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Nigeria’s criminal crude oil

Hydrocarbon Engineering,

In the first quarter of this year Nigeria lost at least 100 000 bpd, approximately 5% of total output to theft from its onshore and swap operations, according to a new Chatham House report. This illegal oil has most likely found ready buyers in West Africa, the USA, Europe and several Asian countries.

Illegally obtained crude and the profits are laundered around the world, threatening the integrity of financial markets and the legitimate oil business. Within Nigeria, the world’s 13th largest oil producer, the practice is tied to political violence, corruption and instability. Despite this, no Nigerian oil thieves have been prosecuted internationally, and knowledge of the illegal business and is practitioners remains poor, according to the report ‘Nigeria’s Criminal Crude: International Options to Combat the Export of Stolen Oil’ from Chatham House.

Report details

Criminal Crude is the first independent, in depth report on the international dimensions of Nigerian oil theft. It explores the problem in the context of legal trading markets and Nigeria’s own oil sector and political culture. The report describes oil theft as a species of organised crime that is almost totally off the international community’s radar.

Nigeria cannot resolve the problem alone, but it needs to take an initiative to develop an achievable strategy with its foreign partners. Even then, much more intelligence is needed to connect the very complex issues and range of actors involved.

‘Foreign governments may want to say this is not their problem, but without better knowledge of how oil theft affects security and strategically important markets, not every government can say so with confidence,’ said report coauthor Aaron Sayne.

Four point theft framework

The report offers a four point framework for states seeking to take the first steps against Nigerian oil theft.

  1. Nigeria and its foreign government partners should prioritise the gathering, analysis and sharing of intelligence on oil theft.
  2. Nigeria should consider taking other steps to build the confidence of foreign government partners.
  3. Other states should begin clearing up parts of the trade they know are taking place within their borders.
  4. Nigeria should articulate its own multi point, multi partner strategy for addressing oil theft.

The report points out that there are no easy answers. Tackling this form of transitional organised crime is about making smart choices with tools that work, in a high risk environment where political will easily waivers. The report provides a basis for greater international engagement on the trade in stolen Nigerian crude.

‘A key issue is how much other stakeholders such as international oil companies, oil traders and shippers would be willing to contribute at the risk of undermining their relationships, reputations and capacity to operate in Nigeria,’ said Christina Katsouris, coauthor.

For more from Christina Katsouris on the Criminal Crude report and the illegal oil industry in Nigeria please watch the video below:

Edited from various sources by Claira Lloyd

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