Global action urged on Nigerian oil theft

Oil theft in Nigeria, a large but murky problem, needs a nuanced, international response, argues a new report by Chatham House, London (OGJ Online, July 9, 2013).

“Nigerian crude oil is being stolen on an industrial scale,” write Christina Katsouris of Chatham House and Aaron Sayne of 104 Consulting.

Amounts are uncertain. According to what the authors describe as best available data, an average 100,000 b/d “vanished from facilities on land, in swamps, and in shallow water in the first quarter of 2013.” More oil might leave the country illicitly from export points.

The theft creates problems outside Nigeria by polluting markets and financial institutions and by creating reputational, political, and legal hazards. It has destabilized the Niger Delta but otherwise hasn’t been a large security risk for Nigeria or West Africa.

In general, Katsouris and Sayne write, “Oil theft is a species of organized crime that is almost totally off the international community’s radar.”

The authors recommend collaboration by Nigeria and other countries to gather intelligence about trade in stolen oil and to improve information about volumes, movements of stolen oil, money patterns, and security risks.

They also recommend that Nigeria consider other steps to build the confidence of partners and that other states address parts of the trade in stolen Nigerian oil they know are playing out inside their borders.

And they call on Nigeria to “articulate its own multipoint, multipartner strategy for addressing oil theft.”

Katsouris and Sayne point out that distinctions between legal and illegal oil supplies in Nigeria can be unclear.

“The government’s system for selling its own oil attracts many shadowy middlemen, creating a confusing, high-risk marketplace,” they write. “Nigeria’s oil industry is also one of the world’s least transparent in terms of hydrocarbon flows, sales, and associated revenues.”

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