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Cablegate: Nigeria: Pipeline Expert Says 73 Percent of Niger

VZCZCXRO8118
RR RUEHMA RUEHPA
DE RUEHOS #0500/01 3520650
ZNR UUUUU ZZH
R 170650Z DEC 08
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 0367
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 0008
RUFOADA/JAC MOLESWORTH AFB UK
RUEKJCS/SECDEF WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUEWMFD/HQ USAFRICOM STUTTGART GE

UNCLAS SECTION 01 OF 02 LAGOS 000500

SENSITIVE BUT UNCLASSIFIED - HANDLE ACCORDINGLY
SIPDIS

STATE FOR AF/W, INR/AA
STATE PASS NSC FOR BOBBY PITTMAN

E.O. 12958: N/A
TAGS: PREL PGOV EPET SENV NI
SUBJECT: NIGERIA: PIPELINE EXPERT SAYS 73 PERCENT OF NIGER
DELTA PIPELINES NEED REPLACEMENT, CAUSE SPILLS

1. (SBU) Summary: The President of oil services company
Nestoil, Ernest Azudialu, told PolOffs on November 17 that
most oil spills in the Niger Delta occur because 73 percent
of pipelines are corroded and need to be replaced; pipelines,
which have a technical life of 15 years, have often been in
use for thirty years. Replacing these pipes with new,
concrete-encased pipes sunk three to four meters underground
would eliminate most spills and make illegal bunkering more
difficult. Decades of environmental degradation have robbed
people of their traditional livelihoods of fishing and
farming, and encouraged them to demand payments before
allowing legitimate businesses like his own to operate in the
Delta. End Summary.

Obsolete Pipelines Cause Spills Daily
-------------------------------------

2. (U) Ernest Azudialu, President of the oil services company
Nestoil, which did roughly USD 34 million in business during
2007 mostly as a subcontractor for international oil
companies operating in Nigeria, told PolOffs on November 17
that most oil spills in the Niger Delta are caused by breaks
in obsolete pipelines. Azudialu, who has 13 years experience
laying pipelines in the Niger Delta, estimated that 73
percent of all pipelines there are more than a decade overdue
for replacement. In many cases, pipelines with a technical
life of 15 years are still in use thirty years after
installation. Because the equipment is corroded and
relatively close to the surface, making it more vulnerable to
intentional and unintentional damage from natural and human
causes, spills occur daily, and it often takes many hours to
find the location of the spill and deploy the necessary
clean-up equipment. The best long-term solution to the
environmental situation is to replace these old pipes with
new, concrete-encased pipes that are placed three to four
meters underground. Such pipes rarely have spills and are
much more difficult to tap into illegally. Spills caused by
illegal bunkering as well as technical failures could be
greatly reduced by pipeline modernization, he said.

Obsolete Pipelines More Vulnerable to Oil Theft
--------------------------------------------- ------

3. (SBU) Azudialu said that illegal bunkering was widespread
and also contributed significantly to what he called the
environmental catastrophe in the Niger Delta. According to
Azudialu, the term illegal bunkering is used to refer to wide
range of activities from highly organized operations
entailing barges, storage, pumping stations and small-scale
refineries to villagers tapping into pipelines and helping
themselves to oil for their own use or for sale on the local
economy. While militant leaders are presumed to be active in
the more organized illegal oil trade, Azudialu said, he
personally knew about one military Joint Task Force (JTF)
operation that was called off just before the militant leader
was surrounded and taken or killed. Azudialu asked
rhetrically: Who called the JTF off? Azudialu left no doubt
that he believes senior officers in the JTF and officials in
the state governments are involved in and profiting from
illegal bunkering.

Local Communities Ask Payoffs to Survive
----------------------------------------

4. (SBU) Azudialu said that decades of environmental
degradation have robbed the people of the Niger Delta of
their traditional livelihoods of fishing and farming, and
encouraged the residents to view the oil as belonging to
them. As a result, they do not see anything wrong with either
taking it directly (tapping into oil pipelines) or demanding
payment from outsiders who are exploiting it. Azudialu said
that in order to work in the Niger Delta, a company must make
payoffs to the local community leaders, pay protection money
to the "youths," and also employ private security firms. All
this makes work in the Niger Delta very expensive. Even if a
company comes to a community to build something for the
benefit of that community, said Azudialu, the community
leaders and youths will first demand payments.

LAGOS 00000500 002 OF 002

5. (SBU) Asked about how development could be achieved in the
Niger Delta under these circumstances, Azudialu said that the
Federal Government had to grant contracts directly to
credible companies rather than funneling money through the
state and local governments. He claimed that the Niger Delta
Development Commission (NDDC) has not proven to be a promoter
of development, calling it the worst conduit for that purpose.

6. (U) Azudialu's assessment of the current state of
pipelines has been confirmed by other of our interlocutors.

7. (U) This cable has been cleared by Embassy Abuja.
BLAIR

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