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The Political Economy Of "Illegal Refining" In The Niger Delta By Kọmbọ Mason Braide (PhD; FNSChE) Port Harcourt, Nigeria
Crude oil theft ("illegal bunkering", in Nigerian parlance) has risen from 50,000 barrels per day (bbl/d) in 2003 (1), to very alarming levels, currently at approximately 100,000 ~ 150,000 barrels of crude oil that is stolen daily (2 & 3), sufficient to provide crude oil feedstock for three (3) refineries that are the size of the old Shell-BP Refinery at Alesa-Eleme, or the new Port Harcourt Refining Company, (PHRC) daily! Between 75,000 barrels and 110,000 barrels of stolen crude oil is disposed of outside Nigeria, by trans-shipments from relatively smaller barges anchored off-shore, and sold mainly to buyers in the ECOWAS sub-region, and beyond, through the complicity of industry insiders, in collusion with criminal networks in Nigeria and overseas. Interestingly, close to 38,000 barrels of stolen crude oil are reserved daily for local artisanal refining and consumption in the Niger Delta. The inventory of crude oil feedstock for "illegal refining" alone is sufficient to run the defunct Shell-BP Refinery at Alesa-Eleme. Illegal artisanal refining fills an economic vacuum for the young men (and women) in the creeks and remote rural communities which suffer the adverse ecological impacts of oil extraction, but derive little or no tangible economic benefits. The artisanal refineries operating in the creeks of the Niger Delta, though illegal, provide both badly needed employment, and also bridge gaps in the availability and supply of premium motor spirit (petrol), and automotive gas oil (diesel) in the oil-bearing communities of the region. The federal and state governments have failed to provide basic (physical and social) infrastructure, including the effective maintenance of security, law, and order in some communities in the Niger Delta, which has stretched the patience of the youths in the region, with dire consequences in some areas. With the connivance of some corrupt politicians and businessmen in the Niger Delta the region, in tactic collaboration with some serving and retired military and paramilitary personnel, including federal and state government officials, crude oil theft remains unabated, despite draconian penalties against violators. Incidentally, the oil bearing communities consider artisanal refining as expedient and justifiable, given the absence of gainful employment in the cities, towns, and rural communities of the Niger Delta. Understandably, all attempts at stopping the operation of "illegal" refineries in the Niger Delta are met with stiff resistance. Studies by Stakeholder Democracy Network (SDN) suggest that the artisanal refining business is worth about US$1 million (approximately NGN200 million) daily, or US$336 million (NGN67.2 billion) yearly: more than the revenues that reach the communities from their local governments, thus making "illegal refining" the most lucrative business in the creeks of the Niger Delta. Although the theft of crude oil and artisan refining are illegal, the SDN study views such activities as entrepreneurial responses to local economic dysfunctions, given the region’s chronic energy shortages, and the failure of federal, states, and local governments to deliver basic physical and social infrastructure for the oil producing communities of the Niger Delta. Definitely, illegal crude oil refining in the region attracts dire economic, ecological, and socio-political consequences, and further aggravates severe environmental damage caused by ruptured crude oil pipelines, and serves as a convenient alibi to justify inaction by local and foreign oil prospecting companies over their oil spill clean-up, and remediation obligations. Based on the UNEP report on pollution in Ogoniland alone, it is conservatively estimated that, artisan refining and crude oil theft cause significant environmental damage, amounting to about US$50 million per annum, per impacted location in the Niger Delta. Unless the economic and political motives behind crude oil theft and "illegal refining" are addressed satisfactorily, the stability of Nigeria’s oil industry remains threatened. These risks include a return to youth restiveness, insurgency, a drastic drop in Nigeria's crude oil production and export, and the predictable loss of revenue, yet again. There is therefore an urgent need for extensive stakeholder consultations between the state and federal governments, civil society, and oil exploration and production (E&P) companies, to jointly develop holistic responses for raising awareness about the health, safety, and environmental impacts of "illegal bunkering", and artisan refining in the Niger Delta region. However, in the absence of credible alternatives, "illegal refining" will continue to thrive and provide solutions, even if on an ad-hoc basis, to cushion the burden of prevailing acute fuel shortages, unemployment, and pervasive poverty in the Niger Delta region of Nigeria. Alternatively, decriminalizing, harmonizing and deregulating "illegal" refining operations could be applied creatively to energize entrepreneurial activity, particularly among the youths who constitute the current work force of the "illegal refineries" in the region. The vulnerability of crude oil and natural gas pipelines calls for a radically different approach for ensuring the effective protection of such critical infrastructure in the Niger Delta (1 & 4). Traditional methods of utilizing high-tech hardware and military interdiction to safeguard the crude oil pipelines often do not yield the desired results. It is the involvement of the people in the oil producing communities in the decision making for pipeline protection that can guarantee the sustainable security and safety of those pipelines. Feeling ownership over the crude oil and natural gas pipelines, well heads, and flow stations, and also being convinced about the positive impact on their communities can encourage people in the Niger Delta to take more active roles in the protection of the pipelines that traverse their lands, and serve as a support resource for the physical defence of those pipelines, if need be. The resourcefulness of ordinary people, especially those living in the rural communities of the Niger Delta region, should not be underestimated. REFERENCES: 1. BRAIDE, K.M: "The Political Economy of Illegal Bunkering in Nigeria"; (19 July 2003). http://www.gamji.com/kombo/kombo3.htm 2. KATSOURIS, C. & SAYNE, A.: "Nigeria’s Criminal Crude: International Options to Combat the Export of Stolen Oil"; Chatham House, London, UK; (2013). 3. SDN Communications: "Communities Not Criminals – Illegal Oil Refining In The Niger Delta"; SDN Research and Reports; Stakeholder Democracy Network Nigeria Secretariat, Port Harcourt, Nigeria; (2013). 4. BRAIDE, K.M: "A Proactive approach to Pipeline security"; (27 September 2005). http://www.gamji.com/kombo/kombo21.htm 5. EBIRI, K.: "Economic Insurgency: Why Oil Theft, Illegal Bunkering Persist"; The Guardian Newspaper, Lagos; (2 February 2014).
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