It's a crime with international
repercussions, and second only to the drugs trade for the money it earns. And
it threatens to destabilise Africa's second-largest economy
Fishermen
from Bodo on the Niger Delta. Photograph: Noah Payne-Frank for the Observer
The
flames roared 20 metres above the Niger delta swamp for 48 hours; 6,000 barrels
of crude oil spilled
into the creeks and waterways around the village of Bodo and several people
died. But although the Nigerian army and navy were stationed just 100 metres
from the site of the massive explosion, no one knows – or will say – what
really happened to Nigeria's most important oil pipeline around
2am on 19 June.
It
could have been an accident. The Trans Niger pipeline, which transports around
150,000 barrels a day of crude oil from wells across the Niger delta through
the creeks and impoverished villages of Ogoniland and Ogu-Bolo to the giant oil
terminal at Bonney, is rusting, nearly 50 years old and known to spring leaks.
But it is also one of the most sabotaged pipelines in the world with local
communities accused by Shell of making over 20 attempts to tap oil from it in
the last year.
Company
contractors had been repairing one section of the pipeline when the explosion
happened but the official investigation team believes that the accident
followed a botched attempt to steal tens of thousands of barrels of crude oil.
Even as one group of engineers was removing illegal taps on the line, another
group is thought to have been installing equipment to allow huge amounts of oil
to be siphoned straight into large barges where it would be taken out to sea to
waiting tankers bound for Europe and the US.
"From
the moment I got to the scene [the next day] I was suspicious," says
Catholic priest Father Obi, appointed by Shell to be an official observer for
the Bodo investigation. "The scene had been hurriedly deserted. Shell must
have known what was going on. The military must have known. Everyone knew there
was complicity. I am personally sure that Shell knew that its oil was being
stolen. If the managers did not know, then those who they put in charge [of the
operation]seemed to know. This [theft] could not have happened without the
collusion of the authorities and the military." Obi is concerned that the
official report has still not been published and is threatening to release his
own.
It all
adds up to organised crime stealing oil using the cover of the authorities, he
says. "Why was a massive barge able to hold 10,000 barrels of oil being
loaded at 2am with crude? Why did another catch fire? Why were excavators
there? Why were local observers arrested the next day, their cameras
confiscated and memory cards destroyed? Were the thieves being protected by the
military? Was the company paying workers to clean up oil spilled in the process
of theft they themselves were engaged in? Did Shell know its oil was being
stolen from under its nose?" he asks.
In a
statement, Shell accepted its oil was being stolen when the accident happened
but strongly denied any collusion or knowledge of who might be responsible.
Shell Nigeria's managing director, Mutiu Sunmonu, said: "Unknown persons
continued to reconnect illegal bunkering hoses at Bodo West even as our
pipeline team were removing crude theft points." But the company has yet
to make public its own investigation.
"We
are not aware of any direct involvement [in the Bodo explosion] but we would
take legal action if anything was discovered," adds a spokesman for the
company in Port Harcourt.
"One
has to understand there is this accusation that the oil industry employees are
behind this, but there are thousands of people who have the skills who may have
been working with the industry over the years. These people are outside and
some of them may be for hire. There is a sophisticated organisation, clearly it
is not just local. There has to be a wide network," says Philip Mshelbila,
head of Shell communications in Lagos.
The Bodo explosion is significant because it shows how oil theft
in Nigeria has reached an industrial scale. It is now undermining Africa's second-biggest economy and ranks with
the drugs trade as the most lucrative crime in the world.
According
to President Goodluck Jonathan, 300,000-400,000 barrels of oil per day, or more
than 10% of all Nigeria's production, is being lost at a cost to the state and
oil companies of around £1bn a month – more than is spent on education and the
health of the nation's 168 million people. Not only is Nigerian oil theft
helping to keep the world price of oil high, it is causing corruption and
social disorder, says the president.
"The
figures are huge. [Oil theft]could destabilise Nigeria. The business is worth
billions of dollars a year. It is on an industrial scale, and involves
commodity traders, international [criminals] and a whole network of people.
There are some allegations that the oil companies themselves are
implicated," says presidential aide Ken Saro-Wiwa, whose father, along
with other Ogoni chiefs, was executed in 1995 after a peaceful protest against
Shell.
Mshelbila
says: "We are losing 60,000-80,000 barrels of oil a day. This is just what
we know is stolen from the trunk lines. We have to shut down lines, so, taken
together it's probably 300,000-400,000 barrels a day. We are seeing more
illegal connections, more frequent shutdowns than one year ago."
According
to a report from the foreign affairs thinktank Chatham House, oil is being
stolen not just from pipelines but from tank farms, export terminals, refinery
storage tanks, jetties, ports, pipelines, and wellheads. "Officials and
private actors disguise theft through manipulation of meters and shipping
documents. Proceeds are laundered through world financial centres and used to
buy assets in and outside Nigeria, polluting markets and financial institutions
overseas, and creating reputational, political and legal hazards," it
says.
Much of
the stolen oil is exported to foreign refineries or storage facilities, says
the report, including buyers in West Africa, the US, Brazil, China, Singapore,
Thailand, Indonesia and the Balkans. The proceeds appear to be laundered through
banks and other channels in various African countries, Dubai, Indonesia, India,
Singapore, the US, the UK, and Switzerland.
