Fool’s Gold: On Oil and its Discontents

Fool’s Gold: On Oil and its Discontents

Oil is at times called “black gold” because, like the metal, it is precious. Its discovery spurs avaricious rushes and crowns a nouveau-riche class in garish ostentation. Numerous books, films, and artworks have documented the familiar, shimmery promise of the commodity; and the predictable disappointment that follows. The peripatetic Polish foreign correspondent, Ryszard Kapuscinski, wrote in the 1980s, “Oil is a fairy tale and, like every fairy tale, a bit of a lie.”

The viscous crude ranges from shades of green to black, but, when refined, petrol is golden. I did not learn this when, as a young driver, I first topped off my tank. I would pop the miniature door, unscrew the black cap, select the grade from the computerized dispenser, unhinge the hefty nozzle, insert it, and watch the grey numbers on the green screen flip until they stopped. If I was clumsy and withdrew the handle too soon a tiny spray of the seemingly clear liquid would splash on the asphalt and the stream would automatically cease.

In Lagos, in May of this year, there was a fuel scarcity. The irony of the scarcity was that though there was less fuel, it was more visible.

Traffic jams called “go slows” slowed to a stop as fuel lines blocked whole lanes of traffic. These queues led to gas stations that had often shut all but one pump. Cars rammed their snouts like famished piglets toward the entrance but it was often futile. Inside the station stood another queue, this one of yellow plastic jerry cans. Hovering around the “kegs” as they are called here, were their pedestrian proprietors. The shifting knots of people erupted into gesticulations and shouts. Discussion is kinetic in Lagos and impatient customers argued heatedly about the order of the queue, the price for a keg and the politics of the scarcity.

Some drivers parked in the fuel lines and left. The vehicle was meant to hold their place in line as they waited for the station to reopen or for the line to budge. If the queue started moving while they were gone, one of the local authorities—area boys, security guards or police—would deflate their tires. The retributive justice worsened the holdup, but in Lagos small-scale rebels must be punished. On the street they say you’re more likely to be killed for stealing 200 Naira than 20 billion.

These scenes played out for weeks. People did everything they could to avoid them. Almost immediately an alternative market sprouted. Twenty-something men slung rubber tubes over their shoulders. Some waved down cars by swinging a repurposed corn oil jug filled with petrol. Others waited alongside splintery tables groaning under bottles of the muted gold liquid. Some dangled cigarettes from their lips. Sometimes the contents of the yellow jerry cans cramming the filling stations were poured into the translucent jugs, re-priced and re-sold. This was the black market, parallel economy, and my introduction to the color of gasoline.

The black market prices changed daily. A young web designer described spending 5,000 Naira (US$25) on ten liters of fuel, nearly six times the standard rate. In Nigeria petrol is subsidized by the government and sold officially at a flat rate of 87 Naira per liter (less than 50 cents). Buying black market fuel was a gamble. Some vendors watered down the petrol or mixed it with kerosene to stretch their profits. The mixture wrecks havoc on car engines.

Unlike the color of gasoline, its odor was familiar to me before the scarcity. The scent lay heavy over the gas stations I frequented in California. I was taught to fear the smell; it threatened explosion. I remember the anxiety of passing between two of the intimidating round tankers on the California 5. I hunched my shoulders, accelerated, and felt the impossible impulse to shrink my car.

In Nigeria these paranoias are not outsized. On May 31, a tanker’s failed brake led to the fiery deaths of 49 people in the eastern city of Onitsha. “It was gathered that the inferno attracted many residents of the city who were helpless,” wrote Sesan Olufowobi and Samson Folarin in the Punch newspaper, “many of them reportedly resorted to crying”. The possibility of such an event, though not its devastation, was forewarned. Tankers are usually decorated with cheery, hand-painted signs. Between painted lions or Jesus’ or philosophical truisms (“who is free?” or “No hurry in life”) is written “highly inflammable!”

During the scarcity, the heady smell of fuel was everywhere. I would climb into the front seat of a car and we would set off. A few seconds later I would say, “is everything ok? It smells like petrol”. Then my seatmate would tell me that there was nothing to worry about, I smelled the keg in the back. These were sedans, SUVs, or even buses, with open airflow between the trunk and the cabin. I would roll down the window and try not to imagine an accident through the mounting nausea. Scarcity stokes hoarding and anytime anyone found fuel they would fill everything they could.

For weeks plans were rendered hypothetical by the scarcity. “I’ll come to VI if I can find fuel,” the web designer said. He later hunkered down at home and said he had “perma-parked” his car. It was boxed into the driveway by the other family vehicles.

Taxis and buses started charging higher rates. “No fuel!” became a standard addition to the normal negotiation that precedes taxi rides. Muyi, a driver I often hire, described going to gas stations in the middle of the night to beat the traffic. He still waited hours. When we rode around town his phone buzzed repeatedly as friends called with tips of which stations were open or he negotiated a rate for a black market keg.

Tankers stalled in Apapa.

Tankers stalled in Apapa.

In Apapa, a sleeping driver slung his foot out the window of the bright red cab of a parked tanker. Another sprawled in the median between layers of rust colored tankers glowing in the slanted evening light. There were hundreds of trucks parked. Their license plates read like a pop geography quiz: Kano, Kaduna, Jigawa, Enugu, Kebbi, Oyo. The drivers camped out in the trucks for weeks. The lucky ones were salaried. Mohammed Sulaymon, a 56-year-old father of three, made 50,000 Naira per month (US$250) to drive as many times as possible between Lagos and central Kogi State. Ahmed Hassan, at 32, made only 23,000 Naira (US$115) per month to drive back and forth to Maiduguri, the hotbed of the Boko Haram insurgency. Some young drivers were paid by the trip though, so the waiting game bred economic anxiety along with ennui.

Apapa is the main port for Nigeria. It handles 90 percent of imports to the country. The country’s manufacturing sector is hindered by logistical challenges ranging from frequent power outages to complex regulatory bureaucracy. As such, there is a huge amount of goods that come in to the port in Apapa. Among the cars, refrigerators, foreign foods and toothpaste, oil is also an imported commodity. There are 59 “tank farms” or oil depots in Apapa. The layers and lines of tankers were waiting to receive oil from these tank farms, but they were shut down, blockaded by a disagreement between the oil importers and the government.

