For over a decade, the country has battled the scourge of oil theft. The effect is that the country is unable to meet its production quota allocation as approved by the Organisation of Petroleum Exporting Countries(OPEC). Besides, the revenue base for the Federal Government has been negated, leaving the country to rely heavily on borrowing to finance its expenses. But, the outcome of a stakeholders’ conference held earlier in the week may change the narrative. MUYIWA LUCAS writes.
he statistics are staggering; enough to practically bring a country’s economy down on its knee if urgent measures are not taken. For instance, between 2010 and 2020, the Nigerian Extractive Industry Transparency Initiative (NEITI) put the audited figure of oil theft and losses at about 619.7m barrels of crude oil daily. This volume is valued at $46 billion dollars or N16.25 trillion. Equally, Nigeria is said to have lost about 4.2 billion litres of petroleum products from refineries which were valued at over $1.4 billion at the rate of 140,000 barrels per day from 2009 to 2018. This figure is just an average, because, there are peaks where the country loses between 200, 000 to 400, 000 barrels in a day.
At an investigative sitting of an ad hoc committee of the country’s Senate last November, a picture of how Nigeria lost more than $2 billion to oil theft during the first eight months of the year came to the fore.
Its findings were presented to the Senate in a report that found only 66 per cent of the country’s oil production could be “effectively guaranteed.” The other 33 per cent, the report said, was affected by theft and lost production “due to the third party easy access on land terrain”.
“The country has lost over $2 billion to oil theft between January and August 2022, which lost revenue ordinarily would have supported the country, fiscal deficits and budget implementation,” the report said.
Indeed, for a very long time, large-scale theft from the country’s pipelines has affected exports, forced some companies to shut-in production, crippled the country’s finances and knocked the country off its position as Africa’s top oil producer.
Earlier in the week, at a conference on oil theft and losses convened by the Special Investigative Panel on Oil Theft/Losses in Nigeria held in Abuja, eggheads in the Nigerian economy examined the effect of this menace and in the process postulated several options available to the country to navigate the murky terrain of oil theft.
At the conference, with the theme: “Protecting Petroleum Industry Assets for Improved Economy,” the Vice President, Prof. Yemi Osinbajo, urged stakeholders in the oil and gas industry to come out with recommendations and solutions that would address oil theft and boost production in the country.
“All theft and sabotage of oil and gas assets are a clear and present danger to our economy and national security. Not only do they pose a serious threat to all exploration and our energy economy, they also impact negatively on what is accrued to the federation and the business prospects of investors in the oil and gas sector,” the VP said, warning that if the trend is not checked, will fuel crises that will paralyse government and leave the country extremely vulnerable to all of the shocks and other unexpected consequences.
Osinbajo stressed that the total value of crude oil losses between 2009 and 2020 was higher than the size of Nigeria’s foreign reserve at any point in time and also 10 times Nigeria’s savings in our crude account. “However, our administration is committed to leaving our best actions, notes and ideas for use by the next administration and better of our nation,” the VP said.
Similarly, the National Security Adviser (NSA), retired Maj.-Gen. Babagana Monguno, said crude oil theft is arguably the biggest threat to Nigeria’s economy currently.
He noted that the initial concerns of oil theft in the country dated back to the early 1980s, which has since then now grown to a more pronounced and disturbing level in recent times. Mongunu disclosed that criminals have now increased the level of sophistication considering the various methods deployed to tap primary pipelines with illegal secondary pipelines to load on barges and sell to international collaborators, or to process locally for illicit domestic sale.
According to the NSA, the attacks on oil producing facilities had led to several shut downs, and in some instances declaration of force majeure by some international oil companies in the country. This, he noted, had resulted in loss of revenue and by implication negated the capacity of government to generate the required resources to fulfil its statutory responsibilities to the citizenry.
“Currently, crude oil theft is arguably the biggest threat to Nigeria’s economy. Its socio-economic impact includes environmental degradation, health hazards and disruption in economic activities of the host communities amongst other concerns. Permit me to state that the recent discovery of an illegal pipeline connection at kilometre 4, on the Trans-Escravos Pipeline, Yokri Community in Burutu Local Government Area of Delta State, was the tipping point which prompted the Federal Government to institute a 10-man special Investigative panel. This discovery further brought to the fore some seeming gaps in the security arrangement and frameworks for securing the oil and gas infrastructure in the country. Unfortunately, it is these identified gaps that are being exploited by criminals and economic saboteurs to undermine our national security,” Monguno said.
