Criminal Gangs and the Niger Delta Militancy

A UNODC Report this week indicted local people, the security forces, government officials and international elements as the culprits in the Illegal oil bunkering that fosters the militancy in the Niger Delta.

In a report titled, ‘Transnational Trafficking and the Rule of Law in West Africa: A Threat Assessment’ obtained by, The United Nations Office on Drugs and Crime (UNODC) highlighted the link between oil bunkering and the instability in the Niger Delta and asked:

Who are the traffickers?

The Niger Delta militants are the groups most often associated with illegal oil bunkering, but they are but one of many elements involved in the trade. In 2003, Brigadier-General Elias Zamani, then commanding a Delta peacekeeping force, was asked whether oil was being stolen by local people, the security forces, government officials or an international element. His reply was: “All.”

For starters, the line between the state and the militant groups is not as clear as is often portrayed. While many of the groups started out as ethnic self-protection societies or protest groups, some were drawn into the high-stakes world of Delta politics. In a patronage system similar to that of the “area dons” found in Jamaica’s garrison communities, many of the militant groups have been funded and armed by local political leaders to ensure electoral victory for their patron. This victory gives the patron the opportunity to loot the preferential share of oil revenues assigned to the oil producing states. In between elections, these armed groups may freelance in crimes against the oil companies – including kidnapping, extortion, and illegal bunkering – all committed in the name of fighting for the people of the Delta.

They commit these crimes with a sense of impunity, due to their connections to their political patrons. It may be that some of the revenues find their way back to their sponsors, or that license to loot is simply one component of the patronage agreement.

There are a great variety of armed groups operating in the Delta region, and it is likely that most, if not all, of them profit from illegal bunkering. The militant groups do spend a good deal of time and money presenting their political message, but they have also asserted their involvement in oil theft. The leader of the Niger Delta People’s Volunteer Force, Dokubo Asari, has openly admitted to gaining the funds to arm his group through the sale of stolen crude oil. He has argued that he was simply taking back the oil that was stolen from the Ijaw.

It also appears that the Movement for the Emancipation of the Niger Delta (MEND), the most prominent militant group presently operating, is involved in stealing oil in addition to its kidnapping activities. MEND was formed, in part, in protest against the arrest of Dokubo Asari. When Brigadier General Wuyep Rimtip, the new Joint Task Force commander for the western part of the Delta, stepped up the fight against the oil gangs and replaced several army battalions suspected of involvement, MEND warned that it would retaliate.

In October 2008, Rimtip said: “There is a connection between militancy and illegal bunkering. It is their main source of sustenance.

They use the proceeds from the sale of stolen petroleum products, whether refined or crude, to procure arms and take care of their needs.” The view that MEND is involved in bunkering was also suggested in statements made around the extradition of the putative head of the organization, Henry Okah, from Angola.

The oil bunkering groups have set territories and violently discourage newcomers from entering the business. A Port Harcourt-based researcher into Niger Delta affairs estimated that up to 1,000 people were killed between January and November 2008 in conflict at least in part motivated by control of oil turf. In September 2008, it was widely reported that two separate groups with links to MEND had clashed at the village of Harristown in Rivers State.

It appears that this activity is conducted with the cooperation of, and perhaps for the benefit of, local political figures, in particular the state governors. In 2006, the Nigerian Economic and Financial Crimes Commission (EFCC) announced that 31 of the 36 governors in the country were under investigation for corruption and that at least 15 would be charged.

Serving governors are immune from prosecution, but 12 former governors are currently awaiting trial, and several prominent former Delta governors have been accused. Although some convictions have been made, in 2009, EFCC chairwoman Farida Waziri complained that the accused were manipulating the courts to avoid prosecution.54 Militant leaders have claimed association with these governors. There have also been repeated claims of links to national leaders in Abuja.