The main road through Apapa has one service lane, but typically the tankers use two lanes and try to cut into the queue. This leaves the buses and commuters scrambling and fighting for space. The road is ripped up from the daily wear of hundreds of heavy trucks and the drainage system fails. Apapa is synonymous with traffic at the best of times. A typically verbose editorial in the New Telegraph newspaper painted a brutal picture. “Apapa is supposed to be a place of so much wealth and gain, part of our economic Paradise, El Dorado. What confronts anyone who is lucky to complete a journey to that part of the nation’s commercial capital is akin to hellfire. A national emergency has to be declared, nothing short of that will be bold enough to tackle the nightmare that Apapa has become. It is a sad picture of the systemic collapse of not only our value system but also our national economy. Madness will lose its meaning when you take a psychiatrist to our two major ports.”

During the fuel scarcity the tankers were queuing for naught. The depots were not distributing fuel, so the inching lines had come to a standstill.

The gridlock spread from the roads to offices and homes. With Nigeria’s dysfunctional electrical grid, most businesses and residences rely on individual generators to power their activities. The generators require fuel to function. There were days when major businesses, including the telecom giant MTN and radio stations, completely shut down.

The irony of the scarcity is that Nigeria is the largest oil producer in Africa and the 13th largest in the world. On and offshore oil fields produced 2.4 million barrels per day in 2014.[i] Nearly every major oil company in the world is here. Oil accounts for 90 percent of export revenue, and 70 percent of government income. Why, then was Lagos at a standstill?

The refinery problem

On July 4th, an American PhD candidate invited me for a barbeque at the ExxonMobil compound in Lagos. The citrine yellow complex loomed over tall gates topped with barbed wire. At the entrance, guards gave us tags, took our names and escorted us upstairs to Kurt Solon’s flat. The three-bedroom bachelor pad had a Washington DC aesthetic: pristine and sleek with a double-door fridge and marble countertops. The air conditioner blasted so the girls pulled scarves around their shoulders. The décor was a mix of glowing orbs (“I have a thing for LED lights,” he said) and traditional African masks. Solon bought them at the Lekki market, one of the only places to buy trinkets in this city with its notable dearth of tourists. Google warns that tourism.gov.ng “might be hacked”. Visa applications require a letter of invitation. Nearly all visitors to Lagos come to work. Those who work for major companies get paid a bonus for the stress and “hazard” of living here. Solon got a whopping 70 percent hardship pay added to his salary every month.

Solon had the physique of an outdoorsman with broad shoulders and a sun-lined face. He is a geologist from Colorado who looks for oil. As we waited for the grill to heat he told me, “The single biggest problem facing Nigeria today is that there are no refineries.”

ExxonMobil ranked second in the Forbes 500 list of most profitable companies last year.[ii] It is the largest direct descendent of Standard Oil, John D. Rockefeller’s 19th century oil monopoly. It operates 2,500 offshore wells in Nigeria producing 750,000 barrels of crude per day, around 9 percent of its global crude supply, according to a company engineer. The oil is then exported to one of the company’s 37 global refineries, or sold to other companies to process. It is the largest refiner in the world, operating in 21 countries. But it does not refine petrol in Nigeria.

This is by and large the story of the international oil companies here. Shell discovered the first onshore field in Oloibiri, a small community in modern day Bayelsa state in the oil-rich Niger Delta. In 1956 Shell began exporting crude from Oloibiri to a refinery in Britain. The sixty years since have changed the physical, financial and psychological landscape of South-Eastern Nigeria. The marshy waterways are regularly home to devastating oil spills. Shell and ENI admitted to 550 oil spills in 2014 alone. (In contrast, there were an average 10 spills annually in all of Europe over a 40-year period, according to Amnesty International.[iii]) Nigeria has the most gas flares of any country, causing acid rain and health problems in surrounding communities.

There has been a constant tussle for control of Nigeria’s resources. In the early 2000’s The Movement for the Emancipation of the Niger Delta (MEND) and other militant groups waged a fierce battle on the oil industry. Kidnapping spiked and most oil companies pulled their foreign staff from Port Harcourt. Currently oil-producing states receive 13 percent of gross oil revenue. Akwa Ibom, Delta and Rivers, the top three oil producing states earned between 5 and 6 billion naira in 2012. But there are locals who think they should earn half, or all of the oil revenue.

It is common knowledge that Nigerian wealth is extracted from the Delta with almost no benefit to locals. But I was still shocked when I arrived in Port Harcourt. To start, the airport was recently voted worst in the world.[iv] Aside from a few sections of town with gated mansions, most of Port Harcourt looks like most of Lagos: dusty, crowded and packed with small-scale street vendors. I stayed on a street where there were a few “story buildings” but mostly squat bungalows. In the midst of the poverty, people prayed for prosperity. There were all-night vigils in the courtyard just behind my window. Roadways were lined with massive billboards with the smiling faces of pastors promoting redemption services and promising miracles.

In 2009, then-President Goodluck Jonathan began an amnesty program for Niger Delta militants. Confrontation with oil companies has calmed since then, though militant leaders continue to hold power in local communities and over local police. Still, with all the challenges in interactions with local communities, Shell and other major oil companies are divesting from onshore activities. ExxonMobil already only maintains offshore wells, which are more—though not totally—isolated from the complicated social tensions present on land. Like ExxonMobil, most oil companies are solely extracting and refining outside the country.

During the scarcity, the tankers were parked in Lagos, not Port Harcourt, because Nigeria runs on imported fuel. The crude that gushes from its oil fields is not refined in the country.

But why not?

