Contrary to belief in some sections that oil theft was primarily behind Nigeria’s crude oil losses, findings have shown that the huge losses in crude oil output were more as a result of various technical and production gaps, including shut-ins and equipment failures.

The Nigerian National Petroleum Company Limited (NNPCL) recently put total loss at 9.425 million barrels; attributed to various challenges in the upstream subsector of the petroleum industry. However, it also noted that the huge loss quoted did not include the 400,000 barrels per day attributed to incidents of oil theft, but rather attributed this to just nine incidents across its operations within the month.

A top military source said the quantity lost to oil theft, which is the common excuse given for sharp drops in production capacity, has in the last few years been curtailed through heavy investment in equipment for the nation’s security forces.

A top military source in Abuja, who spoke on condition of anonymity, pointed out that the situation could get worse if the operators within the oil industry fail to conduct a proper analysis of the situation, isolate the real problems and apply accurate solutions.

According to him, in the real sense of the situation, incidences of theft have drastically been curtailed as security forces. The Nigerian Navy, has in the last few years applied rigorous efforts into ending oil theft, which he said had yielded huge positive results.

He said most of the losses that have been attributed to theft were actually occasioned by some of the activities of the major oil companies. The largest contributor, according to him has been production cuts through force majeure declared by the companies on one hand and old and weak facilities, leading to shut-ins, on the other had.

“Of late, there have been different publications from various sources about crude oil losses resulting from oil theft in Nigeria.

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“The sources give varying estimates of the losses ranging from about 20,000 to 200,000 barrel per day, or as much as 20 per cent of daily production. Others estimate the losses to about $1 billion per quarter, as recently observed for Q1 2022. However, the losses are allegedly ascribed to crude oil theft and paint an incorrect picture of the security situation in Nigeria’s maritime environment.

“Accordingly, it is necessary to clarify the sources of the losses in order to give accurate reports/statistics as well as appropriately address the problem. It is a given that a wrong diagnosis will always result in a wrong prescription. Even when IOCs declare force majeure on their operations, these losses – arising from non-production – still end up being falsely ascribed to oil theft.

“For instance, in December 2021, Shell declared force majeure on exports of crude oil from Forcados. A few months later, in March 2022, Shell again declared force majeure on Bonny crude oil exports, while Eni also declared force majeure on exports of Brass crude oil after a pipeline explosion on the Ogoda/Brass 24 oil line at Okparatubo in Nembe, Bayelsa State.

“These force majeures happen quite frequently, and end up depriving the country of significant quantities of potential crude oil exports. Sadly, it seems the losses arising from the zero production from these facilities are being inaccurately attributed to crude oil theft.

“Also, the incessant cases of weak, old and damaged pipes create avenues for losses, albeit minimal when factored against the total losses. However, the question that arises is why the IOCs have not taken proactive measures in shutting down such wellheads,” he said.

Speaking further, he also cited host communities’ agitations and conflicts with producing companies’, which continue to be a common relationship outlook in the oil-rich region and has led to shutdown of facilities and cut on productions, as another leakage, which does not necessarily amount to theft as another reason.

“Investigations have revealed that the IOCs sometimes use such wellheads to appease the host communities, and also attribute claims of losses to such,’’ he said.

Equally, there is the issue of metering errors in the oil industry, which could result in lower output. All these account in varying degrees for oil losses, which are invariably still attributed to oil theft and complacency by security agencies. Little or no mention is made of these non-theft losses.

“In addition, due to the action of security agencies, which have significantly denied miscreants access to crude oil and other petroleum products, these criminals are resorting to sabotage of oil facilities and to pipeline vandalism, in protest. The reported attacks of Eroton OML 18 on July 12, 2022 and NAOC Riser at Masonkiri, are pointers to this. Such actions have further resulted in lower outputs, which are again erroneously attributed to theft,” he said.

He further noted that concluding that the huge amount of loss, which has practically forced the daily production down from 1.8 million assigned quota 1.083 million barrels per day is all attributable to oil theft, considering the volume, would be practically impossible.

“From the foregoing analysis, it can be inferred that the narrative on crude oil theft in Nigeria does not paint a true picture of the situation. NNPC and the IOCs may need to do more work to clarify the actual losses due to shut-ins, metering errors and theft, instead of the current extant practice of reporting metering errors and shut-ins as losses due to crude oil theft, thereby giving a false impression of actual reason for the losses.

“To contextualize issues, for 100,000 barrels to be lost per day, oil thieves will require a total of 20 barges of 5,000 barrel (5 tons) capacity, to convey this quantity of crude oil daily from the creeks to the high sea; and a total of 600 barges on a monthly basis.

“It is absolutely preposterous for anyone to believe that these humongous numbers of barges/vessels are being clandestinely transported across Nigerian waters, especially considering the level of vigilance especially maintained via anti-crude oil theft operations by the various security agencies, from the Civil Defense to the Military.

“It must be noted that President Buhari has invested significant resources into strengthening Nigeria’s maritime security, in terms of security assets, and technology support. Recent escalations in security operations in the Niger Delta have helped significantly curtail the operators of the wooden boats and the illegal refining sites, who in any case do not account for anywhere near the numbers regularly touted as ‘oil theft’ figures.

“From the foregoing, it is therefore clear that there is a need to comprehensively consider all other likely sources of losses, and not ascribe all losses in the oil sector to oil theft and security lapses,” he said.