Two pirate attacks on 11 April affected seven countries. The cargoes came from Nigeria, Turkey, and Greece; the ships were flying Maltese and Liberian flags; and the 8 missing crewmen were from the Egypt, the Philippines and Turkey (Slav, 2016).
Slav (2016) notion merely indicates how international the illicit enterprise has become. As noted earlier, most of the stolen crude oil as well as crude/refined content of hijacked vessels are exported, either for refining or/and sale. How the product is sold at the global market has, however, not received significant scholarly attention. The criminal enterprise tripod feeds into local, regional and global energy markets, through a global-local nexus of processes, mechanisms, individuals, industries and institutions to create an intersection between the ‘White market' and the Black market for crude oil and its derivatives. The black market, as the legal market, lubricates a convergence of global actors and institutional mechanisms and processes behind the enterprise, that is, the value-chain. This section has, therefore, been carefully crafted to ensure minimal overlap with the focus of the next chapter, which is the enterprise value chain.
There are varying estimates on export volume of stolen crude from Nigeria. Katsouris and Sayne (2013) estimated that roughly 80 percent of stolen oil find their way out of Nigeria, while the rest is illegally refined locally, for local consumption. Dele Cole, a major stakeholder in the anti-theft campaign and a special adviser to former President Obasanjo, put the figure for exported volume at 90 percent of total crude stolen. Though estimates, the figures suggest
162 that massive amount of stolen crude oil worth billions of dollars is exported illegally from Nigeria. However, some of the hijacked crude get sold within the region because of ‘’a booming black market for fuel in West Africa’’ (UNODC, 2013, p. 45), which incentivise vessels hijack by pirates and lubricates energy-related criminalities. For instance, 12,270 tons out of 75,000 tons of diesel on board MT KERALA, the Greek-owned ship, attacked by pirates in January 2014 in Angola, were sold in Republic of Congo and southwest coast of Nigeria (USNI News, 2014).
Since 2009, when the amnesty program was announced, there has been a steady increase in illegal export of Nigerian crude oil (Katsouris and Sayne, 2013). Several factors contribute to the spike, including diesel subsidy removal during the administration of President Obasanjo, growing domestic energy demand, and the opaque system of oil trade in Nigeria creates ‘’a confusing, high-risk marketplace" (Reuters, 2013) and further blurs the legal and illegal oil supplies divide. The NNPC crude oil and petroleum lifting contracts and procedures are the least transparent and flawed in several ways, which results in racketeering, attract briefcase sellers and intermediaries, and compromises the integrity of the market. A common legitimate practice involves allocation of lifts by NNPC to contractors to meet the country's OPEC quota, but such a practice has been criticized for lack of objective criteria. Sharp practices which ensure lifts beyond OPEC quota are prevalent, and it is doubtful whether its proceeds make the books of government own Oil Company.
It is not clear how much capital goes into financing the illicit tripod, but the nature of the enterprise and the vast network of processes and mechanisms sustaining it suggest that it is capital intensive which requires international financing. Like legal oil trading financing, the enterprise is funded in numerous ways, including profit from the illegal operation often
163 ploughed into the business, proceeds from corrupt and shady deals, embezzled public funds or loans from Nigerian banks (RIND6). The enterprise also exploits funding for legal shipment of crude oil through letters of credit issued by local and foreign banks (Katsouris and Sayne, 2013). Any loading of a vessel over and above licensed volume, which usually occur at export terminals and constitute a component of stolen crude also feeds into such funding arrangement, but return as illicit proceeds (ibid). Pirates also useearnings from past hijacks to finance future operations (Onuoha, 2013). Hence, given that the illegal business is very much embedded in existing legal business framework, a legal funding arrangement may well be serving a dual purpose; bolstering both licit and illicit market. However it is sourced; locally or internationally, funding for the enterprise tripod goes into various operations, including buying barges and small tankers for transportation; paying off security apparatus; workforce procurement; and even start-up.
