Nigerian Oil

Nigeria pumps out​ 1.5 million barrels of oil a day, making it the biggest producer on the continent. The multinationals – Chevron, ExxonMobil, Shell et al – in partnership with local firms and the state oil company, the Nigerian National Petroleum Corporation, have made billions from it, and oil accounts for more than half of government income. But next to none of this money reaches the region where most of the oil is found, the Niger Delta, where more than a third of the population lives below the poverty line. ‘We have no jobs, no money,’ a young man in Rivers State told me, ‘so we have to collect the oil and refine our own.’

What this means is stealing it. According to the NNPC, around 200,000 barrels of crude a day are siphoned out of the industry’s pipelines, partly to supply the thousands (nobody knows exactly how many) of illegal refineries that have sprung up over the last ten years. The bulk of the stolen oil is sold off internationally, but roughly a quarter is refined locally to make kerosene for cooking stoves and petrol for domestic generators, as well as the ‘flying boats’ – speedboats with outboard motors – that are the main means of transport in this complex of creeks and tributaries. Diesel, the third product, goes out to the rest of a country where everything moves by road since the rail freight network has suffered years of neglect and ill-advised government contracts.

My best source in Port Harcourt, the capital of Rivers State, was Fyneface Dumnamene Fyneface, who runs an NGO that campaigns against environmental degradation. He models his work on that of Ken Saro-Wiwa, who was hanged in 1995 by the military regime of General Sani Abacha after drawing attention to the destruction of the delta by big oil, notably Royal Dutch Shell. ‘It is on record,’ Fyneface told me, ‘that the oil companies are responsible for 50 per cent of oil spills.’ In terms of soil and water contamination, matters haven’t improved much since Sar0-Wiwa’s time, though last year an appeals court in The Hague finally ordered Shell’s Nigerian subsidiary to pay £80 million in compensation to farmers for pollution caused by a spill in 1970.

The militants who took up Sar0-Wiwa’s cause in the 1990s also stole crude, to buy arms from dealers on the high seas, but they were only ever interested in using them against the soldiers who were sent to kill them. They did their best to obstruct extraction, transit and delivery operations and occasionally kidnapped expatriate workers whom they’d warned to leave the region, but they never harmed them. All this ended with an amnesty in 2009, when the government – by then a civilian regime – agreed to pay them off in order to keep the oil flowing.

But now there is lawlessness. There are regular reports of armed pirates in military camouflage attacking convoys of flying boats and killing their victims or abandoning them in the mangrove swamps. Fyneface explained that the only way strangers could enter the creeks was to pay for security. He had recently accompanied a foreign film crew on a visit to an illegal refinery in the small kingdom of Bille, thirty kilometres south-west of Port Harcourt, for which they paid £3000 for six vigilantes armed with AK-47s as well as a lump sum to the refinery’s owner. This stretch of waterway had experienced at least eight separate attacks the previous year, causing the ruler of Bille, Alabo Bennett Okpokiye-Dokubo, to lament that ‘Bille is suffering in the hands of criminals. Life has become unbearable for us.’ Things have quietened down, but the threat remains. Fyneface and the film crew had got in and out without too many difficulties and he’d learned a good deal.

The illegal refineries, which only operate after dark, employ two-thirds of the estimated three thousand inhabitants of the town of Bille and its surrounding lands. Some of them work in the refining process, Fyneface explained, and the rest supply accommodation, transport the finished products or hawk food and drinks. The workers are taken into the creeks, where there are thought to be around twenty refineries and camps. On site they are provided with food, alcohol, cigarettes and marijuana, as well as boots to help them contend with the bitumen sludge, a by-product that is sold off to road construction companies. The camp that Fyneface and his clients visited employed fifteen ‘boys’; it was powered by three sets of generators and produced between 80 and 150 200-litre drums a day. A drum sells for around $60, of which the workers received only $2.50, which they pooled and shared out at the end of a long night shift. At a hundred drums, this would have netted each of them $16 a day, hardly a king’s ransom but princely enough in a country where the laughable minimum monthly wage of 30,000 Nigerian naira – around $70 – is scarcely ever observed. The refinery’s owner would have quickly earned back his hard currency investment of $5000, which is the cost of setting up a camp.

Fyneface stressed the ‘massive environmental damage’ seen in the delta’s mangrove ecosystem, the most extensive in Africa and the third largest in the world after India and Indonesia: moving around by boat, he saw ‘crude oil sheen on the water. You could see crude oil stain on the mangrove on the seashore; you can see trees dying as a result of crude oil pollution.’ On the shoreline he saw ‘fishing nets and fishermen’s clothes with crude oil stains. The pollution also affected their air … I could perceive the odour of hydrocarbon all through my stay. They are inhaling poisonous air all through the community. I also observed soot pollution such that when you touch a surface, your hand becomes black with the particles.’ The pollution is putting fishermen out of business. In 2011 an oil spill from a Nigerian-operated Shell facility discharged an estimated 40,000 barrels of crude. It spread along more than a hundred miles of the Atlantic coastline, killing marine life and destroying the livelihoods of 30,000 people, even before the serious cost to their environment and their health. Disasters of this kind are an indictment of Nigeria’s governance since independence in 1960, four years after oil was discovered in commercial quantities.

