Africa

Nigeria's piracy - another form of oil theft

  • 18 June 2013
  • From the section Africa
Ship destroyed for carrying stolen oil
Image caption This ship allegedly carrying stolen oil was destroyed by the Nigerian authorities

The piracy problem off the coast of West Africa highlighted by an International Maritime Bureau (IMB) report is, overwhelmingly, a Nigerian problem.

The IMB report said maritime piracy was now more prevalent off the coast of West Africa than around Somalia.

This is partly because an international naval task force has been patrolling the coast off Somalia.

But it is also partly because of the peculiarities of the Nigerian economy and widespread corruption there.

A map in the IMB report showing the most dangerous waters in West Africa draws a line around the coast of Nigeria - with a small extension into the territorial waters of the much smaller countries of Benin and Togo.

'Story behind the story'

While the typical modus operandi of a Somali pirate has been to hold ships and kidnap sailors for ransom, in Nigeria the main motivation is to steal crude oil or refined petroleum products from tankers.

"Many vessels are attacked while at anchor, drifting, or conducting ship-to-ship transfers of refined cargo," said the IMB report.

"Only 33% of vessels were attacked while actively in transit in the Gulf of Guinea. In contrast, attacks off Somalia almost always occur while ships are underway."

The "story behind the story" of the IMB report - and the reason so many tankers are plying the coast in and out of Nigeria - has been a chronic failure by the authorities there to build and maintain domestic Nigerian oil refineries.

To put it bluntly: There is so much money to be made from exporting crude from the sub-region's biggest oil producer - and re-importing refined fuel to the very large, petrol-thirsty Nigerian population - that developing a real, productive economy by doing things like building oil refineries has been almost forgotten.

In a good year Nigeria produces more than two million barrels of oil a day, making it one of Africa's largest producers.

But it only has the capacity to refine less than a quarter of that.

In practice, poor maintenance at the handful of oil refineries means far less than a quarter is actually processed in-country.

So every day hundreds of tankers are plying the Gulf of Guinea and the mangrove swamps of the Niger Delta, where Nigeria's many, relatively small and scattered onshore oilfields are found.

Image caption The creeks in the Niger Delta are perfect for pirates

Right to cheap petrol

The tankers are either taking crude out or bringing refined fuel back in.

When combined with weak and sometimes corrupt security forces, this creates a perfect scenario in which pirates can operate.

The swamps conceal numerous private jetties and mini-ports as well as a network of pipelines which are often broken into.

Corruption and, until recently, armed rebellion in the oil producing areas have led to the development of an entire, well-organised industry for stealing - or, as it is known in Nigeria, "bunkering" - oil products.

This criminal import-export industry has become almost institutionalised by a national government subsidy on petrol sales that costs the country several billion dollars a year and encourages illicit activities.

The subsidy is paid to politically well-connected fuel importers to keep prices low and so stop unrest among the majority of Nigerians who are very poor.

Nigerians know perfectly well how much money is being stolen at the top of their society and have therefore come to demand cheap petrol as their slice of the pie - and their political right.

However, what actually happens to much of the subsidised fuel is that it, too, is sold on the black market at higher prices.

Topsy-turvy world

When this happens, Nigerians are hit by a double whammy.

Their government is ripped off by the fuel importers breaking the rules. And they are personally ripped off by the higher prices.

Ordinary Nigerians live in a topsy-turvy world where petrol stations are never quite what they seem.

It is commonplace in Nigeria to see petrol stations which are abandoned and empty - but where there are small mountains of stacked jerry cans of petrol being sold just by the roadside.

The petrol stations are supposed to be selling the subsidised petrol.

But the fuel has been diverted to the jerry cans where it is sold at a higher, black market rate.

When the authorities clamp down on this diversion and fuel is correctly sold at the subsidised rate inside petrol stations, huge queues develop as people try to get their share.

Some ministers in the Nigerian government have on occasion tried to remove the subsidy and introduce a more rational system.

But they have been prevented from doing so by the threat of near revolution from ordinary people and what Nigeria's President Goodluck Jonathan has called an "evil cabal" of people making money from the current arrangements.

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