Home Environment “More Money, More Problems” – Economic Dynamics of the Artisanal Oil Industry in the Niger Delta Over Five Years

“More Money, More Problems” – Economic Dynamics of the Artisanal Oil Industry in the Niger Delta Over Five Years

This report calls for an alternative approach to tackle artisanal oil refining in the Niger Delta, based on an analysis of how the improvised artisanal oil refining value chain has adapted and changed in Bayelsa and Rivers states over the past five years. This quantitative and qualitative research is based on a comparison of primary data collected from a large sample of actors and production processes in crude oil tapping and petroleum production camps, and distribution, sales, and security agencies across Rivers and Bayelsa between 2012/2013 and 2016/2017.

Our analysis indicates that all levels of the artisanal oil value chain are better organised and more profitable than five years ago. Based on an increased absorption capacity per camp, it is estimated there are five times the number of refineries as there were five years ago. We estimate that during the same period, total supply chain earnings increased by twenty-four times to £578.5 million in 2017.

Yet profits are kept in the hands of the few, and the industry remains characterised by poor working conditions, environmental pollution, and health hazards  – adding to the historic and ongoing environmental damage in the region caused by the actions and neglect of the formal oil industry. The revenue generated increases the risk of armed confrontation between militant factions, and raids of communities by security agencies. These severe threats to stabilisation will continue to escalate if artisanal refining is not addressed effectively.

Artisanal oil industry. Click to enlarge

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SDN’s recommendations for an alternative policy response approach:

  • Develop alternative livelihood options for those working in the artisanal oil refining industry.
  • Demonstrate the feasibility of this approach, with a view to scaling up and replicating pilot projects in other locations.
  • Target investment into alternative livelihoods in locations that would have the greatest impact on reversing growth of the artisanal oil refining industry. This, together with improved coordination between livelihood projects implemented by NGOs in the region, would support stabilisation.
  • Support security agencies to responsibly dismantle camps, confiscate and dispose of crude oil and refined products, and document all progress recorded, so the scale of the industry and changes over time can be measured more accurately.
  • Address demand for black market refined products. To do this, it will be essential to increase alternative energy sources to meet residential and commercial needs.
  • Launch an investigation into the impact of consuming this fuel on air pollution levels.

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