Bunkering and related activities are facilitated by widespread corruption. Uniformed officers get their cut for providing information, looking the other way, or actively protecting the bunkerers. Employees of the state oil company can also cash in on their positions by supplying information and access. Even the beleaguered farmers and fishermen who can no longer support their families on the oil-tainted land can profit from the odd compensation claim. Local communities can also be “settled” for allowing bunkering to occur on their land.

The armed forces have often been implicated in the trade.

In January 2005, two Nigerian admirals, Samuel Babatunde Kolawole and Francis Agbiti, were found guilty by a court martial of helping to steal an oil tanker and trying to sell stolen oil to an international crime syndicate. The vessel was captured off the Nigerian coast with a cargo of 11,000 barrels of oil, at that time the country’s largest seizure of stolen crude, but later disappeared. Although found guilty, they were merely sacked and demoted but were not sentenced to prison.

Further cases have come to light more recently. In July 2007, ten officers, including a rear admiral, were retired because of “formal intelligence reports” that they were involved in smuggling stolen crude oil. Chief of Navy Staff Ganiyu Adeyeye admitted, “They were involved in oil bunkering.”

In September 2008, the Ijaw leader, Chief Edwin Clark, accused members of the Joint Task Force (JTF), the interagency body tasked with fighting oil theft, of involvement in illegal bunkering.57 He suggested that elements of the JTF had provoked the militants into fighting, in order to create a smokescreen for the continuation of oil theft.

His accusations appear to have been prompted by the JTF’s efforts to continue fighting the militants, even during MEND’s self-proclaimed ceasefire. It has been widely reported that Rimtip has replaced several battalions, including one in the Delta city of Warri and one in Bayelsa’s capital Yenegoa, because its “soldiers were deemed to have become too close to criminals engaged in bunkering.”

Omolubi Nuwuwumi, a member of the Waterways Security Committee, a local government-run body that investigates kidnapping, told IRIN that some members of the military moonlight for criminal gangs or rebel groups. “The soldiers are deeply involved. There is no bunkering activity that is taking place in the Niger Delta that the military is not involved in,” Nuwuwumi said, “Eighty percent of soldiers in the region own the best cars – these are people who did not own a motorcycle before coming to the Delta.”

It also seems clear that oil industry employees are involved. Numerous analysts and commentators have concluded that illegal oil bunkering would be impossible without some collusion by industry insiders.

In November 2007, 14 workers at the NNPC oil depot at Calabar were arrested for facilitating oil theft. The thieves were actually caught inside an oil tank by JTF personnel. One of the accused claimed that some police officers were also involved in the operation.

Oil from Nigeria to the world

The value of the oil stolen in West Africa is comparable to that of the cocaine flow, but is even more directly linked to instability, since the proceeds go directly to militants and corrupt officials in Nigeria, the economic powerhouse and home to half the population of the region. The conflict in the Niger Delta is rooted in grievances of residents, who, despite the wealth beneath their land, remain very poor, and argue that environmental damage related to the industry has undermined traditional livelihoods.

But the theft and trafficking of oil (termed “bunkering” in the region) has become a transnational criminal enterprise in its own right, and the violent political struggle provides a convenient smokescreen for those intent on personal enrichment.

Militants and officials earning good incomes off the conflict may be less than eager to come to the negotiating table. The Delta provinces receive an extra share of the national oil revenues, so competition for public office is often fierce and violent. Young men employed to “get out the vote” at election time are among those engaged in the illicit oil industry, and law enforcement officials assigned to combating the trade have, on many occasions, been found to be complicit.

Even the aggrieved communities may receive payment for allowing oil theft to take place on their land. The wide range of players involved in bunkering and the complex web of their alliances make it difficult to discern the victims from the perpetrators. The loss of oil revenues – perhaps one third of the income on which 80% of the Nigerian national budget is based – means that, aside from a few well-placed individuals, the Nigerian public is the net loser.

It is also difficult to say how much oil is stolen, since no one is sure how much oil is pumped out of the ground. Installing gauges on the well heads could help address this problem. Since there are only a limited number of international players with the capacity to make use of tankers full of stolen oil, this criminal enterprise is also vulnerable on the demand side. A kind of Kimberley Process for what President Yar’Adua calls “blood oil” could undercut profitability to the point that the violent struggle would become pointless.