Curbing the scourge
Government’s initiatives and efforts aimed at curbing the oil theft scourge seem to have been yielding some positives and in this Monguno take delight. He explained that the recent interceptions by security agencies at various loading platforms as well as illegal activities of artisanal refiners remains a good indicator that the problem was not insurmountable and was gradually being addressed. This is not however, to mean that crude oil theft does not require strong interagency collaboration with the relevant stakeholders such as the security agencies, NNPC, IOCs and the local communities.
As part of these initiatives, it was revealed that the security agencies, particularly the Nigerian Navy, had embarked on series of intelligence driven maritime security operations to curb the issues of oil theft and illegal oil bunkering in the Niger Delta area. Besides, the deployment of the Falcon Eye System – a high tech real-time intelligence Maritime Domain Awareness facility domiciled with the Nigerian Navy and coordinated by the ONSA had been fully committed to addressing the emerging concern.
It is worthy of mention that the facility has between August 2018 and January 2023 facilitated the prosecution of over 200 vessels involved in maritime criminality within Nigeria’s Exclusive Economic Zone (EEZ) up to the Republic of Togo.
“In addition, 83 oil tankers involved in various crude oil and product theft have been arrested, while the theft of over three million barrels of crude oil was prevented and 11 million litres of petrol and diesel were recovered.
“Recent commendations from the International Maritime Organisation (IMO), European Union and United Nations Office on Drugs and Crime to Nigeria on its efforts in reducing maritime criminality in the Gulf of Guinea and successful prosecution of pirates in the region are quite instructive. As such, it needs not be stressed that technology remains a major force multiplier for any integrated solution or framework to address security concerns of this nature,” he said, adding that it may also require regional and international collaboration due to the transnational nature of the threat to provide a more comprehensive approach by integrating all the necessary stakeholders.
The Minster of State for Petroleum Resources, Mr Timipre Sylva, explained that the volume of crude oil loss to non-state actors and the manner the situation has disrupted the nation’s economy is of grave concern.
“The oil and gas industry as the major source of foreign exchange for Nigeria’s industry has come under serious attacks, bringing serious losses to government revenues. Thirty years ago, Nigeria could produce over two million barrels of oil per day; however, today, it struggles to drill as little as 60 per cent of that amount.
“The concerted efforts of the government in terms of securing our petroleum industry assets is yielding positive results and this tempo will be sustained to achieve OPEC’s quota,’’ Sylva said.
Similarly, the Chairman, Special Investigative Panel on Oil Theft/Losses in Nigeria, retired Maj.-Gen. Barry Ndiomu, said the nation had been witnessing protracted cases of oil theft and steady decline in its revenue accrual from oil sales.
For him, he commended the award of pipeline surveillance contracts to some private firms which he said recently led to the discovery of an illegal pipeline connection used in the diversion of crude oil along the trans Escravos trunkline.
According to him, there is no gainsaying the enormous impact the menace has had on the nation’s crude oil production with the country’s oil output hitting a 13-year low between August and September last year.
“Strategic consultations were held with the governors to get their special insights into experiences in dealing with the many issues around oil theft. On the part of the law enforcement and security agencies, we interfaced with the Chief of Army Staff and the Chief of Naval Staff as well as the Director-General of the State Security Service. We also met with the Attorney-General of the Federation and Minister of Justice alongside the Economic and Financial Crimes Commission (EFCC).
“These engagements are build us information on the challenges their respective organisations faced in securing our nations oil assets and combating oil theft. These and several other government agencies availed the panel memoranda and documents, which have also proved useful to the panel,” he said.
Also, at the conference, the Group Managing Director of NNPCL, Mele Kyari, represented by Mr Bala Wunti, said security of oil resource is important to the economic growth of the country.
Kyari explained the various challenges faced by the company in the production of crude oil and called on all stakeholders to be committed in addressing the various challenges that made Nigeria to lose its oil resources to criminals.
