By Drew Hinshaw
THE NIGER DELTA, Nigeria--Oil is so cheap these days that for
people around here, it isn't even worth stealing anymore.
Just months ago, villagers regularly took hacksaws to pipelines,
transforming their homeland of rivulets winding through bayou
forests into a calamity for global oil giants and
environmentalists.
Hundreds of thousands of barrels of crude spurted daily into
buckets, jerrycans and drums that were loaded into canoes. Some got
cooked in makeshift refineries fashioned from metal cylinders built
along riverbanks.
But now, with prices low, the risk of getting busted by
Nigeria's navy now outweighs the get-rich rewards of sabotaging
pipelines, stealing oil and smuggling vast quantities of it onto
international markets. Indeed, some of these thieves have reverted
to plunking fish traps in the waters they helped pollute.
"We're just doing this to occupy ourselves," said Emanuel Ubo,
an oil smuggler washing out an emptied crude barrel in the creek.
Nearby, an old fisherman tossed a net across water stained
black.
Pipeline theft in Nigeria long ranked among the petroleum
industry's most difficult problems--an invisible tax priced into
the global cost of oil. Major oil companies shut pipelines. Royal
Dutch Petroleum PLC has sold off at least $2.4 billion of oil
properties in Nigeria since 2010.
Meanwhile, environmentalists watched the constant spills add up.
One United Nations report in 2011 reckoned it would take 30 years
clean this expanse of coastal wetlands. There have been countless
more spills since then.
Until recently, government bookkeepers could only guess how many
hundreds of thousands of barrels of oil were taken each day. Now,
officials in the presidency say it is less than 50,000 of the two
million Nigeria produces daily.
The fiscal health of Africa's top economy hinges on whether
Nigeria can keep theft levels low. The government earns 70% of its
income from crude. It needs every drop so it can afford to rise up
from poverty and conflict.
On Saturday, President Goodluck Jonathan will face re-election
in what has shaped up to be a tight race. He is watching his
oil-powered economy sputter as the vote approaches. The country's
currency has weakened 20% in the past two months. And his
ill-equipped army is also fighting a six-year war with the Islamist
insurgency Boko Haram, hundreds of miles north of here. Most
recently, Boko Haram militants have kidnapped more than 400 women
and children from the northern town of Damasak that was freed this
month by troops from Niger and Chad, residents said on Tuesday.
"This is the moment to tackle oil theft," said Joseph Croft,
executive director at the Stakeholder Democracy Network, a Niger
Delta advocacy group.
The relative state of security for Nigeria's oil pipelines comes
after years of government efforts. Under a 2009 amnesty program,
the government tried paying those who at least publicly renounced
the oil-theft business to guard pipelines--only to see oil theft
keep rising.
It also bought Israeli drones meant to survey pipelines but
ended up without spare parts, cameras or engines. A
German-manufactured frigate for sea patrols is also out of
order.
And yet the U.S. has seen promise in Nigeria's navy.
For years, the U.S. military has trained more than 200 Nigerian
naval commandos, and installed coastal radars to track ships. The
U.S. Coast Guard even gave Nigeria a pair of ships.
Now, oil thefts have become manageable enough to revive some of
the business from major oil companies. Shell reopened a pipeline in
February. Others are holding off: The fact that only a few thousand
barrels of oil are stolen a day from them isn't much incentive,
given the low margins.
Kola Karim, chief executive of Nigeria's Shoreline Natural
Resources Ltd., said about 15% of his oil "just vanishes." He adds:
"The price is at the pits of hell so even a drop of your oil
stolen, you feel it."
Some worry theft will increase as soon as oil prices do.
Villagers like James Ebemede, father of 15 children, don't see
alternative ways to provide for their families.
"You don't retire from this work," he said, his rubber boots
sinking into the oil-stained mud where he unloads barrels from
canoes.
Still, the 55-year-old smuggler and distiller of crude oil had
just laid off eight of his 10 employees. He alleges the navy burned
down his refinery about a week earlier, before killing a
30-year-old neighbor in a raid. He has rebuilt the refinery amid
the ashes.
A spokesman for Nigeria's navy, Commodore Aliyu Kabir, declined
to comment. He also said the navy "has zero tolerance for
corruption."
One recent Sunday, almost all the rogue refineries along a
stretch of swamp were abandoned, many of them burned down.
Weeds had begun to creep up from the marsh and overtake a
few.
A pair of naval officers stood on the deck of a command boat to
greet a passing journalist.
"Something for me?" one sailor asked, with his hand out.
Just around a riverbend, a handful of villagers along a creek
were rushing to refine the day's batch of stolen oil into diesel.
They had heard the navy would come at 4 p.m.
"The ones that come in the afternoon take your money," said Anna
Gafugha, her clothes stained from her work. "The ones that come at
night take your oil and your money."
Benoît Faucon in London contributed to this article.
Write to Drew Hinshaw at drew.hinshaw@wsj.com
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