PRESENTATION OF RESEARCH REPORT PRIVATE GAIN, PUBLIC DISASTER: SOCIAL CONTEXT OF ILLEGAL OIL BUNKERING AND ARTISANAL REFINING IN THE NIGER DELTA BY BEN NAANEN & PATRICK TOLANI UNDER THE AUSPICES OF NIGER DELTA ENVIRONMENT & RELIEF FOUNDATION (NIDEREF), PH, NIGERIA & REDEEMERS RELIEF AGENCY INT’L (RAIN), OXFORD, UK 30 SEPTEMBER, 2014

PRESENTATION CONTENT Introduction Objectives Project Location Study Approach / Fieldwork Observations Findings Recommendations Conclusion

INTRODUCTION Nigeria has been losing about $6 billion worth of oil pa to theft in recent years which is about 6.25 % of the country’s total export value. About 80% of the stolen oil is exported while 20% is crudely processed into low quality petroleum products for the internal market. This scale of loss is close to a national economic emergency. Nigeria has the highest rate of oil theft in the world – about 145,000 bpd or 7.25% of total production. Closest rival is Russia which looses about 150,000 bpd or 1.5% of total production. Unfortunately, theft of Nigerian oil is seen abroad as a uniquely Nigerian problem that does not represent credible threat to the international economy or world peace and security, hence it is difficult to get the support of int’l community to combat it. So Nigeria has to find an internal solution to its self-inflicted crisis.

KEY FACTS Amount of oil stolen per day – 145,000bbl = 52, 925,000bbl/year. Financial loss to Nigeria - $6 billion pa. Size of illegal bunkering economy - $9 billion pa. Illegal bunkering employment – more than 26,000 men and women directly or indirectly receive incomes from illegal bunkering and artisanal refining.

Public health risk oil pollution: Bodo creek in Gokana LGA of River State has one of the highest levels of hydrocarbon contamination in the world – 0.526mg/kg of TPH and 0.044mg/kg of PAH. Reference point for most researchers is Potomac River, USA which has 598ng/kg of PAH. High values of TPH and PAH correlate with possible lung, kidney, heart and testicular damages. Exposure to PAH is primary risk factor of lung cancer.

RESEARCH OBJECTIVE To unravel the processes and social ramifications of illegal bunkering (oil theft) and artisanal refining To produce recommendations and social action tools that would lead to the mitigation of the problem

PROJECT GEOGRAPHICAL SCOPE BAYELSA STATE Nembe, Southern Ijaw LGAs Ogbolomabiri Ekulama Ekeremor LGA DELTA STATE Ugheli South Ugheli North Burutu LGA Warri South RIVERS STATE Gokhana, Adonis, Tai LGAs Bodo - B/K Dere – Bolo axis Ogu Bolo LGA Bolo community Area of Study

FIELDWORK ACTIVITIES Fieldwork, between March and October 2013 Rivers State – Gokana, Tai & Ogu Bolo LGAs Hot Spot – Bodo-Bolo Axis

FIELDWORK ACTIVITIES Bayelsa State – Nembe, Ekeremor & Southern Ijaw LGA Hot Spots – Nembe Axis, Azagbene and Igbomaturu

FIELDWORK ACTIVITIES Delta State – Ugheli, Burutu & Warri South LGAs Major hot Spot – Ojobo, Obi-aghaga and Kiagbodo, Uzere

FIELDWORK ACTIVITIES Relevant Government Institutions – Interviews IOCs JTF Op Pulo Shield & camps in RV, BY & DT NNS Pathfinder Illegal bunkering com’ties First hand observations of bunkering ops in camps Int’views at oversea locations

FINDINGS / OBSERVATIONS SOURCES OF CRUDE Abandoned and uncapped Well heads Pipeline vandalization 3,203 oil spills occurred in Nigeria from 2006 – 2010 70 % attributed to sabotage – FMENV

SPDC OIL SPILL RECORDS 2011 - 2013

COMMUNITY CONSULTATIONS

THE SITE VISITS

FIELD WORK – OBSERVATIONS

TYPICAL PROCESS SCENARIO

Contribution of Oil to the Nigerian Economy

FUTURE TREND IN OIL THIEFT The effectiveness or otherwise of current anti-bunkering measures: Effective enforcement measures will vastly reduce oil theft while the current lackluster approach will contribute to increasing or stabilizing theft at the current level The prospects of stability in the region: Widespread conflict such as occurred between 2001 and 2010 will most likely lead to increase in theft International oil prices: Current price levels will continue to be conducive to theft while a fall will diminish the profit margin and act as disincentive. In fact should there be a glut, oil thieves may find it difficult to sell and thereby reduce the rate of theft

CAUSES OF ILLEGAL BUNKERING Socio-Economic Factors Poverty and deprivation / capital accumulation Local bunkering and artisanal refiners mostly driven by poverty Export-led theft driven by profit and capital accumulation High youth unemployment Underdevelopment Perceived exclusion from the benefits of the oil economy

CAUSES OF ILLEGAL BUNKERING Political Factors Failed state syndrome – weak institutions, weak governance Corruption Resource curse thesis/paradox of plenty Resource control assumptions

