill causes will be extremely difficult.

Start your day with The Independent, sign up for daily news emails
News
FIFA President Sepp Blatter reacts during a news conference in Zurich June 1, 2011
news
News
people
Life and Style
food + drink
News
peopleKatie Hopkins criticises River Island's 'seize the day' bags for trying to normalise epilepsy
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Nicole Kidman plays Grace Kelly in the film, which was criticised by Monaco’s royal family
film'I survived it, but I’ll never be the same,' says Arash Amel
Life and Style
Retailers should make good any consumer goods problems that occur within two years
tech(and what to do if you receive it)
Life and Style
healthIf one was missed, vomiting blood was seen as a viable alternative
Life and Style
tech
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Guru Careers: Graduate Editor / Editorial Assistant

£16 - 20k: Guru Careers: A Graduate Editor / Editorial Assistant is needed to ...

Day In a Page

Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor
The ZX Spectrum has been crowd-funded back into play - with some 21st-century tweaks

The ZX Spectrum is back

The ZX Spectrum was the original - and for some players, still the best. David Crookes meets the fans who've kept the games' flames lit
Grace of Monaco film panned: even the screenwriter pours scorn on biopic starring Nicole Kidman

Even the screenwriter pours scorn on Grace of Monaco biopic

The critics had a field day after last year's premiere, but the savaging goes on
Menstrual Hygiene Day: The strange ideas people used to believe about periods

Menstrual Hygiene Day: The strange ideas people once had about periods

If one was missed, vomiting blood was seen as a viable alternative
The best work perks: From free travel cards to making dreams come true (really)

The quirks of work perks

From free travel cards to making dreams come true (really)
Is bridge the latest twee pastime to get hip?

Is bridge becoming hip?

The number of young players has trebled in the past year. Gillian Orr discovers if this old game has new tricks
Long author-lists on research papers are threatening the academic work system

The rise of 'hyperauthorship'

Now that academic papers are written by thousands (yes, thousands) of contributors, it's getting hard to tell workers from shirkers
The rise of Lego Clubs: How toys are helping children struggling with social interaction to build better relationships

The rise of Lego Clubs

How toys are helping children struggling with social interaction to build better relationships
5 best running glasses

On your marks: 5 best running glasses

Whether you’re pounding pavements, parks or hill passes, keep your eyes protected in all weathers
Joe Root: 'Ben Stokes gives everything – he’s rubbing off on us all'

'Ben Stokes gives everything – he’s rubbing off on us all'

Joe Root says the England dressing room is a happy place again – and Stokes is the catalyst
Raif Badawi: Wife pleads for fresh EU help as Saudi blogger's health worsens

Please save my husband

As the health of blogger Raif Badawi worsens in prison, his wife urges EU governments to put pressure on the Saudi Arabian royal family to allow her husband to join his family in Canada