Nigeria actually does have four refineries, run by a branch of the Nigerian National Petroleum Company (NNPC). There are two in Port Harcourt and one in Warri, cities in the Niger Delta. There is also one in Kaduna, 500 miles north of the source of oil. The Kaduna refinery was built in 1980 to supply northern oil needs. It began as a simple “hydro skimming” refinery, but before completion, plans changed and it was completed as a more advanced “integrated” refinery. The more advanced model can produce not only gas, petrol, and jet fuel; it also produces wax, asphalt and base oils. But to do so it needs a paraffin based crude, imported from Venezuela, Kuwait or Saudi Arabia.

Both the domestic and international crude processed in Kaduna flow from a pipeline originating in Escravos, in the Niger Delta. The lengthy pipeline is regularly subject to explosions. The government blames what it calls “vandals”, “oil thieves” and “leakages” for the destruction of the pipelines.

An “artisanal” refining sector is well established in the creeks of the Niger Delta. Communities that have been ravaged by decades of oil spills and the destruction of their natural industries steal—or reclaim, depending who you ask—an estimated 100 to 400 thousand barrels of oil per day. They tap into pipelines, take the crude and refine it in villages tucked in the verdant, waterlogged mangroves. The small-scale refineries vary widely in sophistication, from massive barrels over open flames to metered, temperature gauged pipe systems.

Small scale refining grew over the past decade and a half in parallel with the militancy. There is a small movement to legitimize the more advanced independent refineries, but there is simultaneously a regular crackdown. The Nigerian navy said it destroyed 50 illegal refining camps in Delta state in October alone.

Small scale tapping into the oil pipelines provides a convenient scapegoat for missing oil, and for the refineries’ dysfunction. But a 2013 Chatham House report[v] paints a more complex picture. The authors estimated 100,000 barrels of oil go missing every day. But much of this is large scale, white-collar crime. Oil is stolen in barges, transferred to a “mothership” and taken out to sea. Many ships end up in the “Togo Triangle,” an open-air market for stolen oil off the coast of Togo. It then goes through a lengthy process akin to laundering money. Stolen oil is folded into stores of legal oil and sold to refineries.[vi] Other oil is stolen directly from the export terminals, hidden by staff tinkering with the meters.

The four national refineries, when fully functional produce 445,000 barrels per day. Even when the refineries work, this does not meet the national need, estimated at 700,000 barrels. But the refineries rarely function at capacity. They usually hover around 20 percent and, for much of the past year, they shut down completely.

I went to the refinery in Port Harcourt to find out why.

Creek scenes, en route to the refinery.

Creek scenes, en route to the refinery.

 

The plant is outside the city. To reach it, I drove to the water’s edge and waited at a dingy wooden dock for commuters to fill a wide-based motorboat. Vendors sat beneath bright umbrellas in front of small sagging shacks. The riverbank was littered with refuse. Small motorboats were parked, and as more arrived, people loaded and unloaded jerry cans. Finally we donned life jackets and rode through the serpentine creeks.

We passed barges and pipelines before docking. I hopped a motorcycle and rode past parked tankers and black market fuel stalls on the way to the refinery. There were soldiers stationed in front of the green metal gates. Inside, the offices had a retro aesthetic: orange, squat and square. The walls were thin, like a container, and I walked down a bland hallway, then passed through one of the identical doors.

Thaddeaus Gberindyer, deputy manager of planning, was a technocrat to the core. “I will do my best to answer some of your questions,” he told me. (When my questions probed too deeply, he sighed, “This is why I said I would answer some.”)

When I visited, the refinery was not running. No crude was even entering the facility. “The vandalized pipeline is not functioning at all,” he said. Gberindyer, like most, blamed oil thieves for the refineries woes. “Those people cannot fly from heaven and vandalize, they are human beings.”

But convenient as they were, the pipeline vandals were not solely to blame. The former administration had entered deals that transported crude oil to the refinery by barge to avoid the pipeline vandalism.

But even once crude made it to the refinery, the machinery often did not function because it was not maintained. He explained that the refinery was supposed to undergo a “turn around maintenance” every two years. We plan and shut down the entire plant for about 60 days, open up static equipment, vessels, clean up equipment, and replace parts when it’s required.” But, he said, the last such maintenance happened in 2000. He blamed “constraints” and said finance was “key among them.”

A Pentecostal Christian, Gberindyer added philosophical flourishes to his technical descriptions. He began the interview by waxing about the pivotal implications of the oil industry. “Power, the energy sector, determines life,” he said. He likened the maintenance to a resurrection: “the turn around maintenance is an opportunity to give it life again.”

NNPC oil was worth an estimated $41 billion in 2013, according to an August 2015 report by The National Resources Governance Institute (NRGI).[vii] The turnaround maintenance was expensive, but NNPC had money.

But there are demarcations within NNPC, and restrictions on large expenses. The refineries can require up to 27 signatures from the NNPC headquarters in Abuja for the $10 million maintenance. “There is political input,” explained Joe Ellah, a retired manager at NNPC.

Petro-politics

While the refineries lagged, the government entered oil swap deals. They exchanged the crude earmarked for domestic refining for finished petroleum products. But these agreements were often opaque. The Buhari administration cancelled them all in August, hoping to reevaluate and implement more transparent contracts. The scathing NRGI report found that these kinds of stopgap measures have cost Nigeria billions.

“We find that management of NNPC’s oil sales has worsened in recent years—and particularly since 2010. The largest problems stem from the rising number of ad hoc, makeshift practices the corporation has introduced to work around its deeper structural problems. For instance, NNPC entered into poorly designed oil-for-product swap deals when it could no longer meet the country’s fuel needs. Similarly, it began unilaterally spending billions of dollars in crude oil revenues each year, rather than transferring them to the treasury, because NNPC’s actual budget process fails to cover operating expenses. Some of these makeshift practices began with credible goals. But over time, their operation became overly discretionary and complex, as political and patronage agendas surpassed the importance of maximizing returns.”

“It’s corruption, basically,” summarized Father Obi, a Catholic priest and National Coordinator at The National Coalition on Gas flaring and Oil spills in the Niger Delta.

