Shell said Tuesday its Nigerian unit's oil output is being affected by a combination of illegal refining in the Niger Delta and an upsurge in crude theft, possibly backed by an international syndicate.
In briefing notes on its Nigerian operations in 2011, Shell said it recorded 237 cases of oil theft from its facilities compared with 187 in 2010, which has become a source of concern to the company.
"There is also a massive illegal refining business based on stolen crude oil. All these have reduced the amount of oil SPDC is producing, created environmental and social problems from oil spills and reduced government revenue that could be used to develop infrastructure and services," Shell said.
"These are well funded crimes that may be connected with an international syndicate. Our concern is that if this business continues at this rate, the effects could be devastating, not only to the social and environmental structure of many areas of the Niger Delta, but also to Nigeria's economy," the company added.
A group of Nigerians in March launched a suit against Royal Dutch Shell in a London court for two oil spills in 2008-09 that they said destroyed their livelihoods.
Last month, human rights group Amnesty International accused Shell of under-reporting the volume of oil spilled in the Bodo area of the Niger Delta by at least 60 times.
Shell, however, has consistently blamed increased activity by oil thieves and illegal refining, fueled by the widespread poverty and the lack of basic infrastructure in the Niger Delta.
Shell on May 4 declared force majeure on Bonny Light crude after the loss of 60,000 b/d of production to sabotage attacks on its Nembe Creek Trunk pipeline.
"We estimate that some 150,000 barrels of oil are stolen from facilities every day. This is a huge amount and the effects of this industrial scale theft are devastating for both the people and the environment," Mutiu Sunmonu, chairman of Shell companies in Nigeria, said.
"In 2011, authorities arrested 145 people and seized among others 18 tankers, 22 vehicles, 16 barges, and 35 locally made boats. These almost certainly represent a small fraction of the true scale of the problem," Sunmonu said.
