A spike in piracy off Nigeria’s oil-rich coast has shown gangs are willing to venture further afield and use more violent tactics, increasing the risk of doing business in Africa’s largest energy producer.
Pirates demanded a 200 million naira ($1.3 million) ransom for the release of six foreigners kidnapped on Sunday, the latest in at least five attacks in Nigerian waters this month.
Exxon Mobil and Shell officials said this week that security was a major factor in Nigeria, and it was one of the most expensive oil-producing countries to operate in, Reuters reports.
“The recent upsurge in maritime kidnaps off the Niger Delta … has not been witnessed since 2010,” said Tom Patterson, maritime risk analyst at Control Risks.
“It is easy to underestimate the debilitating effect such a situation can have, even on larger corporations,” Patterson added.
Oil and shipping companies have to hire crisis management teams, pay huge insurance premiums and face the prospect of ransom payments, as well as brace themselves for damage to their reputations.
At the same time, pirates are becoming more ambitious.
Three crew members were kidnapped on Feb. 7 from the British-flagged cargo ship Esther C around 80 miles offshore, the furthest pirates have reached in the Gulf of Guinea.
A Filipino crew member was killed when gunmen attacked a chemical tanker three days earlier, in the first confirmed case in Nigerian waters of crew killed on a vessel that deployed a private armed team, security firm AKE said.
“The main problem with the increase in West African piracy is the consequences to the crews,” said Jakob Larsen, maritime security officer with BIMCO, the world’s largest private ship owners’ association.
“Given the more violent nature of the pirate attacks off West Africa, there is every reason to exercise caution when deciding whether to use armed guards or not.”
The prime suspects for most attacks are Nigerian oil gangs, who already carry out industrial scale crude theft, called ‘bunkering’ in the restive onshore Niger Delta swamplands.
Nigeria’s oil minister said this week that oil theft, which can amount to 150,000 barrels per day (bpd), was the work of an international criminal syndicate. President Goodluck Jonathan has asked Britain for help.
Security experts also believe Nigerian security officials and politicians are complicit in oil theft and piracy.
“There are many top people in Nigeria involved in commissioning these attacks and sharing the profits,” said Michael Frodl, head of U.S. consultancy C-Level Maritime Risks.
“It’s obvious to us that they’ve been bringing in people in other nations into the game, and sharing a cut in exchange for tips for tankers and cargoes.”
Compounding the problem, there is less fuel available in Nigeria since Jonathan reduced subsidies last year, which has forced prices to rise. This has provided an added incentive for gangs to locally refine stolen oil or siphon fuel off ships they attack, experts say.
“Piracy off Nigeria and West Africa is really much more an extension of the ‘bunkering’ that’s endemic on shore, and we think that as oil prices continue to rise, the potential for making bigger profits by reselling stolen oil will only further accelerate attacks and hijackings,” C-Level’s Frodl said.
The rise in pirate attacks comes as Nigerian forces have been more stretched in the last two years due to an Islamist insurgency in the Muslim north.
“There is a sense that security resources are being focused to combat the terrorist threat in the north of the country,” said Rory Lamrock, intelligence analyst with AKE.
“We’re likely to see further attacks over the coming months as local authorities are unable to effectively police the waters, especially up to 50 or 60 nautical miles off the coast.”