Subscribe free to our newsletters via your
. Energy News .

Nigeria's booming oil theft racket costs $1B a month
by Staff Writers
Port Harcourt, Nigeria (UPI) Oct 18, 2013

Shell lifts force majeure on Nigerian oil exports
Lagos (AFP) Oct 18, 2013 - Anglo-Dutch oil giant Shell on Friday lifted a force majeure on crude oil exports from Nigeria after repairing a supply pipeline that has been repeatedly sabotaged in the country's oil region.

Shell's subsidiary in Nigeria (SPDC) said it "lifted the force majeure on Bonny Light exports effective noon today...following repair of recent spill points on the Trans Niger Pipeline (TNP)."

Force majeure is a legal term releasing a company from contractual obligations due to circumstances beyond its control. Bonny Light is one of the main grades of crude produced in Nigeria.

The force majeure was declared on October 10 as a result of spills recorded on the pipeline in the volatile oil-rich Ogoniland.

Shell has since restored production of 150,000 barrels per day of crude shut in as a result of the incident.

"Joint investigation of the spills has now been completed and the various reports signed off by all participants," the company said.

Shell said it regretted the spills, adding that a detailed investigation of the root cause of the pipeline failure was underway.

It also promised to compensate the affected communities.

"Arrangements for payment of compensation are being made in conjunction with people in Bunu-Tai and Nonwa-Tai, the two communities which the joint investigation confirmed were impacted by the spill," it said.

The TNP has been repeatedly attacked by vandals and oil thieves, with Shell claiming the pipeline has been closed down at least five times since early July.

Shell has blamed repeated oil thefts and sabotage of key pipelines as the major cause of spills and pollution in the oil-producing region.

Crude oil theft is a major problem in Nigeria, with estimates that the country loses some $6 billion in revenue per year.

Nigeria is Africa's largest producer, accounting for more than two million barrels per day.

Royal Dutch Shell is selling off four of its onshore Nigerian oil blocks because of the constant theft of large volumes oil from its pipelines, officials said.

The move highlights the West African state's growing battle with criminal syndicates that are stealing an average of 100,000 barrels of crude a day. That costs the continent's second largest economy after South Africa up to $1 billion a month, a criminal enterprise on an industrial scale that officials say rivals the narcotics trade as the world's most lucrative crime.

Oil industry officials and community workers say this massive theft of Nigeria's key resource involves crooked politicians, security forces, oil industry personnel and oil traders.

There are also militant groups operating in the oil-rich but impoverished Niger Delta, a labyrinth of swamps and creeks that provide cover for the complex network of crime.

"There's a sophisticated organization," says Philip Mshelbila, Shell's chief of communications in Lagos, Nigeria's commercial capital. "Clearly it's not just local. There has to be a wide network."

Mela Oforibika, a lawyer and head of the delta community of Bolo in southern Nigeria that's the center of the oil theft network, asserts that the military is paid off by crime syndicates.

"The pay-off system to the armed forces and police ... is well organized ... Most army have a lifestyle that you can't explain," he said.

Stealing oil from pipelines or other facilities is known as "bunkering." Officials say it's now so pervasive, in the delta particularly, that there's little interest in trying to stamp it out. And, with the fix supposedly running all the way up to senior levels of government, there's little political will to do anything despite the ruinous economic impact the oil theft has in a deeply corrupt country long torn by tribal, regional and religious rivalries.

Since Shell, which pioneered Nigeria's oil business, started production from the Oloibiri field in 1958, other majors like Exxon Mobil, Texaco and Gulf Oil have moved in.

Nigeria historically was Africa's foremost producer, although Angola, further south down the Atlantic coast, is now producing more crude oil.

In recent years, Nigeria's onshore production has been slipping, in large part because of "bunkering," but also because the older fields are running down.

Initially, most of Nigeria's production was onshore, 75 percent in the 1970s, But now offshore wells are overtaking the land-based fields and deepwater drilling is now predominant -- and harder to steal from.

Because of the oil theft, Nigerian production is running 400,000 barrels per day below its capacity of 2.5 million bpd.