3.9.1 HOW STOLEN CRUDE OIL AND PETROLEUM ACCESS GLOBAL MARKET
Stolen and hijacked crude oil and fuel access the global black market in an unwarily inherently logistically complex operation through different ways much like transportation of legitimate energy products. These may take the forms of co-loading, split shipment and ship-to-ship transfer on the sea while vessels are underway or stationary (RIND5). Through ‘co-loading' a cargo tanker could be loaded with crude from different sources and countries. Split shipment is a full tanker-load containing multiple ‘parcels' of oil owned by various groups, with each parcel having its bill of lading (Katsouris and Sayne, 2013). Though legitimate modes of transport, co-loaded and split cargoes could be used by thieves and pirates to hide oil stolen as a legal co-load (ibid). Forged bills of lading are often used to provide transport cover for the stolen volumes of oil in a split cargo. A legitimate cargo load could, therefore, have several
164 bills of lading attached some of which serve illegal purposes. This illicit process is complicated by complex international delivery routes which also provide cover for stolen parcels (ibid). This layered process is further discussed in the next chapter.
3.9.1.1 NATIONALS AND MARKETS
The movement and sale of stolen and hijacked crude oil to the global oil market involved a network of individuals, institutions, and countries who deal in specific aspects or segments of the illicit enterprise value chain, in and out of the GoG. The nationals involved can be grouped into two: 1) Those from within the region and 2) Nationals of countries outside of the Gulf of Guinea. Both categories were earlier discussed in the chapter, suffice it to say, here, movement of such crude and accompanying diverse activities involve mostly Romanians, Ukrainians, Lebanese, Chinese, Pilipino, Indians, and Thai nationals (RIND5). The composition of nationals involved should not be taken as indicative of the destinations of stolen crude however in particular against the backdrop of nature of the movement of crude; it does nevertheless suggest the global character of the business and complex network involved.
Several of my research participants observed that illegally acquired crude finds its way to refineries in countries in and out of the region, including United States, Brazil, Ghana and Ivory Coast. The United States, Brazil, China, India, Thailand, and Indonesia were variously mentioned by research participants perhaps because these countries are some of the largest buyers of Nigerian crude oil. Others point in the direction of Ukraine, Bulgaria, and Romania, all in Eastern Europe.
Some government officials informed the researcher that stolen crude find their way to refineries in West Africa, including Société Ivoirienne de Raffinage in Côte d’Ivoire; Sonara in
165 Cameroon; and Saltpond in Ghana. Sonara refinery in Cameroon is known to refine Nigeria’s light crude. This development has not gone unnoticed by the Nigerian government. In a swift response, the Nigerian government under President Obasanjo struck a deal with Cote d’Ivoire government which would see the former supply 30,000 barrels of her crude daily to the latter so as to enlist Cameroon’s commitment to the fight against illegal oil activities in Nigeria (Vanguard, 2003).
Ghana is alleged to be a refining destination and transit for stolen crude from Nigeria. The country’s Saltpond refinery, where stolen Nigerian crude is allegedly mixed with Ghana oil to obliterate its source, is said to be involved in the global distribution of stolen crude (Faucon and Hinshaw (2014).
3.9.1.2 MONEY-LAUNDERING
Illicit energy-maritime operations yield significant proceeds which are often laundered across the globe through several mechanisms to mask its source. Illegal flow of cash operates by exploiting vulnerabilities in legal banking systems especially in jurisdictions known to have a weak anti-money-laundering mechanism, which ensures that such flows go undetected usually with the connivance of top banking officials. Such proceeds are also invested in tax havens and kept in offshore accounts used to launder proceeds of stolen and hijacked crude oil from the GoG especially Nigeria. Several of the research participants named a host of Middle Eastern and European countries as safe havens for illicit proceeds from stolen crude. Their accounts suggest that most of the proceeds go into properties and real estate in these countries. However, much of the financial proceeds return into the region especially Nigeria where they are invested in luxuries, shares in companies and properties, or even set-up
166 businesses, bypassing the financial system with the active connivance of top government and banking officials (RIND6).