“There is not political will,” explained Chinedu Iloe-Abachie, an independent fuel vendor. His stature and full beard would have made him imposing if not for his gentle demeanor and strikingly smooth skin. I found out later his wife was a dermatologist. “So much money is being made from the subsidy scheme, so people tend to look the other way and make the money and leave the refineries… Because if the refineries are working, there’s really no need to import the fuel.”

When I visited the refinery, Gberindyer told me I could not go see the actual machinery because they were finally undergoing the turnaround maintenance. In July they announced that the refinery was working at 95 percent. But by September the refineries were back to less than 2 percent productivity. In November they once again ground to a stop.

NNPC has a heaving bureaucracy and is frequently at the center of massive corruption scandals. In 2013 Central Bank Governor Sanusi Lamido Sanusi reported $49.8 billion dollars were missing from NNPC coffers. A few months later, he was fired.

Vowing to “sanitize” the oil industry, President Buhari fired the board of NNPC when he entered office. He named himself petroleum minister, a post he held in the 70s. Meanwhile, former oil minister, Diezani Alison-Madueke was arrested for questioning in London in October under accusations of fraud and corruption.

The last government refinery was built in 1988. The messy bureaucracy and corruption, fighting over contracts and general lethargy and lack of upkeep is typical of government projects. In a 2015 editorial, journalist Tolu Ogunlesi argued that these traits are akin to state violence. “Is there not a case to be made that Nigeria’s own repression is of a different kind than the conventional kind; that, it presents itself, not as a direct and ruthless government control or intrusion in the lives of citizens, but as an exceptional abdication of responsibility to the people and to their welfare, so that those people are kept trapped in a permanent state of infrastructural dysfunction?”[viii]

A tanker in the Delta.

A tanker in the Delta.

Private Potential?

Nigeria is notorious for hustlers, or entrepreneurs, depending on your perspective. Private airlines replaced the failed government carrier; private hospitals stay open when federal doctors strike; even electricity companies have been privatized. So what of private refineries?

When I called Ubani Nkaginieme—UB for short—he said to come meet him at the Port Harcourt Polo club. I asked him where it was, and suggested he pick me up if he would pass on his way.

“No, no,” he replied, “you won’t get along with how I get around. I’m just a solo guy on a bike.”

“Bicycle or motorcycle?” I asked. He laughed.

It was dark when I arrived and I could barely make out the skeletal horses in the wide field past the parking lot. Inside, the clubhouse had faux-silver wallpaper. Leather couches outlined a sitting area around a flat screen TV playing a Chad-Nigeria soccer game.

“Nigeria’s a fun place, you just have to know where to hang out and who to hang out with,” UB said, by way of introduction, “but I guess that’s true everywhere.”

“This is where the boys hang out,” he said, glancing around. The “boys” were middle-aged men. A couple wore the traditional Delta fashion I first saw on former President Jonathan (himself an Ijaw man from Bayelsa): well-tailored tunics adorned with shiny cuff links and a gold chain strung from the breast pocket. Other men wore khakis and oxford shirts. There were a few women perched on the edges of the couches. They were aggressively feminine in tight skirts, tight braids, smooth made up faces and four-inch heels.

UB, meanwhile, stood out from all of them. He wore all black every time I saw him, from his doo rag to his motorcycle boots. He had a huge black helmet on the table with a handkerchief from Harvard, his alma mater, poking out. He drove a luxurious three-wheeled Spyder complete with surround sound and (perhaps extraneous) seat warmers.

UB had a license to refine 12,000 barrels of crude per day. In a 2004 document titled “The Challenges Of Building A New Refinery In Nigeria With Limited Energy Infrastructure And A Regulated Petroleum Products Market,” he foresaw finishing his first 6,000 barrel refinery by 2006. Despite the somewhat pessimistic title, his paper revealed his grand intentions. He planned to continue investing the profits from the refineries until he was producing 10 times that every day. He was building a refinery in Texas and planned to ship it to Nigeria once he guaranteed his crude supply.

When he showed me the document he said, “I’m embarrassed because…it’s still true. Eleven years later that shouldn’t be the case. It’s sad.”

He had requested NNPC to guarantee the crude supply so his company could invest in a second refinery. NNPC wrote back in 2013, offering 60 percent of the crude. For a plant whose sole purpose was to engage Nigeria’s domestic refining sector, the promise of just over half of the capacity was basically a death sentence. UB explained that what he needed to make the plan work was two letters: one that said if he built the refinery the government would supply all the necessary crude, and the second that they would buy everything they refined. “The question is why won’t they write these letters,” he said.

“It’s either a lack of understanding of the situation we’re in or just pure greed.”

By the time I met him in 2015 he had given up his refining dreams and was working with small-scale gas power plants.

As for his refinery? He sold it in pieces.

“It’s in Kirkuk, Iraq now,” he said.

There have been dozens of contracts awarded for the construction of private refineries in Nigeria. As of yet none have come to fruition. The latest proposal is for an $11 billion dollar complex that would more than double Nigeria’s refining capability. Owned by Aliko Dangote, one of Nigeria’s most famous billionaires, it is scheduled for completion in 2016. UB, though, has his doubts. “It will take five years. As a professional engineer I can say that, even with all the money in the world.”

The reason UB needed a guarantee from NNPC at all was because of Nigeria’s subsidy system. During the scarcity, when the tankers were dawdling at the port in Apapa, they were waiting for the fuel importers to release the petrol. The importers claimed the government owed them 200 billion naira in unpaid subsidy debt.

In the 1973 global oil crisis, the Organization of Arab Petroleum Exporting Countries embargoed exports following the US involvement in Israel’s Yom Kippur war. Helping to fill the gap was Nigeria; exports soared. The Nigerian economy boomed but also concentrated; oil revenue grew to 85 percent of exports. Military leaders, termed “militicians,” dominated the political scene and were the primary beneficiaries of the newfound wealth.

“The road to hell is paved with good intentions,” wrote Ma Olorunfemi, Akin Adetunki and Ade Olaiya in their book Nigerian Oil and Gas A Mixed Blessing? “The government suddenly became awash with cash and with a benevolent intention, wanted to pass the largess to her people.” This came in the form of the Petroleum Equalization Fund and soon after, the fuel subsidy.