What is the nature of this market?

Arguably, one of the greatest threats to the rule of law in West Africa is rooted in the smuggling of a licit commodity: oil. This is despite the fact that only one ECOWAS country produces large amounts of oil: Nigeria.

But Nigeria accounts for over half the population of the region and over 60% of the regional GDP. Oil comprises 95% of Nigeria’s foreign exchange earnings and up to 80% of budgetary revenues.19 In turn, Nigeria is a key trading partner for the other countries of the region, so a large share of the region’s population is dependent on the oil sector.

Nigeria is generally regarded as the eighth largest oil producer in the world, responsible for about 4% of the world’s crude oil production, and is the fifth largest supplier to the USA, the world’s largest consumer. Nigeria has produced roughly two million barrels per day (b/d) since the late 1990s.

Production has not increased, despite considerable investment in increasing deepwater production capacity.

Today, Nigeria is theoretically capable of producing about three million b/d, which means it is effectively running at two thirds of capacity. The underproduction is mainly attributable to theft, vandalism, and violence in the Niger Delta.

Although most Nigerian oil output is produced in cooperation with multinational oil companies, by law the mineral wealth of the country is the property of the Nigerian state and thus all the people of Nigeria.

Consequently, the theft and smuggling of this oil – a crime termed “bunkering” in the region – is theft from one of the poorest populations on earth. But direct losses do not comprise the greatest threat posed by bunkering. Far more formidable are the associated conflict and corruption.

Historically, almost all of Nigeria’s oil has been produced in the Niger Delta, which nonetheless remains one of the poorest areas of the country. Anger over this incongruity and the environmental damage done by the industry has led to longstanding protest and violence. Oil theft is but one aspect of the ongoing conflict in the Niger Delta, but it brings in resources and arms for the combatants, as well as providing strong disincentives to negotiate. Some argue that oil was even a factor in precipitating the Biafran rebellion (1967-1970).

How the trafficking is conducted?

Before stolen oil can be trafficked, it must first be stolen. Classic oil bunkering involves stealth; attaching an unauthorised secondary pipeline to a company mainline by the techniques known as hot and cold tapping. The theft of oil through corruption is also possible, where vessels are filled or over-filled through payments to the officials controlling export.

These two approaches will be discussed in turn.

Theft by stealth

Oil is produced in the Delta on hundreds of relatively small fields. In 2008, there were 606 oil and gas fields, 5,284 wells, 7,000 kilometres of pipeline, ten export terminals and 275 flow stations in the Delta. There are oil or gas operations on the territory of about 50% of the Delta’s 3,000 communities. Finding an isolated stretch of pipeline to tap is a relatively easy matter. Oil appears to be mainly stolen during the night.

“Hot tapping” involves creating a branch connection to a pipeline in which the oil is flowing under pressure. To access lines running under water and to conceal the tap, a small area of swamp around the pipe may be cordoned off and drained. An isolating valve is either welded or fitted mechanically to the pipe.

After fitting – and with the valve in the open position – the pipe is drilled to the maximum permissible size through the valve, or the pipe is drilled part-way through and doused with sulphuric acid to complete the job once the line is in place. This procedure is extremely hazardous, as the sparks from drilling can easily ignite the fuel. In the past, corrupt or former oil-industry workers were used for this task, but professional “bunkerers” have now acquired the skill.

In “cold tapping”, oil gangs blow up a pipeline, putting it out of use long enough for them to attach their spur pipe-line. Most pipeline bomb attacks appear to be linked to oil theft: either to enable a spur pipeline to be fitted, or in retaliation for military operations against the oil gangs.

According to Niger Delta security analysts Bergen Risk Solutions, there were 19 pipeline bomb attacks during the course of the illegal spur pipeline transports the crude, often over several kilometres, to a convenient creek, where it is released into flat bottomed loaders (barges) or wooden “Cotonou boats”.

