Nigeria’s unbridled crude oil theft

The standard depiction of oil theft in Nigeria shows a young man, knee-deep in a swamp, with a bucket or wooden canoe full of pilfered thick black sludge. But a banker in Geneva or a slick shipping trader in London might provide an equally appropriate image, according to a report published in September 2013 by Chatham House, a London think-tank.

The report, authored by Christina Katsouris and Aaron Sayne, exposes a complex network that arranges the theft of oil worth billions of dollars a year.

According to the report, oil theft may cost Nigeria as much as $8 billion a year. When converted to the local currency, this amounts to a whopping N1.6 trillion annually or 37 per cent of the nation’s annual budget.

As much as 400,000 barrels of crude oil is stolen everyday in Nigeria.

Politicians, security forces, militants, oil-industry staff, oil traders and members of local communities all profit from oil theft, with so few having an interest to stop it, according to the Chatham House report.

“When so many are feeding from the trough, it is doubtful if anyone in Nigeria has the political will to stop it.

“Profits are laundered abroad in financial hubs, including New York, London, Geneva and Singapore. Money is smuggled in cash via middlemen and deposited in shell companies and tax havens. Bank officials are bribed. Cash is laundered through legitimate businesses. Some of the proceeds—and stolen oil—end up in the Balkans, Brazil, China, Indonesia, Singapore, Thailand, the United States and other parts of west Africa.

“At the smallest scale, telltale plumes of smoke rise from illegal refineries in the Niger Delta’s labyrinthine creeks. But larger-scale bunkering involves siphoning oil from pipelines on land or under water and loading it onto small barges, from which it is transferred to bigger ships in the Gulf of Guinea that carry the stuff to international refiners who may be unaware it is stolen—though plainly many know it is.

“The line between legal and illegal oil supplies is easily blurred in a country so rife with corruption. Transactions in Nigeria’s oil industry are infamous for their murkiness.

“The trade in stolen oil helps other transnational criminal networks to spread across the Gulf of Guinea, creating global links between oil thieves, pirates and traffickers in arms and drugs. The damage caused by thieves also often forces oil companies to shut pipelines down. As a result, Nigeria is producing oil at 400,000 b/d below its capacity of 2.5m b/d,” the report stated.

Ironically, no known concrete step has been taken by the Federal Government of Nigeria to act on the report or to nip the worrisome barefaced stealing of the nation’s economic lifeline in the bud.

Beyond the Military Task Force otherwise known as Operation Pulo Shield set up by the Jonathan administration, a more concerted approach is required to save the Nigerian economy from hemorrhaging.

It is our recommendation that government takes a second look at the Chatham House report and implement its far-reaching recommendations which include freezing the assets of oil thieves, placing them on do-not-trade lists, blocking banks from lending or processing payments to oil thieves and imposing travel bans alongside other measures.

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