CAUSES OF ILLEGAL BUNKERING Market Factors High oil prices, soaring profits Scarcity of petroleum products in riverine communities of Niger Delta High domestic demand for cheaper fuel Robust international demand for oil Vulnerability of Oil Installations and Weak Deterrence Oil installations, especially pipelines, are not protected hence vulnerable to attack Oil installations can easily be sabotaged without serious consequences for perpetrators

IMPACT AND CONSEQUENCES Economic Impact - Huge loss of revenue to government - Impact of revenue loss on national, state and LG budgets and socio-economic development - Dwindling oil and gas investment - Neglect/death in the local communities of other artisanal occupations Social Impact - Social crisis decline of education – increase in school drop outs lack of interest in other necessary low income occupations

IMPACT AND CONSEQUENCES Political Impact - Nigerian politics, driven by desire to control oil revenues - Threat to democracy – overwhelming influence of oil money on elections - Weakening of state institutions and political instability - Potential rise of petrocracy - Arms proliferation - Security and human rights violations

FINDINGS – CONSEQUENCES Environmental and Public Health Impact Wide spread environmental impact – land degradation and possible groundwater contamination Compounded destruction of marine ecology and fishery economy Possible outbreak of cancer pandemic due to hydrocarbon contamination - Potential Bhopal or Chernobyl in the Niger Delta Lung and skin diseases and burns are on the increase Spread of sexually transmitted diseases, including HIV_AIDS

Environmental Impact DEFORESTATION – LAND DEGRADATION – GROUNDWATER CONTAMINATION FOREST FIRES – CO2 EMISSIONS – CLIMATE CHANGE IMPLICATIONS

LIMITATIONS OF CURRENT COMBATING MEASURES Criminalization/legal approach Discouragingly negligible rate of conviction of arrested suspects Corruption by security and law enforcement officials Intervention of influential individuals Advocacy Inadequate education and awareness campaigns Military Action – use of security forces, JTF, Navy Pipeline Security (surveillance) Challenges and Shortcomings of Current Pipeline Surveillance Programmes Technology and Oil Theft Mitigation Aerial Surveillance Sensing Technology Pressure Monitoring LIMITATIONS High level corruption among State security officials

SUMMARY OF RECOMMENDATIONS Immediate Measures Addressing the socio-economic foundation of illegal bunkering through an attack on poverty and job/livelihood creation targeted at the youth who must be made to come out of the creeks. Pipeline protection through community-based surveillance, replacing the private contractor surveillance. In exchange for this role communities receive development support through GMOU.

Speedy prosecution of oil theft cases by setting up a special judicial mechanism exemplified by special courts. Policy review to allow communities own modular/cottage refineries that would contribute to addressing local supply disequilibrium, build local capacity in the downstream sector and empower local communities through job creation.

SUMMARY OF RECOMMENDATIONS Recommendation for the IOCs Socio-Economic Initiatives-Towards a new Development Paradigm Socio-Economic Approach-Mitigating exclusion, building inclusiveness in host communities by attacking poverty and unemployment Pipeline Protection and Management –Review of Pipeline Surveillance Initiatives: Community Based Approach Restructuring Community Relations, Changing Perception and Attitudes Constructing Sustainable Partnership with Local Communities Building a Robust Advocacy Strategy

Recommendation for the Federal Government SUMMARY OF RECOMMENDATIONS Recommendation for the Federal Government Legal Issues Speedy prosecutions – Special Courts Strengthening the Legal / Process Strengthening Enforcement Regime Targeting the Market for Illegal Oil Policy Reform – Promoting Cottage/Modular Refineries Political Approach Good Governance Combating Corruption, Strengthening State Institutions, e.g. law enforcement, judiciary Resource Control Proactive Environmental Restoration Programme Cleanup and Remediation Projects

SUMMARY OF RECOMMENDATIONS Recommendation for the Local Communities Effective Leadership and Governance Good local governance will strengthen community bargaining power Credible leaders will earn the support and respect of the youths and members of the community Pave the way for peace which is a crucial condition for development Enhances and drive socio-economic growth and development Sustainable Partnership and ownership Such partnership could create a sense of ownership which would enhance the security of oil facilities and oil workers

SUMMARY OF RECOMMENDATIONS Recommendation for International Collaboration Targeting External Demand Sources Implementing an international tracking system for the major destinations of Nigerian crude Nigeria to initiate an international campaign that would treat oil theft as a trans-national organized crime (TNOC) Formation of an International Coalition Against Nigerian Oil Theft (ICANOT) Reform of Nigeria’s crude oil sale and contracting process Institutionalizing a transparent process not political consideration Empowerment of the local marine industry

CONCLUSION Combating illegal bunkering requires addressing its socio-economic foundation including Poverty and Unemployment Government policy initiatives should be monitored to produce expected outcome The IOCs must construct new equitable and mutually beneficial partnership with the local communities, to enable the communities develop a sense of ownership that will make them protect oil facilities in their domain Efforts should also be intensified through positive advocacy to change old community perceptions The study also call for a new community – based pipeline surveillance initiative and an effective judicial mechanism to ensure speedy prosecution of arrested suspects. We believe oil theft will be substantially mitigated if these urgent measures are rigorously implemented

THANK YOU