Rising oil prices fueling $133bn black market for commodity

AS OIL PRICES CON TINUE their ascent, a $133 billion flourishing black market comes as no surprise to observers of Nigeria, one of the major oil producers, known for oil trafficking, losing about $1.5 billion yearly due to pipeline tapping, illegal production and other sophisticated schemes.

Oil remains the world’s leading commodity, with an estimated $1.7 trillion market valuation, and is growing daily as energy needs increase. Oil like any other commodity experiences fluctuations and the volume of oil smuggled is highly dependent on fluctuating prices. It remains a very lucrative business and everyone is trying to cash in.

As a result, licensed players, which include indigenous compa- nies like Aiteo, and international oil companies (IOCs) like Shell operating in Nigeria, often suffer losses, and record a high number of illegal theft points and oil spills. For example, Shell said it has removed 950 illegal theft points since 2012, and recorded nine oil spills in 2017 alone. Many pipelines dedicated to oil and gas operations have been crippled due to this.

Nigeria Natural Resource Charter (NNRC) also said that “with global oil prices rising to $100 per barrel, oil theft has evolved to a cottage industry creating consequential socio-economic problems.”

It added that oil theft has risen to unprecedented levels and that the country was unable to curb the epidemic.

However, the Nigerian Navy has said that there is a decrease in crude oil theft due to three major security strategies. Saidu Garba, Flag Officer Commanding (FOC), Central Naval Command of the Nigerian Navy, said: “Crude oil theft and other such criminal activities have reduced as a result of a number of measures put in place, one of which is the permanent operation at sea, which is called Operation Tsare-Teku. Tsare-Teku maintains a number of vessels at sea at all times.

“The second is the swamp bogey operation whereby we go around demolishing all illegal infrastructures that has been put in place for illegal oil production.

“The third one is the choke point regime at strategic points within the waterways to ensure that there is no illegal movement of any kind,” he added.

Experts have advised the industry players to adopt a community driven multi-stakeholder participatory partnership model which would ensure engagement and sustainable in the areas of operation in the Niger Delta.