By
Port Harcourt, Nigeria
Demonise
& Diabolise:
The
Niger Delta has been a source of illicit international business deals (like
the trans-Atlantic slave trade), as far back as the 15th
century. Today a new form of syndicated criminal proclivity is threatening the
very foundations of Nigeria’s petroleum industry, and by extension, the
Nigerian economy, as well as putting tremendous pressure on Chief (General)
Olusegun Obasanjo. That problem is the "illegal bunkering"
of crude oil and/or its derivatives.
The
term "bunkering", (whether legal or
illegal) has been thoroughly abused, demonised, and misused in Nigerian
parlance, so much so that the mere mention of it readily evokes, connotes, or
triggers subliminal suggestions of grand illegality in the Nigerian
paradigm. For example, when petroleum products pipelines get cannibalised, the
Nigerian mind very effortlessly visualises "illegal bunkering" in
progress. When shiploads of crude oil (from refineries) get stolen, and
are routinely sold off as low-pour fuel oil (LPFO) - a relatively cheaper
commodity in the international oil markets - Nigerians simply smile, and know,
at the very bottom of their very naive hearts, that "illegal
bunkering" has definitely taken place.
While
in the Nigerian worldview, "bunkering", (whether legal or
illegal), is synonymous with stealing petroleum (or/and
its derivatives), in Oxford English, "bunkering" is
a legitimate process whereby a duly licensed operator provides fuels, water,
and lubricants (bunkering services) for marine vessels on request.
Simply stated, "bunkering" is the fuelling of
ships. It is like having a floating fuel service station on the high seas, or
at coastal jetties, to fuel, or/and supply provisions for ships.
Bunker
fuel consists mainly of automotive gas oil (AGO), which has been perennially scarce
in Nigeria, and low pour fuel oil (LPFO), an environmentally unfriendly
residue of petroleum refining operations. Ironically, at the very core of this
rather twisted perception about bunkering, is the
near-zero availability of locally refined petroleum products from Nigerian
refineries, for (legal) bunkering.
Bunkering is the main activity within the Port
of Gibraltar in the Mediterranean region. Singapore, another world-class bunkering
centre in South East Asia, is a non oil-producing nation. Most Nigerians would
be shocked (and awed) to know that Gibraltar is one of the largest bunkering
ports in Western Europe, and its bunkering companies continue to grow from
strength to strength. Over 6,000 vessels are served each year. In 2002 alone,
over three (3) million metric tons of bunker fuels were delivered from
Gibraltar. Gibraltar’s many advantages include its location near major shipping
routes, low port charges, competitive market, and its tax-free status within
the European Union (EU). Furthermore, the government closely monitors the
market continuously, so as to ensure competitiveness and transparency.
Incidentally, there is also a UK-based International Bunker Industry
Association (IBIA), of which Nigeria is a duly registered member. The IBIA
offers professional technical advice on bunkering.
However,
quite unlike Gibraltar, and Singapore, Nigeria is not a known reliable
supply source of either crude oil, or refined petroleum products. Consequently,
most foreign vessels that come to Nigeria for the purpose of bunkering
do so either as a matter of last resort (How for do?), or for the
sake of partaking in premeditated mischief and crime: so-called "Illegal
bunkering". Most foreign vessels, especially crude oil carriers,
take sufficient bunker fuels from elsewhere, in order to ensure hitch-free and
hassle-proof services that they know they would most probably not get in
Nigeria.
Today,
Senegal, Cote D’Ivoire, and South Africa are the main bunkering centres
in Africa. Indeed, the Niger Delta region of Nigeria aught be the Number 1 bunkering
centre in Africa, given its strategic positioning in the Gulf of Guinea, just
like Gibraltar and Singapore are to the Mediterranean and South East Asian
regions respectively, and more so, because of the magnitude of onshore and
offshore oil and gas exploration, production, processing, supply, and
distribution operations in that part of Nigeria.
