Fear, panic as endless oil theft cripples Nigeria’s economy

dac oil theft
dac oil theft

From Uche Usim, Abuja

For decades running, Nigeria has suffered pipeline vandalism and crude oil theft that have repeatedly fractured operations in the petroleum sector and ultimately robbed the Federal Government of the much-needed revenue.

As a national sore that has been left untreated, crude oil theft recently assumed an unprecedented dimension with reports indicating that Nigeria loses about 95% of its crude oil to

organized criminal gangs, populated by the elite.

Governor Nyesom Wike of Rivers State was the first to openly accuse the security agencies of being complicit in the menace, but his voice was hushed by the propaganda machinery of the political class.

However, operators insist that scrubbing off the culpability of security agencies in oil theft is the very reason it is blooming.

They said the network is so sophisticated that it cannot exist without the blessings of security agencies. This is because oil theft involves ferrying the product in barges that must be escorted by armed law enforcers to markets in the United States, West African nations, Brazil, China, Singapore, Thailand, Indonesia, and the Balkans.

About 150,000 barrels of oil a day was stolen last year, costing the government $5 billion.

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More so, a report released last month during a meeting on crude oil theft between the Nigerian Upstream Petroleum Regulatory Commission and Oil Producers Trade Section, and the Independent Petroleum Producers Group, showed that from January 2021 to February 2022, Nigeria lost $3.2 billion to crude oil theft.

The amount when converted by the official N416.25 to a dollar exchange rate translates to about N1.3 trillion, which is a dangerous development for an economy already on ventilators.

The report further revealed that oil theft rose significantly between 2021 and 2022, with over 90 percent of total crude produced at the Bonny Terminal stolen in January 2022.

The Bonny Terminal Network, Forcados Terminal Network and Brass Terminal Network, are now creating crude oil loss of about 91 per cent, meaning that the cost of production in those cases already shoots above actual oil price, which hovers around $120 per barrel.

Worse still, oil production has dipped to less than 1.5 million barrels per day in what many have summed up as a national disaster.

The ugly development has forced state and non-state actors to champion conversations around detonating this monster fiercely pushing Nigeria into extinction.

Pastor Enoch Adeboye, the General Overseer of the Redeemed Christian Church of God, had a rare outburst at a recent Sunday sermon when he spoke about the massive theft of crude in Nigeria’s Niger Delta which has planted the country on the road to bankruptcy.

He inferred that the industry was currently in dire straits, stressing that efforts must be made to save it.

He said: “Who is stealing the oil? Where is the money going? What do they want to do with the money? Who are the foreign nations buying this stolen oil? How many of these nations of the world are your friends?

“We are borrowing more and according to a friend of mine, we are moving steadily towards a state of bankruptcy, a whole nation”.

Private sector players like Tony Elumelu recently raised the flag that the frightening level of oil theft was convincing evidence that Nigeria can never meet its Organisation of Petroleum Exporting Countries (OPEC) production quota since the bulk of the produced crude is usually stolen.

“There is no doubt that Nigeria will not reach its OPEC production quota unless it stops the stealing.

“Who is stealing crude oil? They are not everyday people. They are the elite of society, and we must fight them together”, he said recently.

In his response, Mr Mele Kyari, the Group Managing Director of the Nigerian National Petroleum Company Limited (NNPC) said; “When we fight them, it’s for the survival of us all.”

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For an economy already bogged down with corruption, opacity and environmental vandalism associated with its oil industry, leaving the issue untackled is akin to national suicide; especially when one reckons that the  oil industry generates about two-thirds of Nigeria’s revenue.

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Analysts say the issue must never be politicised if the country is to survive because it has reached a point where the monster is either killed or it kills the nation.

Already, oil theft has ruined all efforts by the NNPC to reduce the cost of oil production to about $10 per barrel as the current production cost is pegged at $32 a barrel.

The Central Bank of Nigeria (CBN), Mr Godwin Emefiele, at the last Monetary Policy Committee meeting, lamented the worsening oil theft and its destabilising effect on government revenue and accretion to reserves.

Another player and founding Managing Director of Seplat Petroleum, Austin Avuru, in a recent report, warned that oil production in Nigeria was now in an emergency, critical state, due to oil theft.

In the report, titled, “Reining in the Collapse of the Nigerian Oil Industry,” Avuru disclosed that some oil producers no longer get to see as much as 80 per cent of their production making it to the terminals. He also urged the authorities to do something about the problem.

Meanwhile, sensing dangers ahead amid louder calls for energy transition, International Oil Companies (IOCs), who built the infrastructure in which oil is mined, are quickening their exit; leaving the country vulnerable to a crippling energy crisis.

Investigations by Daily Sun reveal that private sector players with expertise on how to manage the imbroglio are not part of the solution crew the government has constituted to arrest the situation.

According to industry watchers, the solution to oil theft does not lie in excessively militarising the Niger Delta region, but by a tripartite agreement between the private sector players, government bodies (Ministry of Petroleum Resources and agencies) and the security and intelligence circle.

Sources note that the private sector and operators, if sincerely carried along, are expected to provide the technical know-how by deploying HiTech surveillance equipment, especially as oil is no longer stolen at the well-heads because vandals have become innovative, bypassing the anti-ballistic pipelines to disrupt production.

The government, on the other hand, should provide the conducive environment to make that happen and the security agencies riding on credible intelligence either nips the issue in the bud or punish offenders decisively.

Operators note that what has been noticeably missing in the solution architecture is the seeming lack of reliable intelligence to nip the vandalism in the bud. This, they note, springs from near-zero involvement of the Department of State Services, National Intelligence Agency (NIA), Defence Intelligence Agency (DIA) and the likes.

For a nation trudging towards economic emancipation and global competitiveness, oil stolen from Nigeria and the money generated from its polluted markets are already posing reputational, political and legal hazards.

According to Chatham House, an independent think-tank, parts of the legitimate oil industry are also being compromised by the theft blight as the money is also being laundered through international banks.

Once the stolen crude leaves Nigerian waters, the product often moves in complex ways. Oil is loaded onto ships in multiple parcels or transferred between ships by buyers.

For Nigerian oil theft to be curtailed significantly, experts suggest that those outside government circles will have to join forces with stakeholders within.

They insist that neither Nigeria nor other countries cannot stop the illicit trade alone, and going it alone is of very limited value.

Historically, oil theft has been both a symptom and a cause of violent conflicts in the Niger Delta. Law enforcement agencies going after the wrong people, rival theft networks setting up turf wars, or politicians using stolen oil to finance elections could destabilize the region once again.

The NNPC spent N32.56 billion on pipeline security and maintenance within the first seven months of last year, above the N29.6 billion budgeted for the year, reflecting a rising incident of vandalism and frequency in maintenance.

Stakeholders believe the costs must have risen, even as they await the latest report from the oil company.

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