The
scale of the "bunkering" has shocked observers. Thirty centimetre
pipelines able to transport thousands of barrels of oil a day have been found
leading straight from pipelines into the swamps. The Nigerian navy had to sack
two admirals for their role in the disappearance of a tanker that had been
seized for transporting 11,000 tonnes of stolen crude.
"A
lot of big-time stealing goes on. You know the oil you are offered is
stolen," says one oil trader in Port Harcourt who asks to remain
anonymous. "They give it to you without documents at a cheaper rate. I was
offered 50,000 litres today for 55 naira (20p) a litre. But 75 nairais the
cheapest you can get it from the government. You know it's a racket. There is
no chance of getting caught because there is no system to catch people. Big
business is big politics."
He
alleges that the Nigerian military has become deeply implicated in oil theft
since an amnesty was declared with militants two years ago. "The military
now control the oil platforms, not the militants. People now have to buy oil
directly from the military. The military is a chain of command, so I can only
assume this goes to the very top. Oil theft used to be about people breaking
into pipes. That is not happening any more. If I want to load 200 tonnes of
crude, I would have to pay for a lot of security. It is far easier to go
straight to the military."
Most of
the oil is being stolen by the rich, he says. "It is dishonest for
government and the oil companies to blame the poor for stealing the oil. The
people in the communities are just the foot soldiers. Clearly this is a
sophisticated organisation. Where do people get vessels, the money for bribes
and security? It costs millions. What the poor take is very small. The racket
goes deep into the security and political systems. Tens of thousands of tonnes
of oil is being spirited away every week. All the authorities are involved –
the oil companies, the military, the politicians. There's plenty of money to be
made so everyone is in it."
Research by delta non-government group Stakeholder Democracy Now(SDN)
estimates that 75% of the stolen oil is being exported with the rest being
refined in illegal "artisanal refineries". More than 500 of these are
known to have been set up in the last five years, taking stolen crude and
refining it into a rough diesel for local sale.
According
to SDN, a medium-sized illegal refinery costs around £3,000 to set up but can
earn that back in a few weeks. But the operators need to pay hefty bribes to
the police and military, as well as to buy oil tapped off the 1,600km of
pipelines that cross the delta. Each tapping point, says SDN, can earn more
than £500,000 a month but its investors must pay armed guards, the military,
contractors, local communities and even oil company staff.
Delta
communities freely admit their role in the theft of oil but blame continuing
poverty and pollution for their actions. "The government and oil companies
are collecting our oil and we don't have jobs, or money so we have to collect
the oil and refine our own," says a man in the village of Bolo near where
an illegal refinery was set up five years ago.
Bolo
leaders admit that the military was paid off. "When the refinery was
working it used to refine around 10,000 litres of oil a day. It could only
operate with the help of the police and military, The pay-off system to the
armed forces and police was well organised. It was a plum posting for the
military here. Most army have a lifestyle that you cannot explain," says
Mela Oforibika, a lawyer and chief of the Bolo community.
"This
place was booming. Every house was rented out. Thirty people had jobs. Young
men came in who knew the art of distillation. What moral right did I have to
stop them? It brought us money. The bars were full, the economy
benefited."
But the
pollution from the illegal refineries was extreme because no one knew how to
safely dispose of the waste residues from the diesel-making process. The Bolo
refinery on the small island of Odokian was raided by the military five months
ago, possibly because the consortium who owned it refused to pay the authorities
for protection.
Today,
the four-acre site stinks of oil and may never recover. It is saturated with
waste oil, the palm trees are blackened by fire and there are no fish in the
waterways. Rusting pipes, burned-out oil drums and old metal tanks litter several
acres of what was lush farmland.
Community chiefs blame the oil companies and government for the
pollution rather than the refiners. "There's a heavy level of unemployment
here. People knew what was happening to the environment, but what is the alternative
for the young men? The illegal refineries were set up as a direct result of the
wickedness of Shell and the oil companies who
polluted the waterways and
never compensated us. The refineries have been destroyed but they will come
back. How long can you keep armies to police these communities? We would never
have allowed these [refineries] to come into our area if we had been properly
compensated before," says Boma Ipiurima Asitonka, a Bolo teacher.
"You
cannot abandon people like this. If there was work here, no one would have made
this pollution," says Oisiekel Tubomie, chief of Bolo youth council.
The
only solution to oil theft is to give people a stake in the oil, say the
chiefs. "We propose that the government sets up and licenses legal,
mini-refineries in dozens of villages and sells them oil at cost price so they
can profit, provide jobs and diesel for the communities. It would destroy the
criminality and end the pollution," says Oforibika. But this is not an
option for the oil companies, who must operate in an increasingly volatile
environment bristling with guns. Shell plans to spend £1bn building a new, more
secure loop for the Trans Niger pipeline to bypass Ogoniland and areas where
its present one is regularly sabotaged.
"If the
government and the oil companies spent a fraction of what they lose to theft on
developing the delta communities, they would not have these problems of theft.
As it stands, the oil industry is run by a very small elite for a very few
people. If nothing changes, the future here is bleak," says Oforibika.
