By Sarah Kent and Michael /Wall Street Journal
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police officer checks an oil pipeline which vandals break to steal oil from, in
Warri, in Nigeria’s Niger Delta/AP
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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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