By Sarah Kent and Michael /Wall Street Journal
A police officer checks an oil pipeline which vandals break to steal oil from, in Warri, in Nigeria’s Niger Delta/AP
Nigeria’s oil industry is at a crisis point because the theft of oil from pipelines and the pollution it causes are reaching intolerable levels, costing the country and oil companies billions of dollars a year, the head of Royal Dutch Shell PLC’s Nigerian operations said.
Shell said the problem of oil thieves breaching its Nembe Creek Pipeline got so bad in February that it was considering shutting it—cutting off 150,000 barrels a day of crude supplies worth around $15 million a day at current market prices. The pipeline accounts for 90 kilometers (56 miles) of the 6,000 kilometers of pipelines that Shell operates in the country.
Oil theft is a long-standing issue in Nigeria, frequently leading to supply disruptions and environmental pollution when thieves drill into pipelines in order to siphon off the crude inside. The Nigerian government has repeatedly pledged to act aggressively to curb insecurity in the oil sector and has said that incidents of oil theft have decreased in the past year. However, Shell said the situation got worse last month.
“The situation in the past few weeks is unprecedented,” said Mutiu Sunmonu, managing director of Shell Petroleum Development Company of Nigeria Ltd. during a briefing in Nigeria on Friday, the details of which were released by Shell on Monday. “The volume being stolen is the highest in the last three years; over 60,000 barrels per day from Shell alone.”
“This is really getting to the crunch…rather than allow people to continue to attack my pipeline and devastate the environment, I may actually consider shutting in the pipeline completely,” he said.
Shell’s figures for how much oil is being stolen from pipelines in the Niger Delta appear to contradict those coming from the Nigerian National Petroleum Corp. At a conference in Abuja last month, Abiye Membere, group executive director of exploration and production at NNPC, said the volume of oil stolen on a daily basis throughout the country was between 50,000 and 80,000 barrels a day.
“This certainly is a well-funded criminal activity, probably involving international syndicates,” said Mr. Sunmonu. The thieves have built up infrastructure around their operations, including shipyards to build barges to transport stolen oil and facilities to store it, he said.
According to the Nigerian government, the oil thieves in the Delta region are part of larger international criminal operations that sell the stolen oil on international oil markets. The country’s oil minister said in February that President Goodluck Jonathan has reached out to other countries for help in addressing the problem on an international level.
In October, Shell pegged the cost of oil theft at more than $6 billion a year, based on estimates that more than 150,000 barrels a day are stolen in the country.
Ade Abolurin, commandant general of the Nigerian Security and Civil Defence Corps, said Monday that policing the Delta was difficult, as thieves often target hard-to-reach areas where there is a smaller security presence.
“We can’t cover every area,” particularly pipelines in the forests and creeks of the delta, he said. He said that there has been a “significant reduction” in theft over the past year.
“We really need concerted efforts nationally, locally and internationally to actually get this under control,” said Mr. Sunmonu.
—Benoît Faucon and Obafemi Oredein contributed to this article.
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