DEALING WITH MASSIVE OIL THEFT

The authorities must do more to stem the economic haemorrhage

T he recent alarms on the massive oil theft in the country raised by the trio of Chairman of Heirs Holdings, Tony Elumelu, former CEO of Seplat Energy, Austin Avuru, and the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele came as no surprise. But the capacity to undertake such criminality to the magnitude being reported is not one that is available on the streets. It is nothing but an organised crime that must necessarily involve big actors in the communities as well as industry and security collaborators. President Muhammadu Buhari must therefore muster the courage to deal decisively with what clearly threatens the economic well-being of Nigeria and our national security.

Last Tuesday, the federal government delegation visited the Niger Delta creeks, pledging to end the activities of illegal refiners, pipeline vandals and sundry other criminal cartels in the sector. Minister of State for Petroleum Resources, Timipre Sylva, who led the team spoke with officers of the 146 Battalion of Nigerian army and personnel of other security agencies. But talk is cheap. The challenge is to find solution to the problem. While oil theft is not new in Nigeria, it used to be done with some modicum of fear. Not any longer. The volume of crude being stolen almost on daily basis is now so staggering that it is already threatening the entire oil and gas industry. On Thursday, the federal government estimated the total value of oil theft between January 2021 and February 2022 at $3.72 billion. This is a scandalous leakage for any country to bear.

Following incessant attacks on their crude oil pipelines, many of the international oil companies (IOCs) in the country are suspending their operations. Even if some of the figures being touted are a little exaggerated (indeed, the country does not know the exact number of barrels it produces) the fact remains that the menace of oil theft is growing in the level of skills and sophistication. Indeed, as these criminal cartels get more and more emboldened, they are investing in barges, canoes, speed boats and large wooden boats which they use in their illicit business.

To compound the challenge, crude theft is likely to increase with high oil prices. As things stand, some of the oil producers are avoiding the notorious pipelines, resorting to trucking, and barging to get their crude to terminals. This increases their production cost and impacts on their margins. Interestingly, while the bulk of oil production in Nigeria comes from offshore, most of the reserves are onshore.

The companies and the country are losing significant revenues and opportunities from the near industrial scale theft. This is one of the reasons we are not likely to derive corresponding benefits from high oil prices resulting from the Russian invasion of Ukraine.

With illegal local refineries springing up on daily basis in the creeks, the implications for the environment is dire. Besides, this is coming at a period Nigeria is in desperate need of all the funds it can muster to meet pressing national challenge. It is therefore time that the federal government and its agencies took serious measures to contain the ugly situation. Most reasonable people believe that the menace is growing in the level of skills and sophistication only because some law enforcement agents may have been compromised. More worrying is that the trials of the few apprehended suspects in the past were impeded by the interference of some influential individuals who themselves could be complicit in this highly lucrative criminal enterprise.

At the session with the federal government during the week, the Managing Director, ExxonMobil Nigeria, Richard Laing, reportedly described the situation as organised crime because “the sophistication of the engineering involved points towards a high degree of sophistication and technology, as well as the distribution.” It is difficult to argue with that summation. Yet, to imagine that the country suffers such enormous revenue depletion while begging for foreign loans to finance projects is, to say the least, lamentable. It is therefore important to treat this as an emergency and introduce drastic measures, including rejigging the security infrastructure for protecting oil assets and leveraging technology. But first, the authorities must stop the haemorrhage.