All stolen oil that is taken out of Nigeria for sale elsewhere appears to be initially transported in surface tanks or barges. However, much of the oil to be distributed within Nigeria appears to be transferred into drums, generally transported by trucks. The barges make their way downstream, pulled by tugboats, to meet awaiting tankers. Due to the topography of the Niger Delta; tankers can approach quite close to the shore at the mouths of major rivers, in particular the Benin, Escravos, Forcados and Ramos rivers.

The vessels involved are typically in poor repair, usually leaking oil, and many have been officially disclassed (decommissioned). One 2006 report put the cost of the barges at 6-10 billion Nigerian naira ($45-74,000), with a capacity of up to 5,000 barrels.

The vessels seized by the Joint Task Force (JTF), the interagency body tasked with fighting oil theft, during the course of 2008 had storage capacity of between 84 and 12,000 tons and comprised 44 barges, 50 wooden boats, 58 tankers and 56 surface tanks.

Most of the seizures of illegal oil and vessels took place in the Eastern Delta until fairly recently. This might be regarded as indicating that theft was concentrated in this area but recent evidence suggests that the military, possibly with the connivance of local politicians, took a softer line on oil theft in the west until early 2008.

More recent interdiction work suggests bunkering activity is spread throughout the Delta region.

Most sources believe that the chain from theft up to transference to oil tanker or local distribution is handled by the Bunkering ship observed near the mouth of the Benin River

A barge being filled with stolen oil A Cotonou boat filled with oil same gang but generally different units of the same group.

The operation of the oil tankers and marketing of the stolen oil overseas appears to be a separate undertaking.

Theft by corruption

While most attention is given to the forms of bunkering described above, the lack of accounting for the oil pumped out of the ground opens the door to corruption-based theft, either by well-connected professional criminal groups or by the government/corporate ventures themselves. In 2003, a motion sponsored by the Chairman of the House Committee on Petroleum, The Honourable John Halims Agoda, alleged that the Federal Government of Nigeria was losing over N100 billion ($770 million) annually to large scale fraud and illegal bunkering by the oil companies.

Some analysts believe that illegal bunkering actually began in the late 1980s as a method of enabling the Nigerian National Petroleum Corporation (NNPC) to export crude oil beyond its OPEC quota. According to this line of argument, the NNPC pioneered bunkering, and militant groups simply took it up.

Today, there are several ways oil can be stolen without the need for tapping a pipeline. Oil company employees can be bribed into allowing unauthorised vessels to load. Authorised vessels can be “topped” – filled with oil beyond their stated capacity – and the excess load sold on. Oil revenues can also be embezzled, or money made through the sale of export credentials and other paperwork.

Trafficking and sale

Once the oil is stolen, it must be moved to the markets and sold. Three markets can be identified:  Domestic, Regional Intercontinental

A sizeable proportion of the stolen oil is sold within Nigeria. This is possible because Delta crude is of exceptionally high quality, with low sulphur content, and requires minimal refining. There is evidence that a large amount of the stolen oil is processed in rudimentary local refineries, a technology that may have been developed during the blockade of Biafra during the Nigerian Civil War (1967-1970).

In 2008, at least 300 illegal refineries were destroyed by the military in the Delta Condensate, which is the liquid left over after natural gas has been processed, is also stolen and used locally.

Oil and refined petroleum products – whether licit or stolen – have long been smuggled from Nigeria to much of the rest of West Africa, because Nigerian subsidies have traditionally made diesel and petrol substantially cheaper in Nigeria than elsewhere in the region, particularly in Benin, Cameroon, Chad and Niger.

In 2004, the International Monetary Fund concluded that the trade was so vast that it had substantial implications for Nigerian monetary policy and the value of the CFA franc.

Nigeria has four oil refineries of its own with official production capacity of 388,000 b/d but they are in a poor state of repair and operate at far below this figure. Despite being an oil exporter of global importance, Nigeria is actually forced to import some of its fuel requirements. It appears that a large share of the stolen oil is refined in other West African countries, including Ghana, Cameroon and Côte d’Ivoire.