However,
the criminalisation of bunkering operations, the unstable, inadequate,
and unreliable domestic refining capacity, and a miasma of simplistically
conceived national energy policies, among several other reasons, account for
this unique anomaly in Nigeria. Actually, ships prefer not to come to
Nigeria and bunker because of the high port charges, related miscellaneous
illegalities, called "levies", and official extortions like
mandatory but illegal "military task force approvals".
The
Origins Of A Dysfunction:
Before
1973, petroleum products pricing was not uniform in Nigeria. The retail prices
of petroleum products were dependent on the point of sale, relative to the only
primary distribution depot then, at the Shell-BP Refinery, Alesa Eleme, near
Okrika, near Port Harcourt, Rivers State.
In
October 1973, the military dictatorship of General Yakubu Gowon decreed uniform
pricing of refined petroleum products for the Nigerian market.
Subsequently, the Petroleum Equalisation Fund (PEF) Decree No. 9 of 1975
was promulgated. To date, it provides for the uniform pricing of all petroleum
products throughout Nigeria, irrespective of distance from point of production.
The Board of the Petroleum Equalisation Fund retains all surplus revenue from
the sale of petroleum products, reimburses marketers for losses incurred
because of uniform pricing, and recovers the difference between the landed cost
of imported petroleum products and the regulated price in Nigeria. It is very
interesting to note the close similarity in the conceptualisation of both the
Petroleum Equalisation Fund (PEF) and the Petroleum Trust Fund (PTF).
Nigeria
was divided into twenty-six (26) zones, with each zone assigned an applicable price
differential that may be claimed from the PEF, depending on delivery
distance from point of supply. Paradoxically, the scope of PEF reimbursements
did not, and still do not include claims from the oil producing areas of the
country, since the emphasis was/is on distances covered by tanker trucks.
Obviously, the terrain of most oil-endowed areas of Nigeria is swampy or/and difficult
to service by road. Moreover, they are close to the refining centres at Port
Harcourt and Warri. Consequently, petroleum products marketing companies in
swamps of the Niger Delta territory were, and still are not eligible for "bridging"
claims, one of the sweet dividends of "petroleum
equalisation" post-First Nigerian Civil War (1967~1970).
For
some 28 years, the predatory military autocracies of Generals Yakubu Gowon,
Murtala Mohammed, Olusegun Obasanjo, Mohammadu Buhari, Ibrahim Babangida, and
Sani Abacha, reeled out a farrago of seemingly punitive decrees, all centred on
the theft of crude oil and/or petroleum products: e.g. the Petroleum
Production and Distribution (Anti-sabotage) Decree (1975). Under this
decree, it is an offence, punishable by death, or 21 years of imprisonment, to
sabotage, disrupt, or even interfere with the smooth distribution of petroleum
products in Nigeria. Offenders are to be tried by a Military Tribunal. The
Trade Disputes (Essential Services) Decree (1976) empowered, and still
empowers the military Head of State, now (civilian) President, Chief
(General) Olusegun Aremu Mathew Okikiolahan Obasanjo (GCFR) to proscribe
any trade union (e.g. NUPENG) or association (e.g. PENGASSAN) of
an essential service (e.g. the Nigerian petroleum industry) that is
involved in acts that either disrupt the smooth running of any essential
service, or cause industrial unrest in the Federal Republic of Nigeria.
Violators risk up to five (5) solid years of imprisonment.
The
Special Tribunal (Miscellaneous Offences) Decree No. 20 (1984), the most
draconian of all decrees against "Illegal bunkering", is
the brainchild of the presumed loser of the April 19 2003 presidential
elections, Alhaji (Major General) Mohammadu Buhari (GCFR), while he was the
temporary head of a military junta that subverted the constitution of the
Federal Republic of Nigeria, some 20 years ago. Decree No. 20 (1984) prescribes
very stiff penalties, including death by firing squad, revocation of
licences, and forfeiture of both fixed and moveable assets, for offences
committed against the milder provisions of the Petroleum Decree of 1969,
promulgated earlier by the military junta of Dr. (General) Yakubu Gowon (GCFR).
The scope of Decree No. 20 (1984) covers wilful, or malicious obstruction,
damage, destruction, tampering, or interference with the free flow of crude oil
and/or refined petroleum products.