The government sets the price of petrol in the Nigeria. Costs are kept low as a way of democratizing the oil wealth. The government pays importers the difference between the international and domestic rates of refined petrol products. Over the years the price of the subsidy has skyrocketed. The subsidy payments cost 5.42 trillion naira (US$27.2 billion) between 2006 and 2013.[ix]

Dakuku Peterside, former chairman of the Strategic Petroleum Resources (Downstream) Committee in the House of Representatives called the scarcity “artificial”. The problem with the subsidy, he said, was both in procurement and in payment of the subsidy. To become an importer is “not a transparent process.”

I met a fuel importer one golden afternoon at the Federal Palace. The luxurious hotel has a wide balcony overlooking the Lagos lagoon. Massive oil tankers floated serenely by as nimble motorboats zipped around them. The hotel has been remodeled since its heyday—the declaration of independence was signed in what is now the casino—but the historic old building still stands as a relic. The defunct restaurant juts over the lagoon, with an undulating roof evocative of an abalone shell. On the veranda I bumped into Charles. He dripped money in the shiniest Nigerian fashion. He wore a close-cut, silky black “native” tunic, as contemporary traditional Nigerian fashion is called. His breast pocket was red and embroidered with a cheetah. From his neck hung a chain with a giant sparkling gem in the center. He told me he imported oil for nine years after paying 15 million Naira (US$75,000) for the license. “The official price is not that,” he said, “but you know Nigeria, they always take their own.”

During President Jonathan’s tenure the subsidy was the center of mind-boggling scales of fraud. The number of importers increased from five in 2006 to 140 in 2011. By 2011 the subsidy cost Nigeria $8 billion, 30 percent of government expenditure and four percent of GDP.[x] A 2012 report[xi] prepared by a committee in the House of Representatives outlined a $6.8 billion subsidy scam. The report found the subsidy regime to be “fraught with endemic corruption and entrenched inefficiency. Much of the amount claimed to have been paid as subsidy was actually not for consumed PMS [petrol].” NNPC paid for subsidies on kerosene, even though they had been cancelled years prior. In 2009 the accountant made 128 equal deposits of 999 million naira (US$5 million) in 24 hours and refused to disclose the recipients. NNPC spent over 900 percent of the allocated budget on the subsidy in 2011.

On January 1, 2012 President Goodluck Jonathan removed the fuel subsidy. It was a sudden move that doubled the price of fuel from 65 to 141 naira per liter. It sparked strikes by labor unions in major cities across Nigeria, an uprising termed “Occupy Nigeria”. By mid-month the President agreed to drop the subsidy again, halfway to 97 naira per liter. It was typical Nigerian high-stakes haggling.

But the subsidy is controversial not only for its abuses. Olorunfemi et al argue that even when functional it fails to achieve the intended social welfare.

 “It is important to emphasize that the public discussion on the subsidy issue has remained more emotional than rational. Petroleum products consumption should not qualify for subsidy because their consumption is not evenly distributed between the poor and the rich, or between the rural and urban dwellers. Any subsidy on it will amount to widening the existing lifestyles between the two groups. Unlike food, healthcare, security and education that are more evenly needed among the people, the consumption of petroleum products is not so evenly needed.”

Nigeria still has the subsidy in place, though Buhari is said to be pondering its removal.

Timothe.

Timothe.

Nigeria’s oil problems—like its petrol—are not contained by its borders.

“You know, back before the whites came this was all the same, Benin, Badagry, all the way to Abeokuta. So it’s only now they say it’s two different things,” Timothe told me. I was scrunched next to him, my legs twisted to avoid the long gearshift. We were driving along the expressway that links Lagos, Badagry and Benin.

The border dates to the “scramble for Africa” and the Berlin conference in 1884, but Timothe lives the fluidity he was describing in his unprompted riffing on colonialism. He splits his time between Lagos and Cotonou, but he told me that he is “cent pour cent Beninois”. He bought his four cars in Benin, where they are cheaper, but always stocks up on fuel before leaving Nigeria. He speaks fluent French, English, Pidgin, Yoruba and Mfon. He employed most of these as we crossed the border at Seme.

We were on our way to Ekpe, a suburb of Cotonou. Amos Mideji, an engineer who works as a janitor at my apartment building, invited me for his father’s funeral. I told him I wanted to see Nigerian oil in Benin. He assured me it was no problem; it was everywhere, he said, and the smugglers, too.

Amos hired Timothe to drive the entire Nigerian contingent. Timothe was in the captain’s seat. I shared the passenger side with Amos and his wife Felicia. They were dressed in matching blue Ankara wax print. She had perhaps twice his body mass, so we were a tight squeeze. In the back, though, it was standing room only; there were almost 2-dozen people. Amos’ 20-something daughters wore their trendy best: cheap imported tops, jeans and dresses in bold colors. Older women wore Ankara and balanced babies on their laps.

As we approached the border, we passed dozens of closed gas stations. Most of them were independently owned, with names like Adebaba Petrol Limited. Tony Williams, a schoolteacher who smuggled petrol in the late 1980’s called these stations “ghost filling stations.” Many closed during the day, and opened at night for smugglers to buy fuel in bulk to spirit across the border.

The fill stations that were open were also running a racket. Timothe normally paid 200 naira per liter at these types of stations. With the scarcity, the price had jumped to 250-300 naira. “Here, yes, you’ll see the sign say 87 naira, but they tell you it’s 200. If you don’t want to pay you go.” The much-debated fuel subsidy, meant to equalize the price of petrol for all Nigerians, is a myth. It is enforced only in the centers of power where authorities are watching.

The border is wider in practice than it looks on the map. Roadblocks are scattered all the way from Badagry. The zone feels like nowhere else. It is dusty and tense, at least for me. It’s better if you can laugh your way through the cocktail of egos, hierarchies and arms.

Before we passed the first checkpoint, the crammed crew in the back started singing and shaking rattles. “Villagers!” Timothe shouted to the various layers of security.

