18 This period is significant in this study. First, it was a time of austerity and severe economic conditions which necessitated adoption of Structural Adjustment Programmes (SAP) of IMF and World Bank. Hence most economies in the region were integrated into the Western capitalist economic framework (Nwagbara, 2004). Second, the period marked the beginning of petro-piratic activities in the resource-endowed Niger Delta part of Nigeria (IMB, 1987). The late 1970s and early 1980s saw most African countries grapple with severe economic difficulties and rising debt. As a result, there was a massive cut in public expenditure as most governments ran out of finances (Anyanwu, 1992). As funds dried up, African countries in particular resorted to external borrowing from the Bretton Woods institutions (IMF and World Bank) in the form of a loan. However, availability of such credit facilities was based on several conditions which came in the form of structural adjustment programs (Anyanwu, 1992). The adoption of SAP was obviously a response to worsening economic situations in Africa. However, rather than alleviate the sufferings of the people and improve their well- being, SAP and the conditions attached to it worsened people's living socioeconomic conditions (ibid). Some workers had their salaries slashed while others lost their jobs through retrenchment, bringing about a dramatic rise in unemployment figures. Subsidies were removed, currency devalued and inflation jumped (ibid). Overall, the necessities of life became unaffordable. The aftermaths of job losses and inflation were rising wave of crime and social dislocations (ibid). These developments prepared the ground for the emergence of organised criminalities including piracy in the GoG.
The GoG is a busy maritime route for the movement of tradeable commodities, such as oil and petroleum. As a result of inadequate or the absence of domestic refining capacity, most countries in the region, particularly Nigeria, the region's largest producer of oil, export crude
19 oil to refineries in and outside of Africa, for processing (International Crisis Group, 2012a). Only a fraction of what is consumed daily is processed in-country; the largest chunk of fuel consumed is imported (NNPC, 2013). In 2013, Nigeria produced 800,488,096 barrels of crude oil out of which only 36,193,024 barrels got to Kano, Port Harcourt and Warri refineries; three of Nigeria's refineries with a combined refining capacity of 77.85% (NNPC, 2013). The net volume was exported to refineries overseas for processing into petroleum produce, which is then imported back to Nigeria to make up for the shortfall in local production or/and sold to the international market. This process sees Nigeria rely on imports for around 85 percent of its domestic consumption because of inadequate refining capacity (International Crisis Group, 2012a). The emerging burgeoning oil export-import business not only undermines the prospects of job creation in Nigeria's downstream sector, as jobs are exported to countries where crude is refined but also creates a viable environment for sea piracy as the produce (crude oil or petroleum) on daily transit constitutes potential targets for pirates.
An important dimension is illegal fuel trading, which is different from theft and sale of crude oil. Nigeria provides a rich context and market for the trade in illegally refined petroleum products, which is a lot easier to sell compared to crude oil (ibid), and creates a significant incentive for piracy. The black petroleum market is strengthened further by the government subsidy policy which created artificially low prices for petrol and incentivizes profitable arbitrage. But the scheme has been abused and plagued by ''endemic corruption and entrenched inefficiency'' (House Committee Report, 2012, p. 5), prompting the legislature to launch an inquiry into its operations in 2012. While the scheme may have its benefits, it has come at a cost. The programme has created massive rent-seeking opportunities for illegal
20 dealers in crude oil and petroleum and continues to sustain refined petroleum and crude oil black market in the region.
The oil theft business comes in three different dimensions. There is a small scale of theft characterised by diversion and selling off of petroleum product meant for sale at local market. Oil pipelines and well heads are often hacked and tapped to steal oil. This process is a more organised operation. The third, the most sophisticated and economically damaging, is known as cargo theft. Crude oil is lifted at the export terminals more than licenced quota through forged bill of lading, which also provides information on the volume or amount loaded onto the vessels and the destinations. (Asuni, 2009; Katsouris C. and Sayne A., 2013). What this shows is that oil is stolen in Nigeria at every stage of the petroleum value chain; from the point of drilling through transportation to exportation via the terminals.
Thus it is possible at this stage to identify and briefly discuss the main players involved in the value chain of oil theft and petro-piracy at this juncture of the thesis.