And
yet, "illegal bunkering" persists to date!
Of
Monkeys And The Security Of A Banana Republic:
Shell
Petroleum Development Company (SPDC), Nigeria’s oldest and largest petroleum
exploration and production (E&P) company, claims it lost at least 50,000
barrels per day (bbl/d) in the first four months of 2003. On some days, it lost
more than 100,000 barrels.
It
has been estimated that lethally armed criminal networks, operating with the
tacit support of local and foreign business mafias resident in Nigeria, Niger,
Chad, Burkina Faso, Sao Tome, Malabo, Benin Republic, Ghana, Cote D’Ivoire,
Liberia, Sierra Leone, Angola, and elsewhere, ably chaperoned, aided, and
abetted by powerful (serving and retired) military and political so-called "Godfathers",
illegally siphon off about US$1billion per annum worth of petroleum (crude oil,
and refined petroleum products). In short, between 100,000 and 130,000 barrels
a day (bbl/d) of crude oil, with an international market value of about US$3
million, is being stolen from Nigeria daily, with impunity. This is the
equivalent of a very large 95,000-metric ton crude oil tanker being hijacked
every week, right under the watchful eyes and very sensitive nostrils of the
very loyal and patriotic officers and men of the Nigerian Police
Force, the Nigerian Customs Services, the Nigerian Army, the Nigerian Air
Force, the Nigerian Navy, the State Security Service, and several other law-breaking,
law-enforcing agencies of the Federal Government of Nigeria. (By the way,
the President and Commander-in-Chief of the Federal Republic of Nigeria, a
retired soldier, is also the Honourable Minister of Petroleum Resources, while
the Vice President, charged with stirring the economy of Nigeria, is a retired
Customs Officer! Heaven help us all. God bless Nigeria.)
Meanwhile,
Nigeria loses as much as N10.75 billion every month to criminal syndicates of
crude oil and refined petroleum products thieves operating actively in the
swamps of the Niger Delta, and offshore, in Nigeria’s territorial waters,
according to sources at the Ministry of Defence. Incidentally, the Federal
Government increased its capital investment in the oil and gas industry by over
100%, from US$4.65 billion in 1998, to US$9.47 billion in 2002.
A
significant proportion of the crude oil, and refined petroleum products that
are legally or illegally peddled in the ECOWAS sub-region, is ultimately
traceable to the Niger Delta region of Nigeria. Moreover, the onshore crude oil
tank farms at Bonny, Brass, Eket, Forcados, and Escravos, and several other
virtually unaccountable offshore crude oil storage terminals and natural
gas liquids recovery plants on floating platforms, that litter the coastline of
the Niger Delta, can easily accommodate VLCCs (Very Large Crude Carriers) for legal
or illegal crude oil evacuation, or/and LNG export. Furthermore,
Nigeria’s low-sulphur, low viscosity, low-vanadium content, and low-density
crude oil is in high demand worldwide.
Paradoxically,
the DPR keeps and updates records of all Nigerian oil industry operations,
particularly for petroleum reserves, export of crude oil and refined products, licences,
and leases. It advises government on policies that impact on the
administration, control, and compliance with relevant petroleum laws and
regulations. The regulations are issued as guidelines, circulars, and standards
to the industry. The DPR also has regional offices across the country, and
maintains an office in each of the state-owned refineries and depots.
And
yet, "illegal bunkering" persists to date!
How
To Fetch Water With A Basket:
The
process of "illegal bunkering" entails loading crude
oil (or/and petroleum products) into barges in the labyrinthine creeks of the
Niger Delta, directly from oil field production wellheads, or from NNPC jetties
at Okrika, Calabar, Effurun, Escravos, Atlas Cove (Lagos), or from a myriad of
private jetties dotted along the coastline of Nigeria, or by deliberately
puncturing crude oil or petroleum products pipelines.
