Project Topics

THE MENACE OF ILLEGAL OIL BUNKERING IN NIGERIA: ISSUES AND SOLUTIONS

CHAPTER ONE

                                 INTRODUCTION

1.1     Background to the Study

The Niger Delta region is the crude oil and natural gas hub of Nigeria with several networks of product pipelines (both surface and subsurface) which has created a social problem of vandalization of the product pipelines for the purpose of stealing the product. Illegal oil bunkering in the Niger Delta is massive and as a result bringing concern for the government and the people around these communities where this act is being carried out as it causes a lot of environmental hazard to the people in the communities and brings about security concern to the government. It is estimated that between 200,000 and 300,000 barrels of oil is lost daily to theft, known in the country as illegal bunkering. Most of all the stolen crude is taken to large voyage tankers across the sea and waiting for offshore, which is being refined outside the country. Some of these tankers reportedly meet in mid-ocean to share and blend stolen oil, thus making it more difficult to identify, while the precise contours of the international networks may be difficult to discern; the rest of the stolen oil goes into artisanal refining which is the processing of the stolen crude in makeshift individual facilities into low quality petroleum products.

Many of the operators and oil thieves who are directly and indirectly involved in the bunkering and refining, make money in this multi-billion dollar business, they have secured social license from host communities by launching social welfare programs in the region; like drug cartels in Mexico, of militant jihadists in Pakistan and warlords in Somalia. The militias in the region gained relevance by offering social services such as schools, security, food and education where government is unable or unwilling to deliver these services. In addition to the hard security challenge, oil theft has grown into a cancer that undermines the safety of the environment; the local oil producing communities suffer an incremental social death caused by a complex combination of economic and environmental complications, the environmental impacts oil theft and artisanal refining causes is clearly visible. There is no doubt illegal oil bunkering is rampant among the youths of various communities in the Niger Delta and excercerbate the ecological destruction and social conflict caused by the oil industry.

The sudden increase in oil theft in the Niger Delta region of Nigeria in recent times is alarming. (Akpan 2013; Olusola, 2013; Odemwingie and Nda-Isaiah, 2013; Okere, 2013) reported that as at 2013, Nigeria was losing over 300,000 barrels of crude oil per day to oil theft, pipeline vandalism and related criminal vices in the country’s oil sector. Despite the efforts of the Federal government to curtail the illegal diversion of oil in the Niger Delta by increasing its security spending in recent years and devoting millions of naira annually to hire private security firms as well as equipping men and officers of the Nigeria Security and Civil Defence Corps (NSCDC), constant vandalization of pipelines and other oil facilities across the country as well as transaction in stolen oil by these criminals with international connections have continued to be a problem for the government (Ugwuanyi, 2013; Mernyi, 2014). This shows that, the huge investments of public funds on the safety of oil facilities have not yielded the required results.

Consequently, the Nigerian economy is in a precarious situation. She is currently experiencing an economic emergency unprecedented among the oil producers in the world and drastic steps need to be taken to reverse this ugly trend. No wonder, Nigeria was tagged the most country affected by oil bunkering among her contemporaries like Indonesia, Russia, Iraq and Mexico. Statistics shows that Nigeria is losing about 400,000 barrels of oil per day to oil bunkering which equates to losses of US$1.7-billion a month (Dalby, 2014). This is huge loss compared to a total theft of 5,000 to 10,000 barrels per day and just 2,000 to 3,000 barrels per day in Mexico and Indonesia respectively (Dalby, 2014). Hence, illegal oil bunkering activities in the Niger Delta region pose a big challenge that threatens the foundation of the oil industry as well as the Nigerian economy (Garuba, 2012). It is on this foundation that this study seeks to examine the menace of illegal oil bunkering in Nigeria with a view to analyse the causes and proffer probable solutions to these problems.

1.2     Statement of the Problem

Oil theft became an accepted norm of militant activities long before the Amnesty Programme of the Federal Government (Umaru Musa Yar’adua’s Administration) to be specific. In addition, there have been concerning report of incidence of illegal oil bunkering as well as unauthorized local refineries in the Niger Delta region. This submission is related to that of Wikileaks (2001) which gave a report on “Oil theft or Bunkering” siphons off the life blood of the Nigerian economy for selfish gains. Alas, one would have thought that with the grant of Amnesty and the Federal Government’s efforts to integrate Niger Delta youths into the main stream of economic activities through training and development, the occurrence of illegal oil bunkering in the area would be reduced. Reverse is the case now.