Table 1: Actors in the Value Chain of Oil Theft, Petro-Piracy and Illegal Fuel Trade in the GoG
ILLEGAL FUEL TRADE OIL THEFT PETRO-PIRACY
LOCAL Niger-Delta Militants,
Community Leaders
Niger-Delta youths, Community Leaders
Niger-Delta youths, Community Leaders
21 INTERMEDIATE Oil companies & NNPC
Officials, Department of Petroleum Resources (DPR), Petroleum Products Pricing Regulatory Agency (PPPRA), Customs Officials, Banks,
Registered oil marketing companies, Shipping industry and Vessel owners
Member of the Nigerian Army
(Security personal), Oil companies & Nigeria National Petroleum Corporation (NNPC) officials, Senior politicians, Retired Army Generals
Member of the Nigerian Army (Security personal), Oil companies & NNPC officials, Senior politicians, Retired Army Generals
INTERNATIONAL Foreign and local banks, International organised criminal syndicates Several transnational organised criminal groups, foreign nationals, e.g. Moroccans,
Venezuelans, etc., and Rotterdam spot market Netherland as destination for
refining crude.
Several transnational organised criminal groups, foreign nationals, e.g. Moroccans, Venezuelans, etc., and Rotterdam spot market Netherland as a destination for refining crude.
Source: The author, based on Asuni, 2019; International Crisis Group, 2012a
The scale of oil theft operation speaks to the nature of actors involved in the business. For instance, local gangs, youth and community leaders operate the lowest echelon of the illegal enterprise (Asuni, 2009; International Crisis Group, 2012a). The scale of operation becomes more sophisticated as the business is expanded. The players at this level also become more
22 diverse with membership straddling state institutions such as the military, oil multinationals, etc. and individual actors like the political and ruling elite (Asuni, 2009; International Crisis Group, 2012a). At an international level, several transnational organized criminal groups and foreign nationals including Moroccans, Venezuelans, Lebanese, Chinese and Russians are involved (Ikoh, 2013), with Ghana, Cameroun and Côte d'Ivoire (ibid) and Rotterdam spot market, Netherland (UNODC Report, 2013) as possible destinations for refining of stolen crude. The various actors involved and layered-operational modes underscore the complexity and profitable opportunities in the enterprise. A complex and less transparent transportation system ensures that stolen crude finds its way to the international market and refineries through international criminal syndicates who handles the transport infrastructure and finances (Katsouris and Sayne, 2013). The movement of stolen crude is a clear description of an illegal business model but, it is utterly over-simplistic of a complex web of activities involved in the movement of crude oil and fuel across the sea. A detailed account of the movement of stolen crude is discussed in details in chapter three.
Figure 1.2: Criminal Convergence: Oil theft, Petro-Piracy and Illegal Fuel Trade in the GoG
23 The distinct layers of operations are suggestive of a segmented oil market, role and functional differentiation. However, there is increasing collaboration, as shown in figure 1.2 above, between actors and segments of the business hence the demarcations become increasingly imaginary. Oil thieves, petro-pirates and illegal dealers in fuel operate in a convergence which enhances their operational capabilities and widens the scope of their illicit business, but does not prejudice conflicts and conflictual relations among others. The basis for such collaboration lies in the illicit business opportunities around the region’s energy-maritime economy and the dynamics of commercial activities that drive illegally gotten energy resources. Such collaborative measures will be discussed in details in chapter three. Suffice it to say here that increasing criminal collaboration underscores the capability and dynamism of today’s transnational threats to transform into a more potent mix of insecurity across the globe. Such capability, dynamism and the prospect of a greater security threat requires a holistic consideration of the crime setting in the context of ‘convergence crime’ to combat illegal energy-maritime activities. Against this backdrop, this study weaves an investigation of the phenomenon of crude oil theft, petro-piracy and illegal fuel trade using the prism of convergence crime which is represented in figure 1.2. The study adopts a broader approach that demands a conceptual framework that integrates and demonstrates their areas of overlap. Such a framework also highlights their enterprise nature and the value-production activities that sustain the criminal economy.