Like a tropical Venice, the town of Abonnema is packed on an island in the Niger delta – a deep river to one side, meandering creeks to another and the pounding Atlantic 40km to the south.
In the early days of British colonial rule, it was Nigeria’s busiest port, where ships docked to tap the trade in palm oil and other soft commodities that thrived before the discovery of oil.
Today, the wooden cargo canoes that line the river banks are involved in a more pernicious trade – one that has been growing steadily to reach a scale now undermining the authority and financial muscle of the state.
In April, according to Ngozi Okonjo-Iweala, Nigeria’s finance minister, the theft of oil from pipelines and well-heads in the Niger delta accounted for a 17 per cent drop in official sales, the equivalent of nearly 400,000 barrels a day.
At this rate, the Nigerian treasury and oil companies are losing more than $1bn a month.
There are no consistent estimates for “bunkering” – a term used elsewhere to refer to the supply of anchored ships but which has been corrupted in Nigeria to describe the trade in stolen oil.
However, the finance ministry figures illustrate what oil companies, state agencies and inhabitants of the delta all say has been a surge over the past year.
In 2011, for example, the state agency regulating pipelines recorded 4,468 pipeline break-ins compared with an annual average of 1,746 between 2001 and 2010.
“It is definitely spreading. There are far more people doing it than a year ago,” says a young businessman in Abonnema with peers in the trade. “Every family has someone involved,” he says.
The result is that Nigeria’s finances are being squeezed upstream just as fraud associated with a multi-billion-dollar fuel subsidy is robbing the state of billions downstream. Together, the two may have cost the treasury as much $14bn over the past year, according to Ms Okonjo-Iweala.
“We can’t just hope this is going to go away,” says Patrick Dele Cole, a former presidential adviser from one of the trading families that first settled at Abonnema in the 19th century.
Bunkering became big business during an uprising in the 2000s by militant gangs demanding a greater share of revenues from the oil produced in the delta. They sometimes justified the theft – and still do now after an amnesty programme that has curbed associated violence – as a means of taking ownership of a resource from which the region has hitherto benefited little.
“This is no way to go, regardless of whatever sympathy you have with the state’s failure to develop the area,” says Mr Cole, who has been discreetly raising the alarm at home and abroad.
It is not only the loss to the treasury that is worrying him and others, but the way bunkering is infecting government at all levels, with senior military and political figures staking out a leading role.
“They have been sponsoring local government chairmen. The chairmen have also been sponsoring governors. These people, if not checked in time, will one day produce the president of Nigeria,” Austin Oniwon, managing director of the state oil company NNPC, said recently.
Nor is the NNPC entirely innocent.
Bunkering is carried out in three main ways. The first involves cargo canoes such as those lined up on Abonnema’s shores. The gangs that crew them navigate the creeks, puncturing pipelines and siphoning crude into improvised tanks. They sell this on to illegal refineries that have mushroomed across the delta to supply paraffin and diesel to the domestic market at half price or to larger coastal barges for export.
Where they can, these barges – two of which were recently moored down river from Abonnema within full view of an army post – fill up directly from well-heads in the second common technique. In turn, they carry the crude to ocean-going tankers waiting offshore to supply refineries at a discount as far away as South Africa, Ukraine, China and the Rotterdam spot market, according to members of a task force set up by President Goodluck Jonathan to investigate.
There is a third form of “white collar” bunkering. Consultants studying the trade say this may account for the gap between figures that Royal Dutch Shell gives, of between 150,000 and 180,000 barrels stolen a day, and the much higher recent estimates of the finance ministry. It involves tankers filled directly at export terminals, where metering systems are manipulated to conceal outflows – a practice that began when Nigeria was busting its Opec cartel quota in the 1980s.
All three forms of bunkering require collaboration between politicians, security forces and criminal gangs and, in some cases, oil company employees.
At its most basic, collusion in Abonnema, say local inhabitants familiar with the trade, involves the soldiers deployed to halt the trade, who extract a toll of between 80,000 and 100,000 naira ($490-$615) to turn a blind eye as illicit cargos pass in the dead of night.
It is an apt analogy for the broader problem eating away at the Nigerian state. Although past governments have bought drones from Israel to monitor pipelines, deployed soldiers and sailors to patrol the creeks, and the incumbent one has set up a task force to recommend ways of curtailing fraud and theft in the energy sector, no effective measures have yet been taken to halt the trade.
This may be because the networks profiting from stolen oil now have tentacles deep within the state, financing the patronage system that keeps the political system afloat. Or it is because some politicians consider the theft of oil a price worth paying for the relative peace that has returned to the Niger delta since the government offered an amnesty to militants who had halved oil production with a campaign of sabotage.
Mr Jonathan, who before rising to the presidency was a governor in the oil-producing state of Bayelsa, has sent mixed signals. Controversially, he has recently appointed to head Nigeria’s maritime security agency Government Ekpumopolo, a former militant known as “Tompolo” on whose turf bunkering once thrived.
At the same time, he has brought back Nuhu Ribadu, the no-nonsense former anti-corruption tsar, to head the energy task force. Mr Ribadu says he will be delivering recommendations by next month in what will be a test of Mr Jonathan’s true intent.
On the supply side, Mr Cole says, the state could make a start by forcing up the price of stealing oil by patrolling the waters more effectively and prosecuting offenders.
On the demand side, Nigeria may need more help in tracking the sophisticated networks that sell stolen oil and launder the proceeds through foreign banks.
“This is not something the Nigerian government can solve alone,” says Mr Cole. “It has grown too big.”