ILLEGAL OIL BUNKERING IN NIGER DELTA

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Illegal oil bunkering has increased in recent times in Niger Delta

Submitted: May 26, 2017

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Submitted: May 26, 2017

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ILLEGAL OIL BUNKERING IN NIGER DELTA

 

INTRODUCTION

1.Niger Delta derives its name from the River Niger and is one of the world’s largest wetlands and Africa’s largest delta. There are 9 states comprising the Niger Delta namely; Akwa-Ibom, Rivers, Bayelsa, Delta, Cross River, Abia, Edo, Imo and Ondo states.The Niger Delta is a host to Nigeria’s proved Oil and Gas reserves. Under the Nigerian constitution, all minerals, oil and gas in Nigeria belong to the federal government. Oil extraction outside the framework of an agreement with the federal government is illegal, as is the possession of crude oil by anyone not licensed to do so. According to the petroleum resources minister, Dr. Ibe Kachikwu, Nigeria loses up to 800,000 barrels per day due to increase illegal oil bunkering as against 400,000 barrels as at 2013 and this has resulted to loss of about 350,000 jobs in the oil sector. The Department of Petroleum Resources and the Nigerian Navy play an important role in regulation of oil bunkering business in Nigeria. The government through the appropriate agencies sells the reserves in blocks to deserving companies who in turn explores for crude oil.

Illegal oil bunkering in Niger Delta has been on the increase in the last 10 years. Illegal bunkerers forge documents and signatures of approving naval officials and government officials. Using this method, crude oil is moved outside the shores of Nigeria. In most cases, government officials cooperate with them after being enticed with money. Most Illegal oil bunkering leads to the loss of billions of dollars in public funds. The oil bunkering is not carried out by common people or miscreants because they do not have what it takes to engage in this illicit business. They do not own ship or even market connection to sell their huge consignment of stolen oil. According to findings, illegal oil bunkering are perpetrated by powerful Nigerians with the connivance of the officials of International Oil Companies (IOCs), government officials while officially selling crude oil to legitimate buyers. Stolen Nigerian crude is transported by internationally registered vessels, sold to international buyers, processed by international oil refineries and paid for using international bank accounts. These are the people who cost Nigeria 800,000 barrels per day.

 

However, many of the Niger Delta natives that engage in illegal oil bunkering do not see it as stealing. They claim that they are “taking part of the national cake” which according to them legitimately belongs to them but are inequitably distributed in the country while they suffer environmental degradation with no meaningful infrastructural development in their areas.

AIM

2.The aim of this presentation is to enlighten us on illegal oil bunkering in Niger Delta with a view to making recommendations on ways to curb the excesses.

SCOPE

3.The presentation shall cover the following:

a.What is Illegal Oil Bunkering?

b.Reasons and Factors that encourage Illegal Oil Bunkering

c.Effects of Illegal Oil Bunkering

d.Role of the Military (Nigerian Navy) in Curbing Illegal Oil Bunkering

e.States under Niger Delta Area

f.Facts and Figures

WHAT IS ILLEGAL OIL BUNKERING

4.Pikin (2013) stated that illegal oil bunkering in Nigeria is known as theft of oil regardless of whether it takes place on land or at sea. Bunkering is generally refers to supplying vessels with fuel. Bunkering is the practice and business whereby duly licensed operators stores petroleum products in tanks and subsequently provide fuels, water and lubricants (bunkering services) for marine services on request.

Illegal oil bunkering is bunkering carried out without requisite statutory licenses or valid documents and in violation of laid down guidelines and procedures. Simply put, illegal oil bunkering is an activity that involves sale of refined or crude oil to ships without NNPC license, authorization or without payment of taxes, levies and dues to the government.

 

REASONS AND FACTORS THAT ENCOURAGE ILLEGAL OIL BUNKERING

5.Lack of Adequate Petroleum Products in Most Riverine Communities of the Niger Delta:  There are inadequate petroleum products in most of the riverine areas of the Niger Delta. And as such available ones are sold above the normal price. This leads to illegal oil bunkering.

6.Poverty and Neglect by the Government. Some of the natives of the Niger Delta engage in illegal business due to poverty. They also feel they are being exploited without any development in the area.

7.Collaboration with Powerful Persons and International Communities: The oil majors are usually involved in this hanky-panky without being checked since they have the support of cabals with heavy political linkage. They are actually the illegal bunkerers, crude oil taken out of the shores of Nigeria is without a Bill of Lading.

8.High Rate of Unemployment: The people who lived where oil is discovered feel they also should get money out of oil and so they could justify getting involved in illegal oil bunkering as alternative to unavailability of jobs.

9.Corruption/Mismanagement of Public Fund: People engage in illegal oil bunkering as a result of corruption in the country. Everybody wants to get rich quick and therefore engage in illegal oil bunkering. Some of the host community representatives embezzle fund meant for the development of the area.

10.Thriving Black Market/Availability of Foreign Buyers: There is a thriving black market for the trading of crude oil. For as long as this exists, the practice will continue. When those who buy crude oil refuse to buy from the black market, the practice will become non-profitable and useless.

EFFECTS OF ILLEGAL OIL BUNKERING

11.Loss of Revenue: Nigeria loses billions of dollars to illegal oil bunkering which could have provide massive infrastructure, employment and provide social amenities like clean water, basis healthcare and schools and strong cash reserves needed to finance development in the country. Activities of the illegal oil bunkerers grossly affect the budget.

12.Environmental Effects:  Sabotages and crude oil theft according to a report is responsible for a large percentage of oil spills. Oil spills result in ground water poisoning, destruction of agricultural land, fishery and livestock and fast disappearing mangrove forest.

