Recurrent pipeline vandalism and crude oil theft at the facilities of Royal Dutch Shell in Nigeria cost global oil and gas company around four million barrels of oil worth over $260 million dollars last year.
According to the General Manager of External Relations at Shell Petroleum Development Company (SPDC), Igo Weli, the spill rate of sabotage has risen steeply since 2017, while the crude oil theft from the SPDC Joint Venture’s pipeline network averaged 11,000 barrels per day in 2018, an increase of about 20 percent over the previous year.
“The number of sabotage-related spills increased in 2018 to one hundred and eleven, compared to the 62 recorded in 2017 and, since 2012, SPDC has removed more than 1,600 illegal theft points,” Weli said while delivering an address on Pipelines Right of Way Encroachment and Vandalism at a workshop in Lagos.
Shell’s cumulative loss through 11,000 barrels per day hit 4.015 million barrels last year. With the average price for crude oil in 2018 at $64.9 per barrel, the 4.015 million barrels amounted to $260.5734 million.
Over the years, the Nigerian petroleum industry has been confronted by challenges related to the prevalence of militancy and oil pipeline vandalism in the Niger Delta region. Although there has been a significant reduction in militia activities following the 2009 amnesty deal – Shell states that there has been no damage to key oil and gas infrastructure caused by militant activity since November 2016 – destruction of pipelines and crude oil theft have persisted.
Indeed, the incidence of oil pipeline vandalism has been on the rise in Nigeria. According to the 2013 annual report of the Nigerian Extractive Industry Transparency Initiative (NEITI), Nigeria lost a total of $10.9 billion to oil theft between 2009 and 2011. Within 2016 and 2017, the country lost about N3.8 trillion to the phenomenon. These losses portends the significance of vandalism as a key problem in Nigeria’s oil industry.
Apart from losses to oil companies operating in Nigeria and dwindling revenue for the government, pipeline vandalism has consequences that hold negative economic, environmental, and humanitarian implications for the country. Other demerits include spills into rivers and lakes that could result in loss of lives, worsening of security situation and higher exploration costs that could force multinationals to divest.
Weli called for attempts to restrain pipeline sabotage, as it will go a long way to save lives, protect the environment, and secure communities. Albeit, in addressing the problem, it is important to note that while the actual “bunkering” is done by unemployed youths and militants, this is nothing compared to the theft by very powerful and well-funded cabals. The latter drill holes in the pipelines to tap the oil and ship it off for sale as well as provide the sophisticated technology, logistics and finance required for such a vast scale of theft to occur.
Despite the challenges and resulting losses, Shell’s General Manager for Safety and Environment, Chidube Nnene-Anochie said that irrespective of the cause for the loss, SPDC cleans and remedies regions impacted by spills from its facilities. The company is also actively committed to the cleanup of Ogoniland which was messed up by the activities of oil exploration companies.