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Shell: Nigeria Oil Industry Leaking Profits

A man carries a coffin as protesters march through a road on the third day of a protest against a removal of fuel subsidies in Nigeria's commercial capital Lagos, January 11, 2012.

A top oil firm says Nigeria's oil industry is falling far short of its potential due to theft and mismanagement.

Ian Craig, Royal Dutch Shell's director for sub-Saharan Africa, said Nigeria could be producing up to 4 million barrels per day. Craig told a conference in Abuja on Tuesday, however, that thieves were stealing about 150,000 barrels per day by bunkering, or cutting right into pipelines to steal oil.

Craig also blamed the state-run Nigerian National Petroleum Corporation - which partners with all foreign oil firms - for chronically underfunding projects.

Shell is the dominant oil company in Nigeria, which is Africa's largest oil producer and currently pumps about 2.4 million barrels a day.

Production had been drastically lower until a 2009 amnesty program was initiated for militants who were targeting facilities, pipelines and workers in the oil-rich Niger Delta.

Many Nigerian activists accuse Shell of allowing oil pollution in the Niger Delta. An oil spill late last year from Shell's Bonga oil field dumped 40,000 barrels into the waters off Nigeria's coast.

Oil has also been a source of political tension. Demonstrations erupted across Nigeria in January after the government announced it was ending a consumer fuel subsidy, causing prices to double. The government later announced a partial rollback of the price hikes.

The fuel subsidy was one of the few benefits most citizens enjoyed from the country's oil wealth.

President Goodluck Jonathan has said Nigeria can no longer afford the $8-billion fuel subsidy. He promised to use the money saved on infrastructure and social programs.

Some economists have said the subsidy was wasteful. But protesters allege that government corruption and mismanagement are responsible for the oil-rich nation's widespread poverty.

Some information for this report was provided by AFP and Reuters.