PRESENTATION OF RESEARCH REPORT

1. PRESENTATION OF RESEARCH REPORT PRIVATE GAIN, PUBLIC DISASTER: SOCIAL CONTEXT OF ILLEGAL OIL BUNKERING AND ARTISANAL REFINING IN THE NIGER DELTA BY BEN NAANEN & PATRICK TOLANI UNDER THE AUSPICES OF NIGER DELTA ENVIRONMENT & RELIEF FOUNDATION (NIDEREF), PH, NIGERIA & REDEEMERS RELIEF AGENCY INT’L (RAIN), OXFORD, UK 30 SEPTEMBER, 2014

2. PRESENTATION CONTENT • Introduction • Objectives • Project Location • Study Approach / Fieldwork Observations • Findings • Recommendations • Conclusion

3. INTRODUCTION • Nigeria has been losing about $6 billion worth of oil pa to theft in recent years which is about 6.25 % of the country’s total export value. About 80% of the stolen oil is exported while 20% is crudely processed into low quality petroleum products for the internal market. This scale of loss is close to a national economic emergency. • Nigeria has the highest rate of oil theft in the world – about 145,000 bpd or 7.25% of total production. Closest rival is Russia which looses about 150,000 bpd or 1.5% of total production. • Unfortunately, theft of Nigerian oil is seen abroad as a uniquely Nigerian problem that does not represent credible threat to the international economy or world peace and security, hence it is difficult to get the support of int’l community to combat it. So Nigeria has to find an internal solution to its self-inflicted crisis.

4. KEY FACTS Amount of oil stolen per day – 145,000bbl = 52, 925,000bbl/year. • Financial loss to Nigeria - $6 billion pa. • Size of illegal bunkering economy - $9 billion pa. • Illegal bunkering employment – more than 26,000 men and women directly or indirectly receive incomes from illegal bunkering and artisanal refining.

5. Public health risk oil pollution: Bodo creek in Gokana LGA of River State has one of the highest levels of hydrocarbon contamination in the world – 0.526mg/kg of TPH and 0.044mg/kg of PAH. • Reference point for most researchers is Potomac River, USA which has 598ng/kg of PAH. • High values of TPH and PAH correlate with possible lung, kidney, heart and testicular damages. Exposure to PAH is primary risk factor of lung cancer.

6. RESEARCH OBJECTIVE

7. PROJECT GEOGRAPHICAL SCOPE Area of Study

8. FIELDWORK ACTIVITIES Fieldwork, between March and October 2013 Rivers State – Gokana, Tai & Ogu Bolo LGAs Hot Spot – Bodo-Bolo Axis

9. FIELDWORK ACTIVITIES Bayelsa State – Nembe, Ekeremor & Southern Ijaw LGA Hot Spots – Nembe Axis, Azagbene and Igbomaturu

10. FIELDWORK ACTIVITIES Delta State – Ugheli, Burutu & Warri South LGAs Major hot Spot – Ojobo, Obi-aghaga and Kiagbodo, Uzere

11. FIELDWORK ACTIVITIES • Relevant Government Institutions – Interviews • IOCs • JTF Op Pulo Shield & camps in RV, BY & DT • NNS Pathfinder • Illegal bunkering com’ties • First hand observations of bunkering ops in camps • Int’views at oversea locations

12. FINDINGS / OBSERVATIONS SOURCES OF CRUDE Abandoned and uncapped Well heads Pipeline vandalization 3,203 oil spills occurred in Nigeria from 2006 – 2010 70 % attributed to sabotage – FMENV

13. SPDC OIL SPILL RECORDS 2011 - 2013

14. COMMUNITY CONSULTATIONS

15. THE SITE VISITS

16. FIELD WORK – OBSERVATIONS

17. TYPICAL PROCESS SCENARIO

18. Contribution of Oil to the Nigerian Economy

19. FUTURE TREND IN OIL THIEFT

20. CAUSES OF ILLEGAL BUNKERING • Socio-Economic Factors • Poverty and deprivation / capital accumulation • Local bunkering and artisanal refiners mostly driven by poverty • Export-led theft driven by profit and capital accumulation • High youth unemployment • Underdevelopment • Perceived exclusion from the benefits of the oil economy

21. CAUSES OF ILLEGAL BUNKERING • Political Factors • Failed state syndrome – weak institutions, weak governance • Corruption • Resource curse thesis/paradox of plenty • Resource control assumptions

22. CAUSES OF ILLEGAL BUNKERING • Market Factors • High oil prices, soaring profits • Scarcity of petroleum products in riverine communities of Niger Delta • High domestic demand for cheaper fuel • Robust international demand for oil • Vulnerability of Oil Installations and Weak Deterrence • Oil installations, especially pipelines, are not protected hence vulnerable to attack • Oil installations can easily be sabotaged without serious consequences for perpetrators

23. IMPACT AND CONSEQUENCES • Economic Impact • - Huge loss of revenue to government • - Impact of revenue loss on national, state and LG budgets and socio-economic development • - Dwindling oil and gas investment • - Neglect/death in the local communities of other artisanal occupations • Social Impact • - Social crisis • decline of education – increase in school drop outs • lack of interest in other necessary low income occupations

24. IMPACT AND CONSEQUENCES Political Impact - Nigerian politics, driven by desire to control oil revenues - Threat to democracy – overwhelming influence of oil money on elections - Weakening of state institutions and political instability - Potential rise of petrocracy - Arms proliferation - Security and human rights violations

25. FINDINGS – CONSEQUENCES • Environmental and Public Health Impact • Wide spread environmental impact – land degradation and possible groundwater contamination • Compounded destruction of marine ecology and fishery economy • Possible outbreak of cancer pandemic due to hydrocarbon contamination - Potential Bhopal or Chernobyl in the Niger Delta • Lung and skin diseases and burns are on the increase • Spread of sexually transmitted diseases, including HIV_AIDS

26. Environmental Impact DEFORESTATION – LAND DEGRADATION – GROUNDWATER CONTAMINATION FOREST FIRES – CO2 EMISSIONS – CLIMATE CHANGE IMPLICATIONS

27. LIMITATIONS OF CURRENT COMBATING MEASURES LIMITATIONS • High level corruption among State security officials

28. SUMMARY OF RECOMMENDATIONS • Immediate Measures • Addressing the socio-economic foundation of illegal bunkering through an attack on poverty and job/livelihood creation targeted at the youth who must be made to come out of the creeks. • Pipeline protection through community-based surveillance, replacing the private contractor surveillance. In exchange for this role communities receive development support through GMOU.

29. Speedy prosecution of oil theft cases by setting up a special judicial mechanism exemplified by special courts. • Policy review to allow communities own modular/cottage refineries that would contribute to addressing local supply disequilibrium, build local capacity in the downstream sector and empower local communities through job creation.

30. SUMMARY OF RECOMMENDATIONS

31. SUMMARY OF RECOMMENDATIONS

32. SUMMARY OF RECOMMENDATIONS

33. SUMMARY OF RECOMMENDATIONS

34. CONCLUSION Combating illegal bunkering requires addressing its socio-economic foundation including Poverty and Unemployment Government policy initiatives should be monitored to produce expected outcome The IOCs must construct new equitable and mutually beneficial partnership with the local communities, to enable the communities develop a sense of ownership that will make them protect oil facilities in their domain Efforts should also be intensified through positive advocacy to change old community perceptions The study also call for a new community – based pipeline surveillance initiative and an effective judicial mechanism to ensure speedy prosecution of arrested suspects. We believe oil theft will be substantially mitigated if these urgent measures are rigorously implemented

35. THANK YOU