Right before the actual border the informal stops piled up. Men wielded bamboo poles. Men strung ropes across the road. Men blocked our tires with spiked sticks poking upwards. I was reminded of parking lots in the States where bright red exit signs warn drivers not to reverse or to face “severe tire damage.” This was the portable, payable version that blocked our advancement.

The various authorities dressed in a mismatch of uniforms. Many wore no uniform at all. But still they stopped us, demanding to see my passport and my yellow fever card. It felt like a marketplace—access and mobility were up for haggling.

Timothe mostly laughed his way through. “They’re going for a burial!” He shouted, over and over.

One guard mumbled, “it’s always a funeral.”

Timothe told me that he does this almost every weekend.

“A morbid business,” I said.

The official border was hard to distinguish from the informal posts. They were all clapboard shacks, some with handwritten signs specifying customs or a health post. I was the only one to have my passport stamped; everyone else stayed in the back, singing.

The rules at this crossing seemed to exist solely for profit. Guards and health officers pored over my passport and yellow fever card, trying to find something wrong. I later crossed with a Nigerian-American friend. She didn’t have a yellow fever card. Health authorities ushered her to a clapboard shack and charged her 2000 Naira (US$10) for it.

“Did they give you the shot?” I asked.

“No,” she said laughing, “and they even backdated it for me.”

While we were held up, negotiating at the health post, reams of people squeezed through the pedestrian border. No one asked for their passports. Small-scale importers trek back and forth with grains, or oil or petrol balanced on their heads. I watched a security agent scream in the face of an older man with a massive bag of rice on his head. When he wouldn’t pay, the officer knocked the bag to the dust.

It’s not just money the officers want. Sexual harassment along the border is rampant.

One officer took down my information for an exit form. When we got to the bottom, he paused, then asked “and your phone number?” There was no line for it.

I smiled and deferred. Many women, though, are not so privileged.

Vida, an international relations student who hand washes laundry to pay her school fees, wrote a 50-page thesis on sexual harassment at the Seme border. She found 90 percent of women involved in cross-border trade were regularly sexually harassed. Border guards seize their goods and demand exorbitant bribes, insinuating that there were non-monetary ways to pay them off as well. Many women entered into transactional relationships with police and customs agents to facilitate their business.

 

Independent gas stations, Benin.

Independent gas stations, Benin.

Immediately upon entering Benin, Nigerian sim cards lose service. People speak French and spend CFA instead of Naira. But cars still run on Nigerian petrol.

A gas station in Benin is a bulbous jug of golden liquid set on a water-stained wooden table. These line the streets, from main arteries to back alleys. They dot some stretches of road at 15-meter intervals. There are almost no official gas stations in Cotonou, and the few that I passed had smuggled fuel stalls just in front. In 2012 the International Monetary Fund estimated 80 percent of fuel consumed in Benin was smuggled from Nigeria.

“It’s Nigeria that provides us fuel. If there are problems with fuel for Nigeria, immediately we have problems in Benin,” Charles Djossa told me. An old friend of Amos’, Charles also used to work at my apartment complex back in the 90’s. He found Nigeria too stressful, though, and moved back to Cotonou. Like Amos, Charles is overqualified for his job. He trained as an engineer, but works as a driver for a cement company.

I wanted to figure out how the Nigerian oil ended up in those glass bottles. I convinced Charles and Timothe to help me trace some of the paths.

 

Tricycles for fuel transport.

Tricycles for fuel transport.

By road

The most straightforward way to bring Nigerian petrol to Benin is to cross the chaotic Seme border like I did. Since access is for sale there, some people just pay the officials and drive through.

Adedeji, a languid young father of two, told me that he used to buy from the ghost petrol stations in Badagry. He filled the trunk of his Mazda sedan with giant polyethylene bags of fuel. “It’s cheaper in the bag than in the jerry can,” he explained. “It helps to maximize space in the vehicle and reduces the number of jerry cans you have.”

Then he drove to the border.

“Once I get there, I park, go and do my settlement and then go free,” he said.

“What do you say you are bringing?” I asked. I imagined if I were illegally transporting substances across borders I wouldn’t mention it.

“I say I’m bringing in petrol,” he said, like it was a dumb question.

He would call the guards over, and show them his trunk. This was when the plastic bags came in handy, as it kept the quantity ambiguous, though the fees did not seem particularly regulated to begin with. He paid each guard 200 naira ($1). He would be stopped between three and five times on each trip, so he spent 600-1000 naira ($3-5) in bribes. Then he would meet his customer at the border, pour the fuel into jerry cans and return home.

Beninois do a similar trade from the opposite origin. Just after the cluster of shops, banks and moneychangers that crowd the Benin side of the border is a wide sandy lot surrounded by palm trees. In the center two-dozen motorized tricycles were parked. The wide back ends were hollowed out, making a broad tank to be loaded with fuel.

I tried one out and found it an awkward seat. I could barely fit my legs behind the handlebars. It made more sense when, as we were getting ready to go, we bumped into one of the drivers returning with a load from Nigeria. He was handicapped, both of his legs amputated above the knee. The tricycles belonged to a collective of disabled fuel importers. An alternative income-generating program, if you will, a charity smuggling ring.

By water

The coastal landscape in Southwestern Nigeria is waterlogged. Much of Lagos is below sea level; the city is built on islands and sand filled marshland. Along its edges, Egun communities live in shacks on stilts above the water. Traditionally nimble seamen, many Eguns work in water industries. They cast nets from canoes to catch fish and crustaceans; they suck sand into hollowed boats to sell to concrete manufacturers; and they transport oil. The ambiguity of the border is magnified on the waterways.

There are a few cartels that dominate large-scale importation. One is based in Cotonou under a man named Chef Keta Paul; another in Porto Novo is run by a man known as Doctor Oloye. Or at least this is what the guardian at one of the docks where they unload the fuel told me.

It was hard to get away from the funeral. It was a full time, three-day affair. But finally after one of those quintessential Nigerian parties where you eat dinner twice, Charles drove us across Cotonou to Lake Nokoué. The lake is connected to a river that flows all the way to Lagos. At the shore, we climbed a dock that was beautifully constructed with sturdy wide planks. It was after 8pm and pitch dark save for the massive sky of stars, and a slim sliver of moon, but the place was buzzing. Commuters piled into wide, low, wooden canoes that served as ferries. Women sold snacks to the travelers and hawked fresh fish.