A special report by the United States Institute of Peace, an independent, nonpartisan institution in 2009 revealed that between 30,000 and 300,000 barrels of oil per day is carted away by oil thieves who operate in Niger Delta and that approximately US$100 billion was lost from illegal oil bunkering between 2003 and 2008. A similar report by the UN’s office for Drugs and crime in 2009 estimated as much as 150,000 barrels of crude oil stolen daily from the Niger Delta, while the country losses about $6 billion to oil theft annually (Sunmonu, 2014).

We begin to surprise as why the fight against illegal oil bunkering in the country is still persisting despite the fact that we have more than enough security to deal with this situation. The main problem one can infer from this is that there are some saboteurs within the circle of government who are behind this illegal oil bunkering in the country. For example, in 2001, the Special Security Committee on Oil Producing Areas, set-up by the Obasanjo’s administration to identify those behind the illegal oil bunkering, noted in its report that “a major threat to Nigeria’s oil industry arises from activities of a cartel, which comprises highly placed and powerful individuals within the society, running a network of agents to steal crude oil and finished produce from pipelines in the Niger Delta region”, and could possibly be enjoying the patronage of some retired or top serving military and security personnel, political allies of government, who benefitted from the illicit oil business and have persistently frustrated efforts by the international community to assist Nigeria fight the culprits (Nwachukwu, 2014).

Unfortunately, those involve or rather infested by this bug of (oil theft), due to selfish reasons and the get rich quick Nigerian syndrome are rather myopic not really ascertaining the effects this is having on the economy and the image of the country in the outside world. Nigeria needs to fasten and tight up her security belt in order to profer lasting solution to this menace of illegal oil bunkering in the state so as to fare better economically.

1.3  Research Objectives

The objective of this study is to examine the issues and solutions to the menace of illegal oil bunkering in Nigeria. The specific objectives are:

i)            To examine the prevalence of the menace of illegal oil bunkering in Nigeria.

ii)          To investigate the reasons for the menace of oil bunkering in Nigeria.

iii)        To proffer solutions to the issue of the menace of illegal oil bunkering in Nigeria.

1.4  Research Questions

The following are some of the questions which this study intends to answer:

i)            What is the prevalence of the menace of illegal oil bunkering in Nigeria?

ii)          What are the reasons for the menace of oil bunkering in Nigeria?

iii)        What are the possible solutions to the issue of the menace of illegal oil bunkering in Nigeria?

 

1.5  Significance of the Study

The study is important, as it has helped to demystify all that secrecy that has shrouded the subject of oil bunkering in Nigeria. It is expected that the research will contribute more to the frontiers of knowledge as much was revealed in the course of the study. Both the maritime and oil industries stand to benefit immensely from the results of this research, especially as its recommendations may lead to government action in regulating the trade thus improving its contribution to the growth of the economy. Behind all that is known as illegal bunkering there is a resemblance of organized bunker trade in the country. This study has identified the major players in the trade and regulatory policies aimed at checking substandard practices and illegal bunkering. Clearly an organized bunker market will add value to the economy more so as Nigeria has the ambition to become one of the leading economies by the year 2020.

1.6  Scope of the Study

This study is concentrated on all that is expected to be known about bunkering in Nigeria with emphasis on the Niger Delta Region and what happens elsewhere in the world. An attempt was also made to look at the origin and history of bunkers. Recommendations will be made on the way forward and how the country can get maximum benefit from curbing oil bunkering.

1.7   Limitation of the Study

The researcher encounters some constraints which limited the scope of the study;

Finance: Due to the nature of location within the scope, the researcher spends a lot of money on visiting, traveling from one location to another, and even had to repeat a visit more than three times to seek for information, all these involves money considering the financial constraint of the researcher and limited resources available to him.

Time: Time constraint has been another vital limitation and obstacle towards effective realization of the main objectives of this study. Time was really not on the side of the researcher since the researcher has to combine the little time left with my academic work and preparation.

1.8  Definition of Terms

For a proper understanding of this work, key terms used are defined based on their conceptual relevance to this study

Oil Bunkering: it refers to oil taken from pipelines or flow stations, as well as extra crude oil added to legitimate cargo that is not accounted for

Vandalisation: is the behaviour attributed originally to the Vandals, by the Romans, in respect of culture: ruthless destruction or spoiling of anything beautiful or venerable. The term also includes criminal damage such as graffiti and defacement directed towards any property without permission of the owner.