Shell declared force majeure on the Nigerian blend of crude oil last week because of what it described as rampant theft from one of its oil pipelines there.
Shell said there were more than 230 cases of oil theft in 2011, compared with 187 reported in 2010.
"There is also a massive illegal refining business based on stolen crude oil," the Platts news service quoted the company as stating. "All these have reduced the amount of oil Shell Petroleum Development Company of Nigeria is producing, created environmental and social problems from oil spills and reduced government revenue that could be used to develop infrastructure and services."
The company said the banditry may be tied to an international syndicate. If it continues, it would be "devastating" to the Nigerian economy as well as its environment.
Shell has blamed oil bandits and saboteurs for a series of oil spills near the Niger Delta region in Nigeria. The supermajor is suspected of vastly under-reporting the amount of oil spilled in the region in 2008 and faces a lawsuit in a London court filed by Nigerians impacted by the spills, however.
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