Proceeds from oil theft may expectedly be used to funds politics ahead the 2015 elections, the report hinted at the weekend.
It also indicted high-level politicians and military officials in what it called, “A complex criminal web that includes foreign oil traders, shippers, bankers and refiners.”
The elections, Reuters news agency quoted the report as saying, is one of the reasons for inability of government to record any high-level of convictions.
It expressed “doubts whether anyone capable of curbing it really has the will to do so,” because “the web of beneficiaries of oil theft makes it difficult to stop.”
Daily Independent had some months ago, in a report on pipeline vandalism in Nigeria’s oil rich Niger Delta quoted an anonymous source in the Joint Task Force (JTF) as lamenting the frustration at noticing that certain culprits arrested soon return to the pipelines shortly after being arrested and handed over to the police.
Oil theft, the Chatham House report said, sometimes “funds politics in Nigeria, including election campaigns.”
It named the United States, Britain, Dubai, Indonesia, India, Singapore and Switzerland as likely money-laundering hotspots.
Also, the U.S., Brazil, China, Thailand, Indonesia and the Balkans are the most likely destination for stolen oil, it added.
The report also noted that Nigeria’s supposedly legitimate oil sales business is murky itself, with almost all its crude oil exports sold through traders, a unique system among oil exporting countries.
“Lines between legal and illegal supplies of Nigerian oil can be blurry. The government’s system for selling its own oil attracts many shadowy middlemen, creating a confusing, high-risk marketplace,” the report said.
Stolen Nigerian oil worth billions of dollars is sold every year on international markets and much of the proceeds are laundered in world financial centres like Britain and the United States.
An estimated 100,000 barrels per day (bpd) of oil was stolen from pipelines in the Niger Delta in the first quarter of this year.
This does not include the unknown quantities stolen from export terminals.
The theft amounts to around 5 per cent of Nigeria’s current two million bpd production but has a wider impact because oil companies are often forced to shut down pipelines due to damage caused by thieves.
Nigeria is producing 400,000 bpd below its capacity, mainly due to theft and pipeline closures.
The activity costs Africa’s second biggest economy an estimated $5 billion a year in potential revenue.
While oil majors like Royal Dutch Shell and Italy’s Eni are often the first to complain about theft, it is unclear how much they are losing from it.
A measure of acceptable losses may be keeping them from taking determined preventive action, the report said.
Oil firms do not pay royalties on stolen oil.
“Nigerian crude oil is being stolen on an industrial scale. Proceeds are laundered through world financial centres and used to buy assets in and outside Nigeria.
“Thieves have many ways to disguise funds … including cash smuggling, delayed deposits, use of middlemen, shell companies and tax havens, bribery of bank officials, cycling cash through legitimate businesses and cash purchases of luxury goods.”
Meanwhile, the shutdown of three major trunk lines, Trans Niger Pipeline, Nembe Greek Pipeline and Tebidaba-Brass Pipeline, resulted in shut-in of 400,000 barrels per day, the Federal Government said at the weekend.
Nigerian National Petroleum Corporation (NNPC) disclosed this in a statement just as Minister of Petroleum Resources, Diezani Alsion-Madueke, assured that N15 billion has been set aside for adequate policing of oil and gas installations in the Niger Delta region to stem crude oil theft.
“In the wake of pipeline vandalism and crude oil theft which resulted in the shutdown of three major trunk lines, Trans Niger Pipeline, the Nembe Greek Pipeline and the Tebidaba-Brass Pipeline, accounting for shut-in of 400,000 barrels per day,” the NNPC said, “the Hon. Minister of Petroleum Resources has taken some proactive measures which are already yielding results.”
The statement by Acting Group General Manager, Group Public Affairs Division of the Corporation, Tumini Green, said the rise in crude oil production in the country to 2.4 million barrels per day was as a result of the recent action taken by the minister.
Shell at the weekend shut down the 150,000 barrels per day Trans Niger Pipeline (TNP), barely a week after it reopened the facility.
This development underscored the huge challenges faced by Nigeria, Africa’s largest oil exporter.
Leaks from crude oil theft on the Trans Niger Pipeline in Nigeria have continued, causing a further shut-in of Bonny Light grade oil, Shell said.
It had announced on Monday lat week that the 150,000 bpd pipeline re-opened, prompting speculation that a force majeure may be lifted.
An estimated 100,000 barrels per day of oil was stolen from pipelines in the Niger Delta in the first quarter of this year, the report by London-based Chatham House said, not including the unknown quantities stolen from export terminals.
Shell’s statement said the latest shut-in had occurred on Wednesday September 18 “following reports of a leaking crude theft point at Bodo West in Ogoniland.”
The statement also said the Nembe Creek Trunkline was closed as Shell is removing illegal connections.
It added that in the western Niger Delta the Trans Escravos Pipeline was shut down on September 12 for removal of illegal connections and reopened on September 16.
“While the Trans Niger Pipeline has since been repaired and reopened from the crude theft leaks which forced its closure on July 16, similar incidents have caused several shut-ins thereafter.”
Information from Daily Independent was used in this report.