Nigeria --
Jacob Mandi says he failed to find work with Royal Dutch Shell PLC in Nigeria's
oil-rich swamps. So now the 25-year-old ocean diver earns a rich living
stealing crude oil from pipelines in an activity the company warned on Thursday
is part of a "massive and growing problem of oil theft" in Africa's top
crude-oil producer.
Mr. Mandi, drawing lines on a sandy beach, describes how he dives into the cool
waters of the vast Niger Delta to puncture and siphon oil from Shell pipelines
deep in its creeks. The bulk of the pilfered sweet crude is loaded onto ships
bound for foreign countries, according to Shell, Nigerian oil officials and the
thieves themselves.
"We know which [pipeline] is gas, products, crude," he says,
declining to disclose where he undertakes the widespread but illegal practice
of "bunkering," or stealing oil. "We can sense whether it is hot
or cold. We need nobody's help to know what's inside."
Tired of getting "bunkered," Shell is stepping up a fight against
sophisticated thieves that includes Mr. Mandi and his crew. The pushback
reflects mounting frustration among Nigeria's
biggest foreign investors with a Nigerian government that appears powerless to
halt the losses that earn thieves an estimated $7 billion a year.
In an unusually critical public statement on Thursday, Shell Nigeria head Mutiu
Sunmonu said the "massive and growing problem of oil theft and illegal
refining in the Niger
Delta. . .has reached unprecedented levels."
His open letter, published on Shell's website, said the size of the problem
indicated "a well-financed and highly organized criminal enterprise"
that uses "influence, corruption and violence to protect [its]
interests."
Recently Shell has begun lobbying foreign governments to investigate middlemen,
refiners and foreign ships that might be peddling its stolen crude. Shell has
sought help from the Netherlands,
British and European Union governments to investigate -- and if needed
prosecute -- those abroad benefiting from the trade, said diplomats and people
involved in Shell's efforts.
"It needs, as [Nigerian] President Goodluck Jonathan has asked, for
international collaboration to tackle the issue," Shell's Chief Executive
Peter Voser said in a March interview. Mr. Voser wouldn't elaborate; otherwise,
he says, "you let the cat out of the bag."
Together, thieves drain an estimated 60,000 barrels of oil a day from Shell's
local joint-venture, according to company estimates. Volumes of oil stolen from
Shell and other oil companies in Nigeria have
reached a total of 150,000 barrels a day, or 7.5% of the country's crude-oil
production, Shell says, citing a United Nations figure. It estimates the
illicit trade is bigger than the combined gross domestic product of West
Africa's Togo and Sierra
Leone.
To prevent illegal tapping and potential spills from its pipelines, some
foreign oil companies are shutting them down. Last month, Italy's Eni
SpA shut production from all its four onshore blocks, saying 60% of their
output was being stolen. Shell's Nigerian unit plans to shut one pipeline this
month to remove illegal tapping points. Oil thieves here also hit Chevron
Corp., according to leaked diplomatic cables; the company declined to comment
on its response to oil theft in Nigeria.
Widespread theft of the African nation's oil comes at a pivotal point for the
industry. Rising energy production in the U.S. is
helping to slake global appetite for Nigerian crude, just as a spate of hostage
takings and militant attacks compound concerns about investment risks in the
country's Niger Delta.
The bunkering of Nigerian crude has spawned a shadow industry of its own. It
starts with local thieves drilling plugs into pipelines and pumping the oil
onto barges. Some of the oil is then processed at rudimentary refineries and
sold to fuel distributors that own tanker trucks and filling stations.
The size of the theft, industry experts say, requires resources far beyond the
reach of Nigeria's
young and unemployed. Oil moved on ocean barges requires at least the tacit
approval of some of Nigeria's
army and navy and the former militants paid to guard pipelines, say analysts
and industry executives.
Nigerian government officials acknowledge that tackling oil theft requires
taking on the powerful people and organizations who promote and protect the
illegal activities.
"Obviously, bunkering cannot happen without a certain level of official
collusion," presidential spokesman Ken Saro-Wiwa Jr. said in an interview
last year. "Like any large scale crime anywhere in the world there is an
element of collusion on both ends of the line."
Nigeria's
energy wealth contrasts with its citizen's deep and widespread poverty. Africa's
most populous country has become synonymous with the "oil curse,"
where foreign dollars flow into government-backed projects but neglect
investment in other industries that would broaden business activity and create
jobs beyond energy.
During a helicopter flyover organized by Shell over the 70,000 square kilometer
Niger Delta, evidence of the thefts included a burned tanker that had caught
fire loading crude from a Shell pipeline.
That is the sort of tanker Mr. Mandi is helping to fill. On a recent afternoon,
he and his team were pouring drums of diesel made out of stolen oil into
jerrycans as customers waited in their cars for the product.
For the churchgoing Mr. Mandi, stealing oil in his eyes is his way to stay on
the straight and narrow.
"What do you want me to do," he asks, "take a gun and rob
people?"
In addition to his being a pipeline welder, he trained as a diver to maintain
or repair oil pipelines. But his six-year job search proved fruitless, and
included a spurned application from Shell, he says. Shell declined to comment
on individual cases but said of 6,000 employees in Nigeria,
about 90% are locals.
Mr. Mandi says he now operates a lucrative and illegal bunkering outfit that
allows him to earn some $1,200 a month, about 21 times the average wage.
The income doesn't come without costs. Mr. Mandi says he pays military personnel
for protection and even Shell employees, who lower the pressure on pipelines so
they won't explode when they're punctured.
Jurgen Janzen, a Shell pipelines asset manager, says such assistance would be
unlikely because pressure levels are closely monitored.
A spokesman for the army's Joint Task Force said "insinuations [of
corruption against its members] will always come from those on the wrong side
of the law in order to cast aspersions on our operatives." He pointed to
"myriad vessels and barges" that were "arrested in 2012 and even
in this year" carrying stolen oil.
Shell has commissioned a security study that it hopes will help the Nigerian
Navy get the technical assistance it needs to inspect and stop tankers that are
heading out of the country with its stolen oil, according to people familiar
with the matter.
"We will provide whatever assistance is appropriate for us to give, but
that it is the role of the Nigerian law enforcement authorities to prevent
criminality and bring those who commit it to justice," Shell said in a
statement.