From
the coastal states of Nigeria, specifically in the swamps of the Niger Delta in
Delta, Rivers, Cross River, Akwa Ibom, Ondo, and Bayelsa States, large
inventories of stolen crude oil or petroleum products are typically
trans-shipped into larger ocean-faring marine vessels, waiting patiently on
stand-by, either mid-stream, or offshore, for their booty. In the hinterland of
Nigeria, particularly in Abia, Benue, Delta, Enugu, Edo, Kogi, Ondo, Lagos, and
Ogun States, large inventories of refined petroleum products (petrol, kerosene
and diesel oil) are loaded directly into tanker trucks from the point of
deliberate rupture of petroleum products pipelines that traverse the length and
breadth of Nigeria, (less the Niger Delta).
In
the wake of the "Big Boys" with tanker loads of "illegally
bunkered" (i.e. stolen) petroleum products, ignorant villagers
typically proceed to their tragic death, while scavenging off the remnants the
spilled petroleum products. What is not off-loaded along the ECOWAS sub-region
is sold internationally through the North West European spot oil market. The "illegally
bunkered" crude oil (or petroleum product) is either traded without
documentation or with forged documents.
Only
recently, the Nigerian Navy announced that it arrested 26 people suspected of
stealing crude oil and petroleum. They claimed that they impounded 2 ships, 17
barges and 7 tanker trucks. Diplomats and defence intelligence analysts believe
that Chief (General) Olusegun Obasanjo intends to launch a major punitive
military expedition into the Niger Delta region, so as to end "illegal
bunkering", as well as dealing with the recurrent, and seemingly
intractable ethnic unrest there. Multinational oil companies, concerned about
environmental and safety hazards, as well as revenue losses, have been pressing
for stiffer security measures.
Resource
Control By Other Means:
In
tandem with the multinational oil companies, the Commander-in-Chief of the
Nigerian Armed Forces, and Minister of Petroleum Resources of the Federal
Republic of Nigeria, President Obasanjo (GCFR), has deployed troops to the
Niger Delta region following persistent (engineered) inter-ethnic hostilities
(that defy all the known laws of anthropology), and subsequent large-scale
sabotage of oil field equipment, which caused some multinational E&P
companies to temporarily shut down more than 30% of their field operations
there. It is interesting to note that, over the past four (4) years, the
principal targets of the sporadic episodes of low-intensity terrorism (i.e.
abductions; demands for ransom; sabotage to oilfield facilities, and crude oil
pipelines, including the cannibalisation of flow stations) in the Niger Delta,
have frequently been mainly the multinational oil companies from the USA and
the UK: ExxonMobil, TexacoChevron, Halliburton, and Shell. Hardly does
one hear about threats or sabotage to French (elf) and Italian (Agip) E&P
multinationals operating in the same Niger Delta region of Nigeria.
Unfortunately,
military presence in the Niger Delta region has not addressed the dangerously
precarious social, economic, and political situation there satisfactorily.
Indeed, gunboat governance, crude arm-twisting tactics, group blackmail, and
executive intimidation, disguised as "dialogue" with selected
(ass-licking) so-called community leaders, has failed to bring about greater
security in the Niger Delta region. Meanwhile, the USA and the EU have been
fervently urging Chief (General) Obasanjo to exercise self-restraint in his
frenzy for a military crackdown in the Niger Delta, so to keep civilian
casualties to a minimum.
It
will be recalled that in 1999, thousands of Nigerians were ruthlessly killed in
an army invasion of Odi in Bayelsa State, Nigeria. Shortly afterwards, the
Commander-in-Chief, and Minister of Petroleum Resources of the Federal Republic
of Nigeria informed the nation, through speeches that he delivered to his
shell-shocked, awed, and flabbergasted victims, at a welcome reception held for
him during his state visits in Yenagoa, Bayelsa State, and at Owerri, Imo
State, that indeed, the First Nigerian Civil War (1967~1970) was fought because
of "control" of petroleum resources, contrary to the
conventional wisdom that claims that Dr. (General) Yakubu Gowon (GCFR)
fought the war so as to "keep Nigeria one", or that Eze Ndi
Igbo (General) Chukwuemeka Odumegwu-Ojukwu (Ikemba Nnewi) fought the war in
self defence, in the face of threatened group extinction, via ethnic cleansing.
The Niger Delta region has never been the same again since those speeches.