An earnest guard at the dock named Serieux told me that boats full of petrol come every day too. Maybe 20 every day, he said, each with 200 jerry cans. “They pay the police, the custom agents, so they don’t have any problems. There are a couple big bosses who deal with that,” he said. Two of the big bosses he named were Doctor Oloye and Chef Keta Paul. Keta, he said, “is a multimillionaire. He buys the fuel, he’s in charge of all the boats that traffic petrol.”

As we were getting ready to go, Serieux told us to wait.

“That’s one of Chef Keta’s family now,” he said.

A boat was pulling up on the opposite end of the dock. It was luxurious compared to the packed canoe. It had a roof and just a few passengers. After they disembarked, Serieux introduced me to Augustin. He was returning home from the hotel he was building across the lake in Ganvié. He showed me pictures on his tablet of the spacious lodge. Like the Egun shanties, the hotel was built on stilts above the water.

I told him I would keep it in mind for my next trip and explained that this time I was interested in Nigerian gasoline. In a slightly bored tone, he hurriedly explained the system. “People buy in Nigeria and give to the boat drivers. Boat drivers are organized under these bosses that collect money from the drivers and pay the customs agents.”

Augustin promised he would try to set up a meeting with Chef Keta, but he was wrapped up in a charity project that weekend and Keta proved elusive.

Still, I did manage to find one of the depots.

Charles drove us through dark markets lit with torches. I tried in vain to keep track of our twists and turns. A couple of blocks up from the lakeside Charles suddenly pulled over. I couldn’t see the water, but I saw where the lights ended, a sudden, wide expanse of darkness.

Charles had not, however, stopped for me to gaze into the void.

“Look back there,” he said.

Through a wide gate just behind us I saw a patio filled with stacks and stacks of jerry cans.

I hesitated then said, “ok, let’s go talk to them.”

Charles pulled his car up next to the entrance, just as a driver drove a big truck in front.

“They are trying to block it,” he said.

I rolled down the window and introduced myself. A day laborer man named Archil explained that it was a depot. “We get the petrol that comes from Nigeria then distribute it all over Benin,” he said. He said 15 people worked there. They keep hundreds of jerry cans there, up to 1,000. The head of the operation was out that night, which was why they could talk to me.

Archil said he liked his job. He made 3,000 CFA per day. “It’s good money. See how I’m getting fat?” He smiled, pointing to his shirtless, hefty belly.

Another man standing with the wide, stable stance of a fisherman said he was a canoe driver. He said he takes three trips each week, carrying 500 jerry cans from Nigeria.

Then they hurried us to go, another load was coming in and they had to work.

Fools Gold

The common narrative about Nigeria is one of brutal inequality. It is not untrue. The waterways are a picturesque reminder. The sleek custom yacht owned by Forte Oil chairman Femi Otedola is usually parked in front of his company’s headquarters in Lagos. Every day hundreds of tiny wooden speedboats race pass. Some lug jerry cans of petrol.

The simple story is that few benefit from the nation’s oil, that few are implicated in the industry. But to me, oil seemed to be everywhere, affecting everyone and employing a lot of people.

“When you hear out there that oil in Nigeria is benefitting few people, what you’re not hearing is the definition,” mused Tony Williams, a schoolteacher in Badagry. “What they are saying is they’re making billions of naira,” he interrupted himself, “they have their money in dollars actually. They make billions.”

“For the others we were doing nothing,” he continued, “It was a scratch compared to those people. But people exporting, there are millions of people. Aside from the illegal side, you have many attendants, many station managers. It benefits a lot of people, just not at the same level of benefit.”

Though Tony is now a calm, didactic schoolteacher, he used to smuggle oil. He paid his way through university on his illegal exportation business.

When he finished high school, he got a part time job at a bottling plant.

“I was working for months and I saved up. I was extremely prudent and all I could buy was a cassette player,” he recalled.

His cousins, meanwhile, had started “bunkering,” the catchall term for oil theft. They could afford much more than a stereo. They gave him a “takeoff grant” and he joined the business.

His crew had a Volkswagen van custom built for smuggling. Like the tricycles, it had an extra tank built into the back to store the fuel.

He bought from the ghost fuel stations then drove down to the beach. With his partners he would move the petrol from the tank to jerry cans. Then they would load the kegs onto small loading boats. Just a little ways into the water, they would empty the small boats into bigger Ghanaian boats. “Those Ghanaians were fishermen in Togo who got to know about our business and came to join our business,” he remembered. The Ghanaians would sail the fuel westward to Togo and Benin.

Tony and his partners, still on land, would do their accounting. They paid off the community leaders, and “everyone who helped us.” This included the police, so they would not disturb them, but “there were many factions to it,” he explained. “The customs [officers], you can pay them, but then another group would come… each faction was going after bunkerers because there was money in it.”

One time as he was doing the accounting an officer came in, gun cocked. Tony hid the money under the sofa and stared him down, for 25 minutes. “I looked very innocent. He finally left.”

The boats would transport the fuel to Hillacondji, a small border post on the Western end of Benin. “It was the capital of bunkering then… They had this large field where they do their deal…There were these touts who managed the terrain. They get their own cuts from the sellers.”

Tony and his partners would travel by land to Hillacondji and wait for the boat.

While at sea, the sailors would vary their route to avoid capture by the navy. They would travel far out to sea then circle back, or they would hug the shore at night. “They would go very close to the waves. The waves bring you down but they had a way to navigate the waves. We believe they had charms that repelled bullets.”

Once the boat arrived in Hillacondji, women porters would help to unload the fuel. The Nigerians would pay off the various security agents, the area boys and the owner of the terrain but, “things were not as rough there on the Nigeria side.”

Then they would sell the oil to the distributors in Benin. The price fluctuated with demand. “It depended on how scarce petrol was. If what’s happening now was happening in those days, no matter how careless you were you would triple what you invested.”

