Oil thieves are bringing Nigerian crude oil pumping stations to their knees, according to a new report from World Oil.
The 60,000-barrel per day Agbada 2 flow station run by Royal Dutch Shell in Nigeria stood idle for most of June due to significant leaks in the pipeline used to transport its crude to export terminals. These leaks were likely deliberate, caused by illicit groups that collectively steal 30 percent of Nigeria’s crude that flows through pipelines.
“We’re trying all sorts of things, you wouldn’t believe it,” Igo Weli, a Shell official at Nigerian oil capital, Port Harcourt, told World Oil. “But how do you protect thousands of kilometers of pipelines against people who are out to sabotage them?”
Nigerian oil production was stifled in 2016 from constant attacks on foreign oil infrastructure. Groups like the Niger Delta Avengers argue that Abuja did not fairly distribute oil revenues across the country, leaving remote, but oil-rich territories in poverty.
But the larger theft problem has little to do resource distribution, according to experts.
“It’s constant,” said WoodMac analyst Gail Anderson. “It’s a big amount of crude being stolen. Nigeria is selling much less oil on the international market than what is coming out of the ground.”
The region “has precious little to show for the oil it’s produced,” Anderson added. “Sabotage won’t go away until there’s some kind of economic and social transformation. It’s an ongoing battle.”
The leak affecting Agbada’s distribution channel at a port in the Gulf of Guinea caused Shell to declare a force majeure on the asset, allowing the multinational to legally miss deliveries.
The environmental costs of constant pipeline ruptures are steep as well. The extra expenditures take away from human development initiatives that would benefit Nigerians.
“The government is more awake,” Weli said. “It realizes how important this is — $1 billion spent cleaning up oil spills could go to schools or hospitals.”