Nigeria’s Oil in Trouble Again as Saboteurs’ Ring Returns


The largely unknown oil barons that have been sabotaging Nigeria’s oil economy appears to have staged a major comeback, and are busy making mincemeat of  the country’s oil industry in spite of the heavy security presence all over the oil and gas region.

In Bayelsa State, the Aiteo Group, operator of the Nembe Creek Trunk Line to Shell’s Bonny export terminal, has been one of the hardest hit this year, halting flows through the link at least three times since January.

Aiteo is however, one of Africa’s fastest-growing energy leaders. The company is an integrated energy group with a clear vision for the future and the experience and assets necessary to provide oil and gas on a regional and global scale. They discover, produce, store and deliver energy resources to marketplaces worldwide.

The company boasts of working on opportunities to responsibly develop energy resources in some of the world’s most significant basins, including the huge potential of the Niger Delta basin in West Africa’s offshore fields, and of the Benue Trough.

The challenge the company is facing does not appear to be getting easier. The Anglo-Dutch oil and gas major, Shell, operating in Nigeria as Shell Petroleum Development Company (SPDC) lost an average of 11,000 barrels a day to theft in 2018, it said. That’s up from losses of 9,000 barrels of crude a day in 2017.

Chevron, a giant American oil corporation has also reported problems with third-party interference on their production facilities in the heavily polluted Niger Delta.

Industry watchers say saboteurs including thieves allegedly caused an 80 percent increase in the number of spills in 2018, Royal Dutch Shell Plc, the largest international producer in Nigeria, said in a report last month. Disturbingly, there was no known militant-related stoppage to operations since 2016.

The worrisome disruption tends to be underscoring how hard it will be for the country to fully rid herself of security challenges that have been plaguing the Nigeria for decades. Overseas crude shipments represented by far the country’s largest source of export income, with around $43.6 billion of sales in 2018, according to ITC Trade Map, a venture between the World Trade Organisation (WTO) and the United Nations.

Head of research at SBM Intelligence, a Lagos-based consultant, Cheta Nwanze, told a foreign news agency, ‘’oil theft is a severe drain on Nigeria’s revenue. The losses to theft could easily fund Nigeria’s budget deficit.’’

Arguably, oil theft is perhaps a more palatable option for Nigeria and the companies operating the environmentally despoiled Niger Delta than attacks by militants. While some 100,000 barrels a day are allegedly being taken out of pipelines, militancy was said to have halted at least eight times that amount at one stage three years ago.

The upsurge tends to reflect a belief among local communities that multinationals do not really own the barrels in the first place, according to the former President of the Movement for the Survival of the Ogoni People (MOSOP), Ledum Mitee, a lawyer.

According to Mitee, ‘’they believe the oil is theirs and the government is the thief. People now realise that instead of just cutting pipelines to spite the government, they can make money out of it.’’

The saboteurs’ ring, according to the ex-MOSOP president and former head of the Nigeria Extractive Industries Transparency Initiative, employs at least 500,000 people in the country.

Picking up from there, Nwanze said much of the stolen crude is processed in tiny, makeshift refineries comprising hundreds of cauldrons, each of which can hold as much as 150 barrels of oil. The world’s biggest refineries handle more than 1.2 million barrels each day.

But, unlike politically-driven militancy where the ‘’freedom fighters’’ claim to represent the impoverished and repressed peoples of the Niger Delta, stealing crude is considered a less risky option for those involved.

Multiple incidents of force majeure, a legal measure that allows companies to forgo their contractual supply obligations, have happened this year in Nigeria — even if the precise causes often remain unclear.

The rogue refineries, essentially scaled up versions of widespread gin distilleries in the region, typically employ about 100 people working in shifts. Yields from a single cauldron will include 7,500 liters of diesel, 2,000 liters of gasoline and 500 liters of kerosene a day. It costs about 4 million naira ($11,100) to construct a boiling pot.

Often, oil producers take their own security measures, deploying daily helicopter surveillance with infrared cameras while simultaneously pushing state authorities to do more. But large-scale theft persists.

Former deputy Oil Minister, Ibe Kachikwu, had said in May after a cabinet meeting in Abuja, Nigeria’s capital city that addressing the challenge requires a ‘’holistic approach’’, adding, ‘’oil theft is rife because there is an economic gain to be made from it. So we want to shut those illegal gains by creating positive and legal economic opportunities.’’

President Muhammadu Buhari is however, the substantive Oil Minister in Nigeria. Similarly, during his eight-year tenure, former President Olusegun Obasanjo (1999-2007) held on to the oil portfolio.


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