Thereafter, the magnitude, and tempo of abductions, sabotage of oil field
facilities, and "illegal bunkering" have increased in
direct proportion to clamours for "resource control"
Chief
(General) Olusegun Aremu Mathew Okikiolahan Obasanjo (GCFR; fss) should know.
After all, he is a veteran field commander in that war. He may be saying the
bitter truth! In other words, today, in the year 2003, some thirty-three (33)
years after he personally received the instruments of official handover of the
petroleum resources of the defunct Republics of Biafra and Benin (today’s South
East and South-South geopolitical appendages of Nigeria) from Chief (Major
General) Philip Effiong, as the Commander-in-Chief of the Nigerian Armed
Forces, and Minister of Petroleum Resources of the Federal Republic of Nigeria,
President Obasanjo (GCFR), is indeed the Chief Resource Controller of the
Federation called Nigeria, including the Niger Delta.
Criminalize
& Divert Attention:
The
technical, economic, commercial, and political environments of the Nigerian oil
industry are dynamic. It is therefore clear that the rules and regulations that
govern the oil industry in Nigeria should evolve to meet prevailing realities
and challenges. Regulations must be sufficiently robust to accommodate changes.
There are some obsolete and moribund regulations that affect the Nigerian oil
industry as a whole. Such regulations need to be identified, reviewed and
amended (in consultation with key participants in the industry), in line with
prevailing economic realities. It is therefore crucial that workable
regulations, including the empowerment of an independent regulatory body,
manned by organised, well equipped, proficient, and knowledgeable staff, be put
in place to supervise the industry effectively. The Department of Petroleum
Resources (DPR), as it is currently constituted, is very constrained in
its capacity as an effective regulatory body in the Nigerian petroleum
industry.
Nigeria
is the world’s seventh-largest exporter of crude oil, with a capacity to
produce about 2.5 million bbl/d, and proven recoverable reserves of over 33
billion barrels of crude oil. "Illegal bunkering" is in the
same league as cross-border criminal cabals and cartels. The clandestine
business of "Illegal bunkering" is getting increasingly out of
control, and a getting progressively suave, with operatives deploying their
booty to procure lethal arms, and ammunition. Chief (General) Obasanjo’s dismal
failure to end Nigeria’s culture of bad governance, executive brigandage, and
institutionalised corruption, is a national tragedy. With an oil sector that
provides more than 95% of Nigeria’s export earnings, the Minister of Petroleum
Resources (OBJ) is now under extreme pressure to beef up security, as usual, so
as to end the drain on the national treasury, via "illegal bunkering".
And
yet, "illegal bunkering" persists to date!
Kòmbò
Mason Braide (PhD)
I
welcome your comments (via e-mail: kombomasonbraide@msn.com), and encourage
this article to be freely reproduced, published, photocopied, scanned, faxed,
reprinted, reformatted, broadcast, digitised, uploaded or downloaded, in
whatever manner or form, with or without acknowledgement or further permission.
References
& Sources:
Goldman,
A., Peel, M. & White, D.: "How Nigeria's Oil Thieves Operate", Financial Times, London; (Friday, 2 June 2003).
European
Energy Focus: "Calsoft Provide Solution for e-Fuel.com"; (2003).
Osigwe,
R.: "Nigeria Potentially Main Bunkering Centre in West Coast of
Africa"; Global Energy Security Analysis; Alexander's Gas &
Oil Connections; Volume 7, Issue #11; (18 June 2001).
Braide,
K.M.: ‘The Impact of Deregulation on the Downstream Sector of the Nigerian
Oil Industry’; (August 2001)
Federal
Military Government Of Nigeria: "Special Tribunal (Miscellaneous
Offences) Decree No. 20"; (1984)
Federal
Military Government Of Nigeria: "Trade Disputes (Essential Services)
Decree"; (1976)
Federal
Military Government Of Nigeria: "Petroleum Equalisation Fund (PEF)
Decree No. 9"; (1975)
Federal
Military Government Of Nigeria: "Petroleum Production & Distribution
(Anti-sabotage) Decree"; (1975).
