As thieves siphon off 200,000 barrels a day in Nigeria, Nick Kochan meets the minister tasked with cracking her country’s ¬£1bn-a-year ‘blood oil’ industry
Well-resourced gangs are diverting some 10 per cent of Nigeria’s oil production and channelling the money into kidnapping, piracy and terrorism. The result is not only funds lost to the country’s exchequer but also devastating damage to the environment and to the health of people in the region. Some 200 foreign oil company employees, some from Shell and BP, have been among those kidnapped for ransom in the Niger delta over the last seven years.
A campaign to close down the “crime cabals” who divert crude oil to the tune of 200,000 barrels a day is top priority for Diezani Alison-Madueke, the Nigerian oil minister. She is leading a lobby to get the world community on side on behalf of affected Gulf of Guinea countries such as Benin, Cameroon, Equatorial Guinea, Gabon, Ghana, Ivory Coast, Liberia and Togo as well as Nigeria. “We are very keen to join hands as soon as possible with the international community in fighting this terrible menace,” she said.
Britain and the US are assisting in developing a fingerprinting system for tracking stolen crude. Mrs Alison-Madueke points out that the global community enjoys wide access to Gulf of Guinea oil, with some three-quarters of US oil imports from Africa coming from the region.
A clampdown on revenues from stolen oil is another part of her campaign. Governments need to move against institutions that launder what she calls the proceeds of “blood oil”.
“Oil theft is lucrative because thieves find it easy to sell their consignments either to private buyers or on the international spot market. Who are the buyers of the stolen crude oil, and through what fiscal institutions is the money being laundered? It is not being sold in the Ecowas [Economic Community of West African States] region, neither are the financial institutions represented in Ecowas countries,” Mrs Alison-Madueke says.
Shell has said that Nigeria loses over $1.6bn (¬£1bn) annually to oil theft.
Mrs Alison-Madueke, the daughter of a tribal chief, is seen as Africa’s oil tsar. She was a regional head of Shell before becoming a government minister. She is said to receive regular death threats from oil importers who have lost their licences when found to have defrauded the state’s oil subsidy system. Mrs Alison-Madueke supported the Nigerian President Goodluck Jonathan’s plan to remove the subsidy that the state pays oil companies to make petroleum products more affordable at the pumps. Popular opposition forced Mr Jonathan to reverse this policy. One commentator says: “She is a tough nut to crack.”
Stolen oil needs to be in the same category as blood diamonds, she says. “Just as the world has taken a firm stance against trafficking in blood diamonds, so must we confront trafficking in stolen crude. Many innocent people are losing their lives as a consequence of oil theft.”
The environment of the Gulf of Guinea is being hit by the activities of the gangs. They dump oil into the Gulf of Guinea that they cannot “crack” (break up by heating to reduce its thickness and enable it to flow through pipelines). Their makeshift distilleries are so inefficient that they treat only a third of the raw oil, leaving the rest as waste. The wood used in the cracking process is hacked from forests across the Niger delta, adding to the environmental blight.
Mrs Alison-Madueke says: “It is devastating. There are vast portions of white landscape with trees falling over. The communities don’t yet understand the extent of environmental damage.”
The polluted environment is giving rise to cancers and other fatal conditions and Mrs Alison-Madueke added: “We are beginning to see the results of this damage with babies being born with disabilities in certain parts of the Niger delta.”
The “very powerful, very well funded cabals” drill holes in the pipelines to draw off the oil. It is “cracked” and transported via separate pipelines to barges close to shore, which move it to shipsfurther out. “Those ships are going to refineries around the world. When the refineries refine that product, the fiscal output and profit is laundered through fiscal entities in other regions of the world. That answers why the global community needs to assist,” said Mrs Alison-Madueke.
Nigerian armed forces have sought unsuccessfully to combat the oil thieves. No sooner is one hole on a pipeline shut or one illegal distillery closed down than two others have replaced them. Over a three-week period, the navy blocked 600 illegal distilleries, only to find that 400 new ones had been created in their place. “The Nigerian joint task forces are running from pillar to post to deal with it.”
Gangs are using the proceeds to run other criminal operations in the region, including kidnapping, piracy, and hostage-taking. Some of the millions paid to the oil gangs are thought to have made their way to Islamic rebels linked to al-Qa’ida in the north of Nigeria.
Some observers say the scale of the theft is so vast that it could not take place without complicity at the highest level. One oil trader argued that the proceeds of illegal shipments were “an informal funding arrangement for local chiefs to ensure their support for federal government policies”.
Mrs Alison-Madueke says that the growth in criminal activity in the region is “a negative consequence of the feverish crude oil business activity”.
Finger-printing technology is used to identify oil that comes from legitimate sources, and so “interrupt sales of illegal crude by criminal gangs”, says the minister. She seeks international support for governments to curb the laundering of funds derived from the sale of illegal crude.
“We seek to improve revenue transparency and ensure accountability for every barrel produced.
“Many innocent people are losing their lives as a consequence of oil theft in the Gulf of Guinea. Oil theft constitutes critical economic sabotage, causing a drastic reduction in the revenues accruing to the state from the hydrocarbons sector, negatively impacting the state’s ability to fulfil its obligations to its citizens.”
Oil industry’s first lady: Diezani Alison-Madueke
Mrs Alison-Madueke was born on 6 December 1960 in Port Harcourt, Nigeria. Her father was Chief Frederick Abiye Agama. She studied architecture in the UK and architecture in the US. In 1992 she joined Shell and became its executive director in Nigeria in 2006. She became transport minister in July 2007, minister of mines and steel development in 2008 and minister for petroleum resources in 2010.