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March 27, 2014

Oil Theft Dilemma Stymies Nigeria's Niger Delta

by Heather Murdock

Officials in Nigeria's Niger Delta region have burned down hundreds of private oil refineries in recent months on the grounds they are illegal. Some activists are calling for legalization of these refineries, which currently sell black market fuel. Critics say legitimizing theft will only compound Nigeria's problems with chronic fuel shortages and general impunity.
 
There's a long-standing dilemma in Nigeria's oil-rich Niger Delta region. The people are desperately poor and blame the oil companies for polluting their land and fishing waters. As a result, many folks steal oil from pipelines and refine it in barrels along the creeks. That, in turn, further pollutes the environment.
 
The government is caught in the middle, unable or unwilling to completely stop the black market oil trade, but burning down illegal refineries by the hundreds. When the fires die, the refineries are re-built.

Edward Oforomeh, a lawyer and former police superintendent, said, "We have been reading every day, every day that they have been destroying the refinery, destroying the refinery. And they come back. If they come back after destruction, what do you infer from that?"

'Vibrant' black market
 
He said the only way to end this cycle is to legalize and regulate what is now a vibrant black market oil business.
 
"Is this not a vicious cycle? We are just going around the periphery of the whole issue," said Oforomeh. "Solve it by legalizing them, licensing them so they would be able to contribute to the coffers of the government."

He said if the practice were legal, small-time refiners would purchase crude oil from the government refineries, which only refine half of the oil they are allotted.  
 
Activists say they have asked the government to set up a legal framework for small-time refiners, but have gotten no response.

Significant losses

Some observers say that the problem with this plan is that people will not buy crude oil when they can tap into the pipes for free. The Nigerian government says it loses as much as $1 billion a month to oil theft.
 
Wole Olaoye, a columnist for Nigerian newspaper The Daily Trust, said, "Stealing is wrong. These guys breach the pipes, steal the products and refine the goods locally. There is no environmental impact assessment done. Nothing done. They just cause untold pollution.  They steal the resources of the state."

He said any move to regularize the black market oil trade would contribute to another larger problem Nigeria faces: impunity. Analysts and officials across the country complain that many crimes in Nigeria go unpunished, fueling insurgency in the north and instability in the Niger Delta.
 
But in Warri, a Niger Delta oil city, locals say the real thieves are the oil companies, scooping up resources and leaving behind spills. And what fuels instability is simply that amid all this, there's often not enough fuel to run cars or electricity to keep the lights on.
 
Shortages amid abundance

A generator keeps the lights on at a hair salon in Warri. Hairstylist Samuel Okoro said local businesses need to buy black market fuel to run generators because there's often not enough at the gas stations and there's only a few hours of government electricity a day.  
 
"We have fuel in this country, but we cannot see the fuel to buy. We have crude oil in this country, but we don't have it to buy," explained Okoro. "What our concern is that as far as we can have the quality oil to buy.  Whether it's from legalizing the so-called illegal refineries or for the government building more refineries."

At the end of February and for the first few weeks of March, many gas stations across Nigeria were closed because they had no products. The few that were open had lines where drivers sat for up to eight hours to wait for fuel at a regulated price. Other stations that had fuel upped the price as much as 50 percent.

Hilary Uguru contributed to this report from the Niger Delta.