NIGERIA’S OIL THIEVES: ROBIN HOODS OF THE DELTA OR ECONOMIC ANNIHILATORS?

(Previously reported in The Inkerman Group’s blog)

They have been called every name in the book: oil syphoners, bandits, terrorists, buccaneers and more. But the merry men of the Niger Delta? This may be a highly unlikely nom de guerre for those who conduct destructive attacks against oil pipelines, but for some Nigerians it is apt. According to regional experts, a number of oil thieves have actually engaged in acts of ‘social responsibility’ by using their oil riches to build roads, hospitals, schools and other “community development projects” in the Niger Delta region – an area whose poorest inhabitants claim to be neglected by the national government in Abuja.

The seemingly positive intentions of oil thieves aside, others remain unconvinced. Indeed, the country has been haemorrhaging oil, its main source of revenue, at a rate of 180,000 barrels per day (bpd) thanks to such acts of banditry. For Nigerian officials, these attacks not only cause immediate economic damage, they hurt the African nation’s long-term financial prospects, as they force risk-adverse international energy firms to steer clear of the conflict-ridden Niger Delta. To the casual observer of Nigerian affairs, the case against oil thievery appears incontrovertible. However, a deeper look into the oil banditry crisis reveals a far more complex picture of Nigeria’s hydrocarbon catastrophe.

Heroes? Or…

The Niger Delta region, so named for its location along the mouth of the Niger River, covers nine of the country’s thirty-six states: Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo and Rivers. A densely populated territory, the Niger Delta is home to approximately 30 million individuals, all whom live in an area roughly the size of the US state of West Virginia. The population density, combined with tribal tensions and ethnic divisions (more than 40 separate ethnic groups, speaking 250 different dialects, reside in the region) have created enough problems for residents. However, when combined with constant oil extraction – 2 million barrels are pumped every day from the Niger Delta – the issues facing the region grow even more complicated. Indeed, despite promises of economic fortune, the decades since international firms first extracted crude from the region in the 1950s have seen the country’s economic disparity – and corruption – grow worse. In response, an increasing number of Niger Delta’s residents have resorted to either personally syphoning oil, or worse, joining larger oil-stealing militant groups like the Movement for the Emancipation of the Niger Delta (MEND).

Whilst most MEND-related extremist activity has subsided since Abuja offered the group amnesty in 2009, its former members have not stopped stealing oil, a practice welcomed by ordinary Niger Deltans. For residents of the notorious Delta, the oil thieves are simply doing what today’s ‘corrupt’ Nigerian Government – led by the embattled, if well-meaning President Goodluck Jonathan – appears unable, or worse, unwilling to do: give back to the community. By most accounts, those who engage in “bunkering” (a term used by locals to describe those who hack away at pipelines) actually share the profits they make from selling the unrefined oil on the black market. Rationalising their illegal activities, the oil thieves have told news outlets that, if “politicians and everyone else stole the money, why shouldn’t they steal a taste as well?” Government officials have, naturally, decried these statements as badly-worn excuses to justify illegal, and even downright dangerous, behaviour (the practice of bunkering often results in oil leaks, a potentially life-threatening fire hazard).

However, according to Niger Delta’s residents, the national government does not quite ‘get’ the picture. What President Jonathan’s administration sees as large-scale piracy, supporters of bunkering see as a means of survival. To be sure, Niger Delta’s citizens are among the most disadvantaged of country which already has one of the highest income inequalities in the world. Whilst Nigeria’s oil revenues reach US$50 billion per year, more than 90% of the population squeaks by on less than US$2 a day. Such financial disparity is particularly evident along the Delta, where youth unemployment reaches 40%, and hospitals, schools and roads are dilapidated.

…Villains?

Such ‘pro-oil thief’ sentiment among Niger Delta locals has not gone unheeded by the country’s political and military machine. However, for many Nigerian leaders, the oil barons are simply “buying” support from the locals, hoping that by paving their roads and building their schools they will refrain from turning them in. Aside from supposedly ‘bribing’ Nigeria’s poorest, Abuja-based officials, including representatives from President Jonathan’s cabinet, note that the bandits have been destroying the environment. Furthermore, bunkering has been scaring away foreign investors, particularly those tied to powerful international energy firms, such as Royal Dutch Shell, which constantly suffer attacks on their pipelines. Bunkering has grown so prevalent that officials believe the country is now losing US$1 billion per month in capital flight, a situation which President Jonathan last year publicly called “embarrassing”. Future earnings potential aside, the country is also teetering towards a complete suspension in government operations. To be sure, oil banditry has only exacerbated Nigeria’s general downward trend of hydrocarbon production. According to a June 2013, report by the International Energy Agency (EA), Nigeria’s output of crude oil dipped to 1.96 million bpd from its previous rate of 2.567 million bpd. This equates to a total loss of 607,000 bpd, of which 30% is attributed to bunkering. Given the fact that the 2013 national budget had been based on the 2.567 million bpd standard, this decline could spell disaster for a nation already struggling with Islamic insurgency, massive wealth inequality and an ever-expanding population.

Verdict: A Nigerian Catch-22

Oil thieves could best be summed up as neither heroes nor villains. They simply represent the fallout from post-colonial Nigeria, a nation which has, in the years since independence, grown increasingly more complex and corrupt. Such corruption, particularly in the oil sector, is only likely to continue as security forces often either engage in oil theft themselves, or, as a result of bribery, have turned a blind eye to the activity. There are even indications that a number of Nigeria’s political elite have also made money in oil thievery, which in the long run has led international energy giants to reconsider investing in the region due to lost profits. This had led to a Catch-22 scenario. Oil thieves, unable to financially support themselves due to the lack of community investment from the national government, are forced to carry out their craft. Government officials, meanwhile, will be left with an ever-shrinking pot from which to invest their earnings into the local community as a result of oil revenue losses.

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