1. 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

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

3. 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.

4. 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.

5. 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.

6. 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

7. 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

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

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

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

11. 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

12. 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

13. SPDC OIL SPILL RECORDS 2011 - 2013

14. COMMUNITY CONSULTATIONS

15. THE SITE VISITS

16. FIELD WORK – OBSERVATIONS

17. TYPICAL PROCESS SCENARIO

18. Contribution of Oil to the Nigerian Economy

19. 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

20. 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

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

22. 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

23. 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

24. 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

25. 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

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

27. 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

28. 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.

29. 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.

30. 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

31. 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

32. 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

33. 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

34. 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

35. THANK YOU