The payoff justified the risk. For a while.

“We were never caught until that last time,” he told me.

He had already gotten into university, and he was doing one last trip to get the money for the fees and his apartment. But when he got to Benin the boat was nowhere to be found. Finally, the leader of the boat crew came and said they had been caught. The boat had been confiscated.

“When that happens some people will give you small money to get the transport to go home. We had such a string of successes that we went with our last cash.”

Tony was lucky it was a financial bust that ended his career.

Emmanuel had a much more dramatic exit.

I met him in the tranquil yard in front of the Badagry Heritage Museum. The restored colonial mansion was airy and cool. The somnolent vibe somehow contradicted the violence of the historical slave trade commemorated within.

There was a soft breeze and we sat under a tree with wide branches. Emmanuel had a chipped front tooth. He toyed with a teddy bear keychain as he told me how he ended up tapping oil from a pipeline in Lagos. He had hoped to continue his studies after secondary school, but couldn’t afford the fees so he moved to stay with a friend in Lagos. The only work he could find was sporadic day shifts with a fishing company, until a neighbor introduced him to the oil business.

There was a pipeline running through a community and an entire tapping system sprung up around it. So many people joined the trade that the community self-regulated, creating shifts and specific tapping points. Emmanuel worked his way up from porting the jerry cans to tapping directly himself, buying the fuel he withdrew from the community then reselling it on the black market. “It was a kind of promotion, now I was in the thick of the business,” he remembered.

Then one day, “somebody leaked a firecracker. Some bad guys, a gang, it came from bad blood.” A massive explosion covered the landscape and hundreds of people died. There is a famous cinematic photograph of this pipeline explosion taken by Akintunde Akinleye for Reuters. It won the prestigious World Press Photography Award that year. In the picture a man in a flowing pink and blue boubou washes his face. His clothing is the only bright spot in a blackened hellish landscape. Reams of smoke cover the sky.

“It was a miracle I survived. The inferno covered me entirely,” Emmanuel said, “I tried to run but fire travels so fast. I fell down and fire just passed me…it was god and my parents, my ancestors that protected me.”

“But how were you not scarred?” I asked. I couldn’t believe I had been sitting with this man for over an hour, this soft-spoken, patient man, completely oblivious to his trauma. But I suppose we do that everyday.

“I am scarred,” he told me. He invited me over and lifted his pant leg. His leg was marbled where his skin had melted and reset. A giant pink star-shaped scar like an orchid or a firecracker exploded across the belly of his calf. He lifted his shirt to show me the spidery lines reaching around his side. His elbow, too, was cracked and deformed.

“I went home and a doctor came to the house to heal me,” he said. He never returned to the oil business.

I asked him what he did now, and he said, “lotto.”

“Lotto? You play the lottery?” I asked.

“No, no I manage a lottery stand,” he said. And he asked me for a job.

Even though he didn’t play lottery as his living, I found it poetic. Because he had always been gambling—as everyone is—with this slick, gold, flammable substance.

It’s hard to imagine Nigeria without oil. But one day the oil will run out. Crude oil is made of hydrocarbons, organic matter that decayed in contained pockets of earth with no oxygen. “Oil is wales and people and organic matter from millions of years ago,” Olakunle Olatunde, a staff engineer at ExxonMobil told me. “It’s a finite resource. Once you take it out, you can’t replace it,” he said.

Some people can’t wait. Zina Saro Wiwa is a video artist and the daughter of Ken Saro Wiwa, the famed environmental activist executed 20 years ago in Port Harcourt. She moved back to her hometown to open a gallery in her father’s old office space and to produce new works. She is tired of the “spiritual pollution” of the industry and can’t wait to see what the Delta will be like once the oil companies drain the fields and abandon the region.

Some people, like Emmanuel and Tony have already given up on oil. And some people, like UB have moved onto the next big thing.

The Delta may run dry in the next 50 years, but even with all the waste of devastatingly polluting gas flares, Nigeria has gas stores to last at least three times as long.

“You know Nigeria isn’t even an oil country,” Olakunle, who has spent two decades in the petroleum industry told me. “Nigeria is a gas country.”


[i]http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=5&pid=53&aid=1&cid=r6,&syid=2010&eyid=2014&unit=TBPD

[ii] http://fortune.com/2015/06/11/fortune-500-most-profitable-companies/

[iii] https://www.amnesty.org/en/latest/news/2015/03/hundreds-of-oil-spills-continue-to-blight-niger-delta/

[iv] http://news.yahoo.com/nigeria-rejects-worlds-worst-airport-tag-044555520.html

[v]https://www.chathamhouse.org/sites/files/chathamhouse/public/Research/Africa/0913pr_nigeriaoil_es.pdf

[vi] http://www.npr.org/sections/money/2014/10/29/359624435/episode-578-how-to-steal-a-million-barrels-of-oil

[vii]http://www.resourcegovernance.org/sites/default/files/NRGI_InsideNNPCOilSales_MainReport.pdf

[viii] http://www.thescoopng.com/tolu-ogunlesi-nigerias-brand-of-repression/

[ix] http://www.thisdaylive.com/articles/time-to-remove-fuel-subsidy/211582/

[x] http://www.brookings.edu/research/opinions/2012/01/10-fuel-subsidies-nigeria-songwe

[xi] http://saharareporters.com/2012/04/20/full-report-68-billion-fuel-subsidy-scam

About the Author

She is a freelance journalist who covers inequality and the human repercussions of politics. Her 2011 reports exposing power structures and human rights abuses in medicine in India inThe Los Angeles Review of Books and The Atlantic were reprinted in the New York Times Op Talk and in an advocacy guide by the White Ribbon Alliance, a leading women’s health advocacy group. In 2013, she revealed the deadly underground abortion market in Nigeria under a grant from the Pulitzer Center on Crisis Reporting. Her writing has appeared in The New York Times, The Washington Post, The Los Angeles Times, The Guardian, Reuters, The Atlantic, CNN, Al Jazeera, France 24, among other outlets.