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Oil Theft Has 'Significant' Environmental Cost

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Oil Theft has 'Significant' Environmental Cost

Rising incidences of oil theft in Nigeria's oil producing Niger Delta come at a significant environmental cost, Royal Dutch Shell PLC said Thursday. 

In its sustainability report, the Anglo-Dutch oil major said its Nigerian unit, Shell Petroleum Development Company, or SPDC, experienced 137 spills as a result of sabotage and theft last year, with the volume of oil lost amounting to 3.3 thousand tons. 

"This was an increase in both volume and numbers from 2011, as the scale of oil theft in Nigeria reached unprecedented levels," it said in the report. 

In an open letter published in the report, SPDC's managing director, Mutiu Sunmonu, said the problem of oil theft in the Niger Delta has reached "unprecedented levels" and puts enormous strain on the company's staff, as well as costing Nigeria the country billions of dollars a year in lost revenue. 

He added that the Nigerian government puts the volume of oil stolen significantly above the 150,000 barrel a day estimate given by the United Nations in 2009. 

"It may never be possible to assess the exact figures, but it's clear that a well financed and highly organized criminal enterprise exists on a phenomenal scale...most of the stolen oil ends up in ocean-going tankers that transport it to refineries in other parts of West Africa, Europe and beyond," Mr. Sunmonu said. 

"Where possible, we are taking steps to make it more difficult for the thieves to tap into and steal oil from our pipelines," Mr. Sunmonu said, without providing details. 

However, disruptions remain significant. Onshore production from SPDC's facilities were 20% below capacity last year as a result of pipeline shut downs related to oil theft, the report said and last month SPDC said it would have to shut its 150,000 barrel a day Nembe Creek oil pipeline in order to clear illegal oil tappings. 

In its report, Shell called on the Nigerian and international governments and local communities to take steps to stop oil theft in the Niger Delta. 

"We urgently need more assistance from the Nigerian government and its security forces, other governments and other organizations," Mr. Sunmonu said. 

In contrast to the growing incidence of theft, Shell said it improved its record in terms of operational spills in Nigeria last year. The company said it experienced just 36 operational spills in 2012, down 40% from the year before, while the volume of oil spilled more than halved to 0.2 thousand tons. 

According to its report, SPDC has replaced almost 500 kilometers of pipeline in the last three years and is working to replace more of the infrastructure.

Copyright (c) 2012 Dow Jones & Company, Inc.

WHAT DO YOU THINK?

Post a Comment Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Rick Morgan | Apr. 12, 2013
In a country epitomized by felony from the top down, what can you expect? Unless things have changed tremendously in the last 10 years, I wouldnt be overly surprised if the major thefts were not directly benefiting most of the upper echelons of their executive, legislative (now thats a laugh), and military branches.


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