New Report Highlights Piracy Threat to UK EconomyJuly 11, 2014 in Piracy
According to a new UK Chamber of Shipping study, published 10 July 2014, a lack of security off the coast of Nigeria not only threatens seafarers transiting the region, but it will also have an impact on the United Kingdom’s economy.
The new report indicates that maritime crime in the Gulf of Guinea region exposes almost all of the UK’s £6.3 billion (US $10.7 billion) annual trade with the region, including 12% of oil that is imported into the UK. By 2050, the region is set to hold 25% of the world’s oil production, however the lack of security in the Gulf of Guinea is now affecting the UK’s economy as its economic interests are being placed at risk.
While over the past year, the rise in piracy attacks in the Gulf of Guinea has effectively transformed the region into the new global piracy hotspot, overtaking piracy off the coast of Somalia; the issue of maritime crime in the Gulf of Guinea is not new. This is echoed by Guy Platten, chief executive of the UK Chamber of Shipping, who states that while “most people are aware of pirate activity off Somalia…lawlessness in the Gulf of Guinea is a major threat to our seafarers, the UK’s energy and trade security, and to the economic development in the region,” adding “Nigeria and other states in the region have known for 30 years that piracy was a problem, but too little has been done.”
One issue is the continued under reporting of incidents in the region, which has resulted in the lack of comprehensive data, in turn making it difficult to provide accurate statistics concerning maritime crime in the region. While the study indicates that vessels transiting the region are attacked at least once per week, it does note that a significant proportion, estimated to be up to two-thirds of attacks, go un-reported. Of those reported attacks, 60% occurred within Nigerian territorial waters. Such under reporting has been attributed to two reasons: bureaucracy and a lack of suitable reporting organization.
What Does This Mean For the UK Economy?
Oil and Gas
Although Nigeria is the primary source of energy from the Gulf of Guinea, with proven reserves of 37.2 billion barrels (11th in the world) and a production of 2.5 million barrels per day (12th in the world), all of the country’s oil is exported by sea despite the prevalence of maritime crime.
This insecurity effectively places the UK energy security at risk during transportation through insecure shipping routes, such as those in the Gulf of Guinea region.
Gas exports from the region are not yet as proportionally significant. In 2012, 6% of the EU’s LNG came from the Gulf of Guinea. Maritime security is vital to this source of energy as deepwater fields in the Gulf of Guinea account for 800,000 bpd in Nigeria, and are forecast to provide 60% of total Nigerian production. While there is a plan for an LNG pipeline, which will transport gas across the Sahara, currently all of these energy exports are conducted by sea.
Non Oil Trade
Nigeria is the second largest market for goods in Africa while the region as a whole contributes to the food security of the UK, including bananas, cocoa and palm oil; as well as other produce, including rubber and timber.
The UK also has a direct trade in minerals with West Africa and holds investments in third party trade. These minerals are transported by sea and therefore are affected by the poor maritime governance in the Gulf of Guinea.
Combatting the threat of piracy and maritime crime in the Gulf of Guinea will not be simple as vessels transiting the region use routes that pass through multiple jurisdictions. Consequently any solution to this issue will have to be multilateral.
Although some UK policies are already focusing on reducing maritime crime in the region, including how to protect seafarers and how to address the maritime manifestation of oil theft, the study notes that any UK activity aimed at enhancing security in the region should be proportional to its risks and can only be based on soft power.
While the UK Chamber of Shipping report focuses primarily on maritime security in waters off Nigeria, the study provides evidence to support both continued and additional UK involvement, adding that solutions must be multilateral and cannot focus on one sole country.
The study concludes by indicating that Ghana is an excellent example of how maritime security can be successfully provided in the region. According to the study, “investors in Ghana provide directly to maritime security projects, and this public/private partnership has been seen to be another example of success.” The report adds that Ghana “…demonstrates that the GoG is not an ungovernable region, but that third-party supported, regionally hosted maritime security has significant commercial and social benefits.”