The authorities know exactly what’s going on at the illegal refineries. There is no police station in Bille, but there is a very visible army checkpoint which has to be crossed on entry and exit to the town. During my time there last autumn, Fyneface drove me from Port Harcourt to a waterside village whose refineries had been shut down a year earlier. ‘The authorities only destroy the refining sites when a new officer wants to impress his superiors,’ a local informant told me, ‘or when there are misunderstandings about payments.’ By ‘payments’ he means bribes. Army officers sent to rein in the illegal operations often buy into the cartel as a sideline – hardly surprising given their pay.

We hadn’t gone far into the creek before I started seeing the dead or dying trees and shrubs; thick black sludge rose above the water along the banks. You could see from the remains of one of the defunct refineries just how rudimentary the operation must have been. The oil had been heated in what looked like vast cooking pots, over fires which had themselves been fuelled by oil since wood in the mangrove swamps has long been exhausted. Refining is a dangerous business. ‘I can’t count the number of people who have died in explosions,’ a local source told CNN in 2010. At least 25 people – including minors – were reportedly killed in an explosion in October.

The market for these operations exists because Nigeria imports most of its refined petroleum products. For the last two decades the country’s four official refineries have been operating at around 20 per cent capacity. Successive governments have helped themselves to a handsome share of the maintenance contracts. It’s impossible to say how much, but the contracts are huge: last April $1.5 billion went on a deal for repairs at the Port Harcourt refinery.

The illegal refineries, by contrast, do their job efficiently. In 2020 a survey of diesel, gasoline and kerosene from Bayelsa, Rivers and Lagos States found that the illegal home-refined product was 30 per cent cleaner than imported fuel, mainly from Belgium and the Netherlands, which has sulphur levels of 2044 parts per million (the limit for diesel and gasoline sold in the EU is 10 ppm). As one commentator put it, ‘Nigeria exports high-quality low-sulphur crude and imports low-quality high-sulphur fuel.’ The result is that Nigeria has some of the worst air pollution in the world. The Dutch regulatory agency, the Inspectie Leefomgeving en Transport, is currently ‘in dialogue with the producers’ to ensure that the Netherlands only exports fuel ‘in line with the European quality requirements’. The Belgian regulators have been even slower to act.

The government is under pressure to approve licences for ‘modular’ (i.e. small) refineries. A modular refinery is cheaper to set up than a regular refinery – $250 million against $1.5 billion – and more quickly constructed: a year and a half instead of four. While the initial capacity of a modular refinery is only 24,000 barrels a day, it can be ramped up to 100,000 barrels over its lifetime: a ‘performing’ output comparable to that of conventional refineries. And unlike conventional refineries they don’t have to be shut down for modifications that increase their capacity. They are also semi-automated, which makes them safer, though it means fewer jobs for Nigerian workers.

The NNPC approved 38 licences for modulars three years ago, but nothing seems to have come of them. According to Alex Egbona, a member of the House of Representatives, as of last May only two were anywhere near completion. In August last year, Timipre Sylva, the minister for petroleum resources, said that ‘we have licensed quite a bit.’ He was ‘not in a position to give an exact figure now’ but was confident that ‘a few of these refineries are under construction and very soon, they will be commissioned.’ With subsidies on imports of refined petroleum products consuming 40 per cent of Nigeria’s annual foreign exchange earnings, privately operated modular refineries can’t come soon enough.

But two problems remain. The first is institutional corruption, and whether modular refineries might not turn out to be no less susceptible to it than Big Oil. The second, more fundamental question is how we stop drilling altogether. Nigeria is blessed with more than enough alternative energy sources. On 18 November, fresh from COP26, President Muhammadu Buhari signed the Climate Change Act into law, setting a deadline of 2060 for net zero emissions. Government projections suggest that climate change will cost Nigeria anywhere between 6 and 30 per cent of GDP by 2050 if no action is taken. ‘I do not think anyone in Nigeria needs persuading of the need for urgent action on the environment,’ Buhari said in Glasgow. ‘For Nigeria, climate change is not about the perils of tomorrow, but what is happening today.’

How credible is this ambition? Last July, the Nigerian government submitted its updated Nationally Determined Contribution to the UN, promising to reduce greenhouse gas emissions by 20 per cent unconditionally or 47 per cent conditionally (that is, if it receives international assistance) by 2030. But there is no mention of how this is to be achieved. Nigeria remains unwilling to wean itself off fossil fuels to supply its electricity: in Glasgow, Buhari also appealed for international financing to help pursue gas as a ‘transition fuel’. Worse, there are plans to revive Nigeria’s coal sector – a contentious issue for several states attending COP26 – and the obsession with oil and gas exploration in the north of the country persists: the 2021 Petroleum Industry Act sets aside 30 per cent of NNPC’s profits for it.

Buhari’s position – that rich nations should support Nigeria’s continued use of fossil fuels – ‘flies in the face of the G7 countries’ decision to stop funding oil, coal and gas projects overseas’, as the political scientist Olu Fasan put it in the national daily Vanguard. Meanwhile, according to a recent report from the World Economic Forum, climate change ‘is already wreaking havoc across the region’, with temperatures in the Sahelian strip ‘rising 1.5 times faster than the global average’ and ‘worsening the region’s existing issues of droughts, desertification and erosion’. As for Nigeria, the report estimates that as many as nine million citizens ‘could be pushed to migrate in some of the country’s most vulnerable regions unless early action is taken by the government’. There is little reason to be hopeful so far.