13.Health Effects:  The air which is polluted has no boundary in its flow, while the aquatic lives in the affected creeks find its way into the stomach of Nigerians and even across the West African Sub Region.

14.Socio-Economic Losses: Also, due to the loss of oil revenue to the oil thieves, Nigeria can no longer export crude oil above two million barrels per day as opposed to budgetary provision of over 2.5 million barrels per day. As a result of illegal oil bunkering, coupled with fall in price of crude at the international market, government is failing to meet its obligations to the citizenry, while domestic debt is rising rapidly. In recent times, as a result of loss of revenue caused, among others, by this phenomenon, many states and local governments have been unable to pay salaries to public and civic servants or meet other obligations to the citizenry.

15.Criminality and Insecurity: Presently, Nigeria has the capacity to produce 2.5million barrels of crude oil daily. However, Nigeria produces less than 2 million barrels a day. This is so because when pipelines are damaged and shut down, production is adversely affected. The resultant loss of revenue is the foundation of threats to national security as the nation depends heavily on oil revenue for survival. Oil theft and illegal bunkering fuel conflict, militancy, arms proliferation and drug abuse.

Some of the stolen oil is exchanged for arms in the high seas, just as some of the proceeds are used to purchase arms needed to secure the business. It gives rise to criminal gangs who engage one another and engage government forces in a bid to remain in business. The proliferation of small and heavy arms leads to insecurity of lives and property.

A great deal of the proceeds is also used to create global links between oil thieves, pirates, arms, drugs and human traffickers across the Gulf of Guinea and even to sponsor global terrorism. The security implications are frightening.

 

ROLE OF THE MILITARY (NIGERIAN NAVY) IN CURBING ILLEGAL OIL BUNKERING

16.The role of the Nigerian Navy has been in the areas of surveillance, response initiative and enforcement. The Nigerian Navy is winning the war gradually on daily basis against illegal oil bunkering. It has intensified patrol of the maritime areas of the country in order to deter any form of security beaches and threats.

The Nigerian Navy has arrested quite number of vessels, boats and barges so far and handed over to the appropriate authorities for prosecution. Illegal refineries are also destroyed. The Nigerian Navy has developed technology to monitor and intercepts vessels on Nigerian water ways carrying stolen oil with the use of RMACC and Falcon Eye.

STATES UNDER NIGER DELTA AREA

17. Niger Delta is made up of Akwa-Ibom, Rivers, Bayelsa, Delta, Cross River, Abia, Edo, Imo and Ondo states.

 

FACTS AND FIGURES

  1. Oil Bunkering was introduced as a legitimate business activity in Nigeria with license issued by Department of Petroleum Resources (DPR) in 1979.
  2. It was thwarted in 1984 due to some abuse of the system.
  3. DPR is the authorized body that issued and review licenses as well as permits and approvals for oil bunkering activities.
  4. The losses arising from illegal oil bunkering to Nigeria’s government has been estimated at £7bn a year, the crime causes other stakeholders e.g. the United Kingdom, United States of America, and their allies to incur losses
  5. Illegal oil bunkering has a history of over 30 years.
  6. Nigeria is ranked worse than Mexico, Iraq, Russia and Indonesia in terms of illegal oil bunkering.

 

CONCLUSION

18.We want to conclude this presentation by reminding you that illegal oil bunkering is an activity that involves supplying refined or crude oil to buyers without NNPC license, authorization or without payment of taxes, levies or dues to the government.

19.Illegal oil bunkering has been on the increase on recent times. The reasons and factors that encourage illegal oil bunkering were discussed as well as its effects. However, it is no longer news that Nigeria loses billions of dollars to illegal oil bunkering. This indirectly results to loss of jobs, non-payment of salaries and insecurity among others.

20.Stolen Nigerian oil worth billions of dollars is sold
every year on international markets and much of the
proceeds are laundered in foreign banks.

21.The Department of Petroleum Resources and the Nigerian Navy are the regulatory and enforcement agency for oil bunkering.

 

RECOMMENDATIONS

22.Modular or local refineries which is being referred to as illegal, should not be burnt or destroyed, they should be added as mini-refineries. More floating stations should be provided. This will bring about the availability of the product.

  1. initiation of development programmes to cater for the development needs of the region.

 

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25.Federal Government to intensify massive international sensitization campaign in the media against crude oil theft and illegal bunkering activities in the Niger Delta.

26.Multinational oil companies should improve on Corporate Social Responsibilities (CSR) and move their Head Quarters to the Niger Delta in order to oversee what they do in the region.

27.Corruption in the oil sector should be addressed through strict regulatory framework.

28.All those involved in the oil business all over the world, particularly those who buy Nigeria’s crude oil must resolve to buy with ethics. Ethical buying will often times involve paying a little more but it is worth it. We should know that for every cheap barrel of stolen crude bought from Nigeria, some innocent, hapless Nigerian child, woman or man is paying a heavy price.

29.The communities should be involved in the process of decision-making in all aspect of resource management.

 

REFERENCES AND SUGGESTED FURTHER READING

 

  1. Oriji & Samuel (2016): Oil Bunkering Activities in the Niger Delta “The Way Forward” American Journal of Engineering Research
  2. Ingwe (2015): “Illegal Oil Bunkering, Violence and Criminal Offences in Nigeria’s Territorial Waters and the Niger Delta Environs: Proposing Extension of Informed Policymaking” University of Calabar
  3. Edet (2015). Buying with a Conscience: Curbing Crude Oil Theft in Nigeria
  4. http://nigeriaoilgas.com.ng/?p=1116
  5. http://www.navy.mil.ng

 



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