At Large

The Great Nigeria Oil Robbery

Welcome to the global black market in crude oil.

By 7.7.08

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One of the better businesses in and around Nigeria's delta region is running one of the scores of oil lighters that ferry the country's oil to tankers offshore. The only trouble is that the lighters all carry stolen oil and the tankers operate through the cover of multiple owners and changing flags of convenience.

The oil companies do not publicize this trafficking because the Nigerian government would object, but about one fourth of Nigeria's oil is exported in this manner. According to Dele Cole, former adviser to the ex-president, Olusegun Obasanjo, and now one of Nigeria's leading businessman/politicians, the illegal oil export figure on any given day can reach beyond 500,000 barrels.

The tankers lie offshore avoiding the regular shipping lanes and awaiting the arrival of the lighters carrying the purloined oil. Payment is made "on the barrel head" either in cash or in kind. A substantial gun running trade is often tied in. The oil then heads toward refineries around the world, often changing paper ownership several times before landing. The crude is refined and then sold through brokers worldwide.

A NOT DISSIMILAR system of "private unrecorded" crude sales also emanates from Iran through an even more sophisticated network run by elements of the Islamic Revolutionary Guards Corps (IRGC). The principal difference is that the Iranian operation is carefully monitored by the IRGC's covert trade and finance section. The money is used to fund Iran's foreign "special operations."

In other words, a considerable amount of crude oil is regularly traded through what can best be described as a global black market. Nigeria may not be the only source, but it certainly has become the largest dependable illicit source of supply. Both the producing oil companies and the Nigerian government take the loss of what has been calculated to reach over $10 billion a year -- before the spike in this year's oil prices. And this does not include the income lost from simple sabotage.

The problem in the oil producing states of the Niger Delta began with local complaints over the inadequate distribution of wealth gained from the crude obtained from their region. Various criminal gangs pretending to an interest in local sovereignty evolved through the 1990s. But the well-organized massive theft of oil in recent years has been attributed to collusion among federal and state officials, ranking military officers, and several of the politically militant groups working with organized crime gangs.

According to local press sources, the Nigerian Navy also has cooperated in aiding the oil ferrying system operating from Delta ports. The large sea-going tankers stationed offshore apparently are periodically tithed by naval commanders of that sector.

The security situation on the Niger Delta cannot be separated from the legitimate desires of the populace for benefits suitable to the important place this rich three-state region plays in the Nigerian economy. In particular, local politicians point to the continued lack of basic services in an area that has transformed the entire economic and political status of the nation. This atmosphere of exploitation has created a fertile environment for every kind of pseudo-patriotic criminal gang posing as "freedom fighters."

Federal authorities have been as incapable this year of halting the wave of kidnapping for profit as they have been in controlling the illegal trade in crude oil. State governments have been inconsistent at best in their policing efforts, which in one instance included paying the largest criminal gang in their region to attack and intimidate the smaller gangs.

SEVERAL HIGHER TECH SOLUTIONS have included chemically marking crude as it is extracted in order to trace ownership. At the very least such a system, it is said, would force substantial discounting of the price for which it is sold. Obviously there isn't too much faith in the ability of the government officials involved to hold the oil traffickers to account.

Finally, there is a growing cry for the hiring of private security firms to take over policing of oil transport and shipment. It's a nice way of saying that Nigeria, as other mineral-rich African countries have done, is preparing to bring in mercenaries to provide security where their own forces can not.

This is one of those seemingly convenient devices that have as much, or more, downside risk as it does upside potential. In any case, bringing in any form of "foreign legion" to solve their economic security problems is a prescription for setting the detonator on a political wedge of C-4.

Until the Nigerian federal and state governments are themselves capable of policing the Niger Delta, petroleum operations there will continue to be an African version of the Wild West.

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About the Author
George H. Wittman writes a weekly column on international affairs for The American Spectator online. He was the founding chairman of the National Institute for Public Policy.