PORT HARCOURT, Nigeria, Oct. 18 (UPI) -- Royal Dutch Shell is selling off four of its onshore Nigerian oil blocks because of the constant theft of large volumes oil from its pipelines, officials said.
The move highlights the West African state's growing battle with criminal syndicates that are stealing an average of 100,000 barrels of crude a day. That costs the continent's second largest economy after South Africa up to $1 billion a month, a criminal enterprise on an industrial scale that officials say rivals the narcotics trade as the world's most lucrative crime.
Oil industry officials and community workers say this massive theft of Nigeria's key resource involves crooked politicians, security forces, oil industry personnel and oil traders.
There are also militant groups operating in the oil-rich but impoverished Niger Delta, a labyrinth of swamps and creeks that provide cover for the complex network of crime.
"There's a sophisticated organization," says Philip Mshelbila, Shell's chief of communications in Lagos, Nigeria's commercial capital. "Clearly it's not just local. There has to be a wide network."
Mela Oforibika, a lawyer and head of the delta community of Bolo in southern Nigeria that's the center of the oil theft network, asserts that the military is paid off by crime syndicates.
"The pay-off system to the armed forces and police ... is well organized ... Most army have a lifestyle that you can't explain," he said.
Stealing oil from pipelines or other facilities is known as "bunkering." Officials say it's now so pervasive, in the delta particularly, that there's little interest in trying to stamp it out. And, with the fix supposedly running all the way up to senior levels of government, there's little political will to do anything despite the ruinous economic impact the oil theft has in a deeply corrupt country long torn by tribal, regional and religious rivalries.
Since Shell, which pioneered Nigeria's oil business, started production from the Oloibiri field in 1958, other majors like Exxon Mobil, Texaco and Gulf Oil have moved in.
Nigeria historically was Africa's foremost producer, although Angola, further south down the Atlantic coast, is now producing more crude oil.
In recent years, Nigeria's onshore production has been slipping, in large part because of "bunkering," but also because the older fields are running down.
Initially, most of Nigeria's production was onshore, 75 percent in the 1970s, But now offshore wells are overtaking the land-based fields and deepwater drilling is now predominant -- and harder to steal from.
Because of the oil theft, Nigerian production is running 400,000 barrels per day below its capacity of 2.5 million bpd.
The damage inflicted by the oil thieves has forced some companies in the delta to shut down pipelines for long periods.
On Oct. 10, Shell closed its Trans-Niger pipeline, capable of pumping 150,000 bpd to the giant refinery at Bonney, because it had been holed so many times by thieves.
It's one of the most sabotaged pipelines in the world and that was the third shutdown in four months.
High oil prices in recent months, usually around $100-$110 a barrel, have blunted the impact of the oil thievery. Oil and gas account for around 70 percent of the country's revenues.
But Nigeria's not out of the woods yet, and is unlikely to be despite some expansion in non-oil sectors such as telecoms and construction.
A recent report by the Royal Institute for International Affairs, a London think tank, said Nigeria's oil is being stolen not just from the pipelines, but tank farms, export terminals, refinery storage, ports and even wellheads.
"Officials and private actors disguise theft through manipulation of meters and shipping documents," the study observed.
"Proceeds are laundered through world financial centers and used to buy assets in and outside Nigeria, polluting markets and financial institutions overseas, and creating reputational, political and legal hazards."
Much of the stolen oil is loaded on barges and small ships in the delta's creeks and carried to tankers offshore in the Gulf of Guinea, where it's taken to neighboring countries in West Africa, or further afield to Brazil, China, Singapore, Thailand, Indonesia and the Balkans where it's processed by international crime syndicates.
RIIA says the proceeds are laundered through banks and businesses in African states, as well as the U.S., Britain, Switzerland, India, Singapore and the Persian Gulf.