Oil extraction in the Niger Delta – a challenging dilemma

Nigeria began extracting oil in the Niger Delta back in the 1950s. Today, five international oil companies account for the majority of oil extraction in the country; Chevron, Eni, Exxon, Shell and Total. Oil has given Nigeria relative prosperity compared to other African countries, but corruption in the country is rife. In 2012, Transparency International gave Nigeria a ranking of 139 of 176 globally [*1].

The Niger Delta has suffered widespread contamination. The report published by the UN Environment Programme (UNEP) ]*2] in autumn 2011 stated that it would take at least 25 years to clean up after the oil extraction in Ogoniland (Niger Delta) and UNEP estimated the cost at a minimum of SEK 7 billion. A representative from the Council on Ethics visited Shell Petroleum Development Company of Nigeria’s (SPDC) plants in the Niger Delta, together with a large group of investors. SPDC is owned by the Nigerian government (55 percent), Shell (30 percent), EPNL (10 percent) and Agip (5 percent).

Numerous problems and huge challenges

• SPDC has an extensive network of oil pipe-lines (6,000 km) in the Niger Delta that go through Ogoniland, a region that SPDC has not operated in or had any real access to since 1993, when unrest forced the company out of the area. This means that it has not been possible to carry out maintenance on the oil pipelines. An illegal industry has emerged in the region, with local people sabotaging the pipelines to either export the oil or sell it to the local refinery. This has resulted in far-reaching negative environmental consequences. Illegal refining in principle involves distilling crude oil in drums over open fires, taking a fifth of the product that is formed and using it as a kind of low-grade petrol. The thick oil residue is usually dumped in the river system. On top of that, large-scale and systematic theft from the oil pipelines is happening on the quiet. A report in Nigeria maintains that as much as 250,000 barrels of oil disappears every day [*3].

SPDC was criticised in the UNEP report for inadequate procedures for fixing leaks and spillage from the oil pipelines. The company has since worked on improving its procedures, but at the same time the number of illegal refineries and thefts has increased, which is hampering the large-scale and long-term cleanup process.

*1 Transparency International, Corruption Perceptions Index 2012.
*2 United Nations Environment Programme; Environmental Assessment of Ogoniland 2011.
*3 Article in The Financial Times, 24 October 2012.