There may be a structural reason behind this trade. Many African governments force their state owned refineries to purchase crude oil at the market rate but expect them to sell refined petroleum products at a fixed, subsidised rate. Ghana’s Tema Oil Refinery, in particular, has built up massive debts over many years as a result of the subsidy policy. As a result, senior managers might be tempted to purchase crude oil of a dubious nature.

Another indicator that much of the trade is regional is found in the nature of the bunkering vessels detected. Many of these are coastal tankers and vessels designed to operate on the inland waters of Europe, without the capacity to navigate the open sea. Regional crews have also been detected: six Ghanaians were recently arrested on board a vessel with 4,000 tons of oil.

But although a share of the oil is sold within the Gulf of Guinea, it seems that there is insufficient demand within the region to absorb 150,000 barrels of stolen oil per day, especially since much licit trade in petroleum takes place within the region. In addition, the crews of vessels that operate within the Gulf of Guinea are likely to be overwhelmingly African but most of the crew members seized on illegal oil bunkering vessels by the Nigerian military have come from other parts of the world.

Despite indications that much of the stolen oil is shipped to ports beyond the region, the destination market for this oil remains unclear. The fact that a shipment of oil can change ownership several times while at sea contributes to the opacity of the trade. Countries frequently mentioned in association with illegally bunkered oil include China, North Korea, Israel, and South Africa. Lebanese brokers are frequently mentioned. It has also been suggested that the oil is sold on the Rotterdam spot market, using forged or fraudulently obtained paperwork.

How big is the flow?

It is difficult to determine how much oil is stolen for two main reasons:

No one knows for sure how much oil is pumped out of the ground.

Not all the oil lost is illegally bunkered.

First, there is a general lack of public data around the oil industry in Nigeria, despite efforts such as the Nigerian Extractive Industries Transparency Initiative. In particular, there is no metering at the well head to indicate the amount of oil produced, so it is impossible to simply subtract exports from this amount to arrive at a loss figure.

A Nigerian Senate inquiry, which was set up to investigate the issue in March 2008, concluded that “no-one really knows exactly how much oil is pumped out of the ground.”

Second, lost oil is not necessarily stolen oil. Whenever oil is stolen, there is some spillage, so it is impossible to say how much was actually acquired for trafficking. As discussed above, it is also common for thieves to intentionally damage a pipeline in order to create an opportunity to install taps once the oil pressure drops, resulting in considerable losses.

Some pipelines are destroyed in protest, motivated either by the desire to drive the oil companies from the Delta or in retribution for state action against oil bunkering. Finally, it is recurrently alleged that communities sabotage pipelines in order to have a basis for compensation claims.

Despite these difficulties, a large number of different organizations and individuals have sought to estimate the scale of the problem, often by taking the volume of oil stolen in a well-documented incident and extrapolating. Most estimates range from 80,000 b/d to 300,000 b/d, with a strong clustering between 100,000 and 200,000 b/d, representing between 5% and 10% of official production.

The share of total production stolen is likely to vary substantially over time, though, depending on factors ranging from the proximity of elections to the global market pricefor oil.

Legaloil, an independent website that specializes in Nigeria’s illegal oil bunkering trade, believes that while theft averaged 100,000 b/d over the period 2003-2006, it actually fluctuated widely between 20,000 b/d and 250,000 b/d, as oil companies improved security and brought pipelines back under control, or oil gangs moved into new areas.

With regard to the long-term trend, a number of indicators suggest oil theft has increased over the last decade, with a possible recent decline. For example, while losses cannot be equated with theft, some relation between the two is likely.

Pipeline breaks due to sabotage almost doubled between 1999 and 2004, from 497 to 895. As a result, the amount of oil officially lost in pipeline ruptures increased from 179,000 to 396,000 metric tons per day over the same period.