The damage inflicted by the oil thieves has forced some companies in the delta to shut down pipelines for long periods.

On Oct. 10, Shell closed its Trans-Niger pipeline, capable of pumping 150,000 bpd to the giant refinery at Bonney, because it had been holed so many times by thieves.

It's one of the most sabotaged pipelines in the world and that was the third shutdown in four months.

High oil prices in recent months, usually around $100-$110 a barrel, have blunted the impact of the oil thievery. Oil and gas account for around 70 percent of the country's revenues.

But Nigeria's not out of the woods yet, and is unlikely to be despite some expansion in non-oil sectors such as telecoms and construction.

A recent report by the Royal Institute for International Affairs, a London think tank, said Nigeria's oil is being stolen not just from the pipelines, but tank farms, export terminals, refinery storage, ports and even wellheads.

"Officials and private actors disguise theft through manipulation of meters and shipping documents," the study observed.

"Proceeds are laundered through world financial centers and used to buy assets in and outside Nigeria, polluting markets and financial institutions overseas, and creating reputational, political and legal hazards."

Much of the stolen oil is loaded on barges and small ships in the delta's creeks and carried to tankers offshore in the Gulf of Guinea, where it's taken to neighboring countries in West Africa, or further afield to Brazil, China, Singapore, Thailand, Indonesia and the Balkans where it's processed by international crime syndicates.

RIIA says the proceeds are laundered through banks and businesses in African states, as well as the U.S., Britain, Switzerland, India, Singapore and the Persian Gulf.


Related Links
Powering The World in the 21st Century at

Comment on this article via your Facebook, Yahoo, AOL, Hotmail login.

Share this article via these popular social media networks DiggDigg RedditReddit GoogleGoogle

Memory Foam Mattress Review
Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News

Rosneft cedes East Siberian oil fields to China
Moscow (AFP) Oct 18, 2013
Russia's top oil producer Rosneft signed a memorandum on Friday giving the world's largest crude importer China its first direct access to energy-rich East Siberian fields. The preliminary agreement with China National Petroleum Corp (CNPC) aims to help Rosneft meet the terms of a $270-billion deal signed in June that doubles Russia's oil exports to its giant neighbour over 25 years. It ... read more

Firms eye power generation in post-Fukushima Japan

South Korean president calls for global energy cooperation

Power plant threat to Bosnia oasis

Global Hydropower Market Continuing to Grow, with Asia-Pacific Keeping the Lead

BHP Billiton scraps most of its Indian gas, oil exploration

Scotland's Salmond warns future of shuttered refinery in jeopardy

Finland OKs $168 million in funding for LNG capacity expansion

Nigeria's booming oil theft racket costs $1B a month

Spain launches first offshore wind turbine

Key German lawmaker: End renewable energy subsidies by 2020

Installation of the first AREVA turbines at Trianel Windpark Borkum and Global Tech 1

Trump's suit to halt wind farm project to be heard in November

Harvard Business School installs AC PV solar array

Overcrowded German solar inverter market pushes suppliers to the brink

Solar Exchange Advances to Final Round at Solar Startup Challenge

Tecta Announces Roof+Solar Financing Program

Britain commits to new nuclear power plant

India PM fails to strike nuclear deal in Russia

EDF deal reignites debate over energy costs in Britain

Japan to seek Fukushima decommissioning ideas overseas

Ethanol Safety Seminar Planned in Tacoma

US Biodiesel Production Surpasses Set Target for Second Straight Year

AREVA awarded a contract for the construction of a biomass power plant in the Philippines

New device harnesses sun and sewage to produce hydrogen fuel

NASA's China policy faces mounting pressure

Ten Years of Chinese Astronauts

NASA vows to review ban on Chinese astronomers

China criticises US space agency over 'discrimination'

US Supreme Court to hear greenhouse gas cases

'Stadium waves' could explain lull in global warming

US Supreme Court agrees to hear greenhouse gas cases

Terrestrial ecosystems at risk of major shifts as temperatures increase

The content herein, unless otherwise known to be public domain, are Copyright 1995-2014 - Space Media Network. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement