Today, black is the new gold, especially in Nigeria. It is Africa’s largest oil producer and the 13th largest in the world.
However, Nigeria is facing a major problem. Oil is being stolen at an industrial scale of 100,000 barrels every day costing the country over $8 billion in lost revenue a year. Oil theft is operated by sophisticated multinational criminal enterprises that make Nigeria’s oil industry very complicated because the lines between what is legal and illegal are becoming very blurred. According to a recent article in the Economist, to steal oil, thieves illegally tap into pipelines and other infrastructures in the oil rich Niger Delta. They then funnel the stolen oil into small barges and boats. Some of the stolen oil is refined locally while the rest is transferred onto larger vessels and is refined elsewhere. The stolen oil is then mixed in with oil from legitimate sources and sold around the world.
Nigeria’s oil marketplace is dynamic but not very transparent. The specifics of who is stealing the oil and where it actually goes is hard to accurately estimate. However, Chatham House, a leading London think tank argues that due to the lucrative nature of the business, the key players don’t want the status quo to change. Politicians, security forces, oil workers, criminal entities, and local community leaders all seem to benefit from the oil theft and thus do little to stop it. A large-scale theft network includes security personnel, facilitators, local and foreign transport networks and a range of buyers and sellers. The profits from the buying and selling of the stolen oil is laundered by middlemen in financial hubs from New York to Singapore to Geneva. The money is deposited into the accounts of shell corporations and invested in legitimate businesses.