 At a press conference in September 2008, Nigerian environment minister Halima Alao revealed that there had been 1,260 registered oil spills from all causes, including many from theft, between January 2006 and June 2008, of which 419 had occurred during the first half of 2008.

Mr. Alao said that this reflected “a progressive trend of theft and sabotage.”65 It is possible that oil bunkering and related militancy will spread to other countries in the region as well. Ghana is due to become a substantial oil producer in the near future, with output of 125,000 b/d expected by the end of 2010 and double that soon after. Many attribute the vigour of the electioneering in the last campaign season to this newfound wealth.

In late 2008, sovereignty over the Bakassi Peninsula was transferred from Nigeria to Cameroon. Violence accompanied this transfer, and a group called the Niger Delta Defence and Security Council has claimed responsibility for some of the attacks, kidnappings and killings. It seems likely that regional oil theft will grow unless regional solutions to this problem are found.

Calculating the value of the flow is complicated by the recent volatility in the global market for oil, with prices peaking at US$147 per barrel in July 2008, more than triple the February 2009 price. In addition, the value accruing to the thieves surely depends on where and how they sell the oil.

But analysts considering the issue have suggested a 50% discount on the world price would be sufficient inducement to attract large buyers. At a price of US$20 per barrel of stolen oil, 150,000 b/d would generate a daily income of three million dollars, almost all of which would go to criminal or corrupt parties. This would represent about one billion US dollars per year.

The UNODC Report concluded:

West Africa suffers from a combination of factors that make it vulnerable to organized crime. It is one of the poorest regions on earth. In many countries governance is weak. The region is located along illicit trafficking routes. And criminal groups can recruit foot soldiers from a large pool of desperate youth.

Criminals are exploiting these conditions to traffic a range of products through the region: drugs (mostly cocaine from South America to Europe); cigarettes; weapons and ammunition; people (destined for illegal migration or the sex trade); counterfeit medicines; toxic waste (including e-waste); oil; and natural resources (like hardwood and diamonds). In some cases, the value of trafficking flows dwarfs local economies.

This trade is putting a fragile region at greater risk – under-mining the rule of law; deepening corruption; polluting the environment; violating human rights; stealing natural resources; depleting human resources; and jeopardizing health.

This makes West Africa more prone to political instability and less able to achieve the Millennium Development Goals. While this Report takes a regional approach, its assessment should be put into a global context. Most illicit activity occurring in West Africa is caused by external market forces.

That being said, there are many beneficiaries in the region. Collusion between corrupt elites and opportunistic criminals enriches the few, impoverishes the many, and undermines public institutions. States are being hollowed out from the inside. Democracy and development falter, while crime and corruption flourish.

A two-pronged approach is needed. First, based on the evidence in this Report, the international community should be better prepared and equipped to identify threats, and take the remedial action needed to tackle them.

Rich countries should take their share of the responsibility by curbing their appetite for the drugs, cheap labour and exotic goods that are being smuggled via the region, and by stopping the use of West Africa as a dumping ground for weapons, waste, and fake medicines. Private companies that are complicit in this illegal business should be named, shamed, and banned, and codes of conduct more rigorously enforced.

Second, illicit transnational flows may change over time, including in response to successful policy interventions. Signs of a recent decline in cocaine trafficking through West Africa provide a welcome example. However, unless the underlying issues are addressed, the problem will be displaced somewhere else, or simply replaced by another illicit activity. Therefore, governments must strengthen the rule of law in their countries to develop social antibodies against organized crime and to eventually break the cycle of crime and underdevelopment.

Because of the transnational nature of the threats, national governments should draw on the support of donors, regional arrangements, and international instruments like the UN Conventions against Corruption and Transnational Organized Crime.

West Africa is under attack, from within and especially from abroad. It is time for the world – and the governments concerned – to respond to the threat before more of the common wealth is stolen, more lives are lost, and before criminality deepens its penetration of state.

Read the full report here

Read also Organized Crime Plundering Nigeria – UNODC Report

 and The Nature of Niger Delta Militancy