Ghosts behind oil theft in Nigeria and price of inaction

Mele Kyari, the Chief Executive of Nigeria National Petroleum Company Limited, announced that they discovered a loading port that had been in operation for the previous nine years as well as a 4 km illegal pipeline that ran from Forcados in Delta State to the sea. 

The information was revealed by Kyari when he testified before a joint senate committee on upstream, downstream, and gas. He bemoaned the unparalleled rate of oil theft in Nigeria, which has been going on for more than 22 years. 

Vandalism has been a problem for businesses in the Niger Delta for a long time. The 180,000 barrel-per-day Trans-Niger Pipeline running dry exemplifies the severity. According to an industry union, utilization between October 2021 and February was as low as 5%. 

Forcados, Bonny, and Brass oil terminals,  three operating facilities have all been shut down as a result of the alarming rate of crude oil theft, which results in the loss of around 600,000 barrels per day. 

The Trans Nembe pipeline’s operations may be impacted by a spill site that occurred in the Bori community of Rivers State in the past six weeks, according to Kyari. Unless clamped. 

During the crackdown, the business demolished 350 illegal refineries, 273 wooden ones, and 374 reservoirs. 1, 561 metal tanks were destroyed, and among other things, over 49 seized trucks were burned. 

However, the Nigerian government is already spending billions of dollars subsidizing gasoline and earning less than its debt payment bill, while daily production is currently almost half lower than its OPEC limit. 

The petroleum regulator disclosed that the country lost $1 billion in income due to crude oil theft during the first quarter of this year, warning that the practice posed a threat to the economy of Africa’s largest producer. 

A network of pipelines controlled by major oil companies is tapped every year in Nigeria, resulting in the loss of millions of barrels of crude oil as a result of theft and vandalism, highlighting the fact that inadequate security results in significant financial losses for the nation. 

Only roughly 132 million barrels of the 141 million barrels of oil produced in the first quarter of 2022 were received at export terminals, according to Gbenga Komolafe, the chairman of the Nigerian Upstream Petroleum Regulatory Commission. 

This suggests that more than nine million barrels of crude oil were lost to theft, Komolafe said in a statement. “This translates to a loss in government income of over $1 billion… in only one quarter. 

Oil and gas investors have lost confidence in the industry as a result of persistent crude oil theft and pipeline damage. This explains why Nigeria is no longer as attractive to foreign direct investment as it once was. 

Government leaks and oil theft may cause the Nigerian treasury to lose more money than it receives as oil money, even as the current wave of theft wrecks the country’s economy. The president plans to borrow N8.8 trillion to fund next year’s budget amid a shortfall in Oil revenue 

As a result of theft and vandalism in the delta region as well as the departure of foreign businesses, Nigeria lagged behind Angola, and Libya in terms of output. In an effort to stop the decline, the government is assembling law enforcement teams and directing community engagement efforts. 

According to Nigeria’s Budget Office, government oil earnings through November were only about half what was expected, despite higher oil prices. 

Oil theft and illegal refineries have made life intolerable for its inhabitants notwithstanding findings by the United Nations Environmental Programme (UNEP) that found an unparalleled concentration of benzene, a carcinogen, and hydrocarbons caused by oil spillages that have polluted air and water 

It has become a source of national embarrassment, especially now that the price of oil is at an all-time high and other countries and businesses are laughing all the way to the bank as they rebuild their economies with the proceeds of the oil windfall, while Nigeria’s economy appears to be on the verge of collapse. Crude oil theft has gone on for years, and no end is in sight. 

In response, President Muhammadu Buhari ordered security agencies in the Niger Delta region to take immediate action against oil thieves. 

A website for residents of host communities and other Nigerians to report instances of oil theft was launched by the FG under the name “Crude Theft Monitoring Applications.” 

Nigeria granted contracts for pipeline surveillance in August and unveiled a framework for internet monitoring and reporting so that people may anonymously alert authorities to incidences of oil theft. 

To prohibit all unlawful activities in the Niger Delta region, we are going to take significant action, said Ekpemupolo, 51, also known as Tompolo, in an interview. 

Tompolo, who served as the commander of a loose coalition of heavily armed rebels and conducted a campaign for more local control over the Delta’s hydrocarbon wealth from the middle of the 2000s, is one of the few persons who are knowledgeable about wreaking havoc on Nigeria’s oil business. 

Malam Garba Shehu, the presidential spokesperson, had stated that the federal government would soon expose the names of prominent figures responsible for crude oil theft in the nation, but as of this writing, it still appears to be just a promise. 

Using force, he added that security personnel dismantled illegal oil bunkering operations to sabotage the nation’s economy. 

Shehu added that additional measures were being implemented to stop it while also implying that there might be instances of some law enforcement officers partaking in unlawful activity. 

The Nigerian National Petroleum Company (NNPC) Limited is also setting up a surveillance system to identify or provide advice as soon as oil pipelines are sabotaged, Shehu continued. 

Ways Foward

National emergency response is urgently needed. The Nigerian state has been hijacked and strangled financially by some influential individuals. Nigerians’ present and future hopes, as well as their economic potential, are being destroyed by crude oil thieves.  

According to Richard Kennedy, Managing Director of the Chevron Nigeria/Mid Africa Business Unit, the theft of crude oil in Nigeria is a well-organized crime. 

“Considering my own experience, it is important to distinguish between host community problems and the theft of crude oil. Much larger than that, in fact. It is entirely distinct from the problems facing the host community. To put it bluntly, it’s organized criminality.” He added 

Aside from that, he disclosed that the degree of theft is costing Nigeria millions of dollars per day in lost revenue, which could have assisted in resolving our financial problems. 

The incapacity of the government to handle this problem reveals either the appalling condition of governance in Nigeria or the fact that non-state actors are holding the state to ransom in collusion with some officials in the government and security sector. 

The government is responsible for all actions, and negligence is not an option. Government should be held directly, vicariously, and dangerously accountable for the effects and outcomes of such inactions if it fails to address this issue and end crude oil theft. 

As a deterrent to others, FG must pursue and harshly punish those responsible for this heinous conduct. It becomes increasingly risky when those involved in it hold important government and security positions. Governing in Nigeria is plagued by greed and corruption.