Such is the scale and cost of the pipeline vandalism epidemic in Nigeria that Shell has decided to sell its assets in the region. Tens of thousands of barrels are stolen a day by criminals, while militants use sabotage as a political statement against the government and oil companies. With input from industry experts at Shell and NNPC, Chris Godfrey investigates why vandalism has thrived in the Niger Delta, the extent of its impact and what measures can be taken to stop it.


Seven billion a year – that's the estimated cost in dollars of oil stolen from pipes in the Niger Delta, according to the International Energy Agency. Over the past decade, more than 15,000 breaks have been attributed to pipeline vandals. Nigeria has experienced a phenomenal rise in cases. According to the Nigerian National Petroleum Corporation (NNPC), in 1995, there were just seven reported incidents; between 2010 and 2012 the figure stood at 2,787. Amid a background of political tension, abject poverty and rampant militancy, a vandalism epidemic has embraced Nigeria and oil pipelines are the target.

"The theft is very material," says Simon Henry, CFO of Shell. "Figures have been quoted of up to a billion dollars a month being stolen from the government, in effect, and that figure is probably accurate."

Despite being Africa's largest oil-producing country, a well-documented shortage in petroleum has left citizens angry at a perceived corruption and mismanagement by officials, not to mention rising oil prices.

Exploiting the situation, organised crime syndicates are paying groups to break into oil facilities and steal thousands of gallons in each raid, while militants use pipeline vandalism to make political statements against apparent aggressive corporate profiteering and elicit governments within the sector. For those in absolute poverty, taking advantage of poorly protected pipes in areas of low policing could be the difference between having light and power, and not.

Even in areas with substantial policing, forces are struggling to contain the crisis, with two officers reportedly taken hostage and others killed during a recent shoot-out next to a pipeline in Arepo, Ogun, just one example of the humanitarian impact this surge in vandalism is having. It's a regrettably familiar story; in May this year, a deliberate explosion in Port Harcourt, Nigeria's 210,000bpd-capacity refinery, killed seven and injured many more.

"The obvious tactic has been to bolster security forces across the Niger Delta, where vandalism is most prevalent."

Such is the extent of the problem that Shell last year announced its intentions to sell its stake in its Nembe Creek pipeline. Mutiu Sunmonu, head of Shell's Nigerian unit, called the level of vandalism unprecedented, stating: "More than 60,000 barrels of oil are being stolen a day, resulting in frequent production shutdowns and massive oil spills blighting the ecosystem."

Such a figure represents a significant chunk of the 150,000bpd production from the 97km network. Shell shut down the entire pipeline earlier this year in order to remove theft points, a move that meant further lost profits; cementing its desire to leave the region.

Protect and serve

The obvious tactic has been to bolster security forces across the Niger Delta, where vandalism is most prevalent. In a recent report from Platform, a London-based body monitoring the oil and gas industry, Shell spent nearly $1 billion on worldwide security between 2007 and 2009, 40% of which was allocated to the protection of its resources and personnel in Nigeria, understandable when you consider that 62 employees were kidnapped and three killed, and 15-20% of its output was stolen during 2008.

"Protecting our people and our assets is Shell's highest priority," says spokesperson Precious Okolobo. "Our spending on security is carefully judged to meet this objective, wherever we operate in the world. We have always acknowledged the difficulties of working in countries like Nigeria. In the period that this report refers to, the armed militancy in the Niger Delta was at its height, requiring a relatively high level of security spending there."

Despite this huge outlay, there is a growing realisation that a robust security force cannot stop vandalism on its own. The primary aim of the investment has been directed at protecting workers, and with pipelines spanning hundreds of kilometres, preventing and monitoring vandalism without enlisting technology has proved ineffective at stemming breakages.

The act of cutting into lines with hacksaws and blowtorches, installing spigots and siphoning off some of the crude flow, is regionally known as 'bunkering' and among the most common acts of vandalism to pipes. When systems are laid in shallow ground, less than 2ft in the case of the Arepo line, they are easily accessible and bunkering becomes a simpler process.

Structural integrity

Recognising the current limitations of its infrastructure, NNPC has committed to deploying horizontal directional drilling (HDD) technology in all of its pipelines. HDD, or slant drilling, is the practice of installing underground pipes without the need to dig trenches, as pipes are pulled along a prescribed bore path made through surface-launched drilling rigs. Not only does the technique mitigate many of the social and environmental impacts of installing pipelines, compared with the 'open-cut' method, it also means pipes can be placed up to 60m below the surface.

"We have changed the configuration of the pipelines and, once you change the configuration, it has to be new pipes because the old ones cannot go through the configuration," says Andrew Yakubu, group managing director of NNPC. "This HDD is a new technology that keeps the pipelines far away from the surface. That is what the contractors are doing and that is what we mean by bringing a new technology to bear. Certainly, they are going to bury the pipelines very deep, beyond anybody's access."

The cost of pipe replacement, speed of installation and the fact this technology was relatively unknown meant initial uptake was slow, made worse by local communities agitated by construction and the perceived consequences. However, after numerous projects were completed successfully, ahead of schedule and without fault, many more oil companies are turning to HDD as a move against pipeline vandalism.

Though deeper pipelines thwart the less-equipped vandals, there are still many groups that possess the technological means to extract oil from them. In order to respond to these attacks immediately, firms have tried installing discrete sensors in especially contentious areas. However, the scope of these is limited and covering entire pipelines is impractical.

Recent developments have seen the creation of fibre-optic cable (FOC) systems; a cost-effective way of tracing structural and functional integrity across huge distances. Buried above the pipeline, FOCs use laser technology to scout for intrusions and tampering of pipes, relaying signals back to the designated control room upon detection.

One of the huge advantages of such cabling is its ability to update security and maintenance teams with 24-hour real-time information such as the exact location of physical damages. Providing these groups can coordinate effective response units to the area, the loss of oil through spillage and bunkering can be stemmed a lot quicker.

Systems upgrade

The supervisory control and data acquisition (SCADA) systems operate in a similar vein. Operating through a network of remote terminal units (RTU) and a central host computer, they gather information such as where pipeline leaks occur, and transfer data back to the central site and alert the station, providing detailed analysis and taking the necessary automated actions on the way.

"Recognising the current limitations of its infrastructure, NNPC has committed to deploying horizontal directional drilling technology in all of its pipelines."

Control of the network is managed from a single remote location, while the field devices used monitor variables such as flow, pressure and temperature across the pipeline; when anomalies are discovered, the data is relayed to the automatic control system that has the power to perform emergency shut-down of valves if a breach has occurred.

It has proved itself an effective platform for tracking vandalism and limiting the economic consequences already in Nigeria and David Ige, NNPC group executive director, is keen to see more uptake of the platform.

"We are looking at technology like SCADA to minimise our response time and know exactly where the pipeline vandalism is taking place," he says. "We have been maintaining for over 30 years and, despite the difficult environment characterised by frequent vandalism, we have manage to keep the lines at a high level of availability."

More than 70% of Nigeria's exports are made up of crude petroleum and reducing the $7-billion loss of oil is in the best interests of the international community.

"Oil theft is an aspect of global terrorism that has become a big industry on its own. It has become a major threat to the Nigerian economy and we need to work with all stakeholders to curb it. The thieves must be traced, apprehended and prosecuted," said Nigerian President Goodluck Jonathan in a statement delivered at The Hague.

Jonathan has set aside $1 billion to bolster pipeline security and infrastructure, resolve community-related issues, and encourage oil companies to follow through with their corporate social responsibility. Whether this will be enough to stem what has become a hugely profitable black market industry remains to be seen.