Curbing Crude Oil Theft

BeyondtheBeat  CHIKA AMANZE-NWACHUKU Tel: 08033294157, 08057161321 Email: chika.amanzenwachukwu@thisdaylive.com

Crude oil theft in Nigeria has continued unabated despite the steps taken by the government and oil companies to tackle the menace. Although the exact volume of oil stolen on a daily basis is unknown, industry sources said hundreds of thousands of barrels of Nigeria’s crude are illegally bunkered daily. Part of the stolen crude oil is often sold to refineries in nearby West African countries or refined at the illegal refineries located in the oil-rich region.

In 2014, Nigeria was listed as the country with the highest incidents of crude oil theft in the world.
According to data obtained then from Oilprice.com, with as much as 400,000 barrels of crude oil stolen daily, Nigeria was ranked worse than Mexico, Iraq, Russia and Indonesia on the top five countries mostly plagued by oil theft.

This decade long illicit business has continued to flourish in the oil producing region notwithstanding the heavy security presence, resulting in the loss of billions of dollars in public funds.
A report on crude oil theft in Nigeria, released last week by the Nigeria Natural Resource Charter (NNRC), put the average loss between 2016 and 2017 at approximately N3.8 trillion.

According to the United Kingdom-funded non-governmental organisation (NGO), the estimated financial value of what Nigeria lost through crude oil theft, sabotage and pipeline vandalism in the region, during the period under review, was higher than the N189.4 billion being the combined allocations to the health and education sectors in the 2018 federal budget.

NNRC, which provides policy options to guide government and societies in their use of natural resources to ensure maximum and sustainable returns for citizens, noted that the amount translates to a mere 8.4 per cent of the estimated value of losses from oil theft in 2016 and 2017 alone.
The report identified poverty, unemployment, poor governance, pervasive corruption and the continued neglect of the oil region as major reasons for the increasing oil theft.

The NNRC further observed that with global prices rising above $100 a barrel in the early 2000s, oil thieving evolved into a cottage industry, creating consequential socio-economic problems.
It further noted that the illicit business has risen to unprecedented levels over the last decade, peaking between 2011 and 2014, pointing out that the inability of the government and oil companies to stem the tide has made Nigeria the country most plagued by oil theft in the world.

Disturbed about the upsurge in the illicit trade, the Nigerian government, during the regime of Dr. Goodluck Jonathan had announced plan to spend $1 billion to implement a comprehensive programme to check oil theft and vandalism of oil and gas infrastructure, which had cost Nigeria hundreds of billions of dollars in lost revenues.
The huge sum, Jonathan said in The Hague, would be “used to curb crude oil theft, the vandalism of oil and gas infrastructure and prosecute crude oil thieves.”

Jonathan had stated that a technical committee had already been set up to look into all aspects of the implementation of the programme, which according to him, will include further action to enhance the security of pipelines and other oil industry infrastructure, resolve community-related issues, boost youth empowerment in oil-producing areas and enhance the commitment of oil companies to the discharge of their corporate social responsibilities.

The former president had said that the new effort against oil theft planned by his administration would require the maximum co-operation of the international community, especially countries like the Netherlands which are major stakeholders in the global oil industry.
“Oil theft is an aspect of global terrorism, which has become a big industry on its own. It has become a major threat to the Nigerian economy and we need to work with all stakeholders to curb it. The thieves must be traced, apprehended and prosecuted,” the former president who was in the Netherlands for the 2014 global Nuclear Security Summit had said.

Also, in 2015, the federal government had revealed that the country was losing about 400, 000 barrels of oil to thieves daily.
Vice President Yemi Osinbajo, who dropped the hint at a lecture he delivered on ‘Nigerian Economy and the Future’, said the volume of crude stolen then amounted to about N4.8 billion daily.
Osinbajo had expressed disappointment that whereas Nigeria was losing 400,000 barrels of oil daily, a country like Ghana was surviving on less than 150, 000 barrels per day.

“The militancy in the south has also reduced oil production significantly and that is why any form of extremism must be put down not only because of the economy but for the unity and peace of the country and that is why all the recent initiatives are important because we must deal with the question of economy,” he posited.

The Vice President had appealed for patience, promising that the new government would put things in good shape.
But despite these promises, oil stealing has continued to increase, indicating that no concrete step had been taken by the federal government to address the problem.

In fact, an annual sustainability report released in April this year, by oil giant Shell, showed that crude oil theft from its pipeline networks in Nigeria rose by 50% to 9,000 barrels of oil a day (b/d) in 2017, from about 6,000b/d in 2016.
The oil major though attributed the rise in 2017, partly to the “militant-induced shutdown of the Forcados export terminal in 2016, which reduced opportunities for third-party interference”. The report also revealed that since 2012, Shell Petroleum Development Company of Nigeria Limited (SPDC) has removed more than 950 illegal theft points.

In the past, stakeholders in the oil and gas sector often accused the federal government of not doing enough to address the menace of crude oil theft, either because some government officials or highly-placed Nigerians, who are government cronies were directly involved. Also, the tapping of Forcados crude oil export terminal in 2013, was an eye opener that those involved in the unlawful act might not be ordinary thieves, but people with special technical training to operate the Surface Controlled Subsurface Safety Valves and the Surface Safety Valves installed on the flowline near the wellhead to secure the oil well and prevent crude theft.

In 2013, the federal government had appealed to the international community to join hands with Nigeria in checking the international criminal syndicate that makes a fortune by stealing the country’s oil.

The call stemmed from the belief that oil thieving involves highly technical syndicates that operate within and beyond the shores of the country, thus the cooperation of the international community would be required to check the unwholesome trade.
Given that oil still remains the life blood of Nigeria’s economy, curbing the menace of crude stealing, which is a major threat to the country’s economic growth and stability should indeed be an urgent national priority. Tackling this hydra-headed monster requires the cooperation of the international community.