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Menace Of Crude Oil Theft

12 Jan 2013

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Minister of Petroleum, Dizeani Allison Madueke

Crude oil theft is fast becoming an intractable problem in Nigeria. Last November, the international energy agency reported that nigeria was losing about $7 billion annually to oil theft. Just like previous regimes, the Goodluck Jonathan administration has taken a number of steps to curb the daily theft, but with little or no result to show for it. Yemi Adebowale x-rays the crude oil theft challenges, steps so far taken to tackle the menace and the lack of result


A report last year by the International Energy Agency on crude oil theft in Nigeria was frightening. It said, “Oil theft, costs the Nigerian government an estimated $7 billion in lost revenue per year.” According to the report, theft and sabotage often lead to pipeline damage, causing oil firms to cut output.


The IEA said further: “Flooding and large-scale theft of crude drove Nigerian oil output to the lowest level for more than two years in October 2012. Oil production in the country fell to 1.95 million barrels per day in October, with production in recent months hovering between two million and 2.5 million barrels per day. The drop from September to October was around 110,000 bpd, leaving Nigerian production at the lowest level in around two and half years.


“By early November 2012, production levels were recovering, with export schedules showing increased volumes for December. It was enough to keep the country as Africa’s top producer ahead of Angola at 1.79 million bpd, but the drop comes amid growing warnings that the country must take action to avoid stagnant output in the future.” Theses are frightening facts and figures. No doubt, the Jonathan administration has been equally worried about the mounting incidents of crude oil theft in the Niger Delta. The swearing in of new service chiefs in November last year provided the President another opportunity to reiterate his commitment to ending the menace. At the ceremony, he specifically charged the service chiefs to put the problem to an end. The President Said: “The unacceptable rising incidences of crude oil theft must be tackled frontally. Considering the direct adverse implication of the activities of crude oil theft on our national economy, I expect the Chief of Naval Staff and other service chiefs to immediately go to work to urgently bring the issue of crude oil theft to an end.”


Unfortunately, the President has not marched his words with action. As most analysts would say, his statement in November 2012 was a mere rhetoric. Many readily point to an earlier meeting with the service chiefs in May 2012 in Lagos, which was called to work out strategies for tackling crude oil theft. Nigerians are still waiting for the actualisation of the master plan from the meeting.
At the said “high-powered security meeting” held at the Civic Centre, Victoria Island, Lagos, the Federal Government, represented by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke discussed how crude oil theft would become history in Nigeria, using a special task force.


Alison-Madueke stressed that the task force would include both indigenous and international oil chiefs and added that over 180 million barrels of crude oil were lost on daily basis in the country. “In the last six months, the number of oil theft on Nigerian water had been on the high side. The meeting with stakeholders in the industry and service chiefs was to address the security lapses in the oil and gas industry. About $5 billion was spent in the last one year on pipeline repairs.”                 


The minister told the media at the end of the meeting that the service chiefs had been working with the petroleum ministry aggressively in the past to address the problem, “but there is need to discuss how to come up with a solution to improve safety of our oil assets. There is need to discuss the short term, medium term and the long term plans. We have had a successful meeting with the Senior Service Chiefs and have agreed to set up task force to address the issues.” 


The security chiefs on their part said that senior army personnel and other security agencies would be included in the planned task force and that all the security agencies will ensure adequate monitoring of the country’s oil pipelines. That was where the story ended. Crude oil thieves are still having a field day in the Niger Delta.


On many occasions, oil companies in the country shut in production for weeks due to pipelines damaged by oil thieves. The menace had become a major deterrent to exploring for new fields in the country. Last year, Shell said sabotage and crude oil theft was the cause of 11,806 barrels spilled from SPDC facilities in 118 incidents. “This is a serious attack on the state – the people, the economy, and the environment. Since, we calculate crude theft quantities based on volumes produced from flow stations and what is received at terminals, it is true that additional oil is stolen between wellheads and flow stations,” said a top official of SPDC last year.


The latest step to be taken by the Jonathan administration to curb oil theft was the decision to contract out the protection of the country’s vast coastline to ex-militant leaders. They are expected to use their experience to monitor and prevent crude oil theft. The arrangement took off briefly but suddenly ran into stormy waters. There are speculations that the contract had since been revoked.


Foreigners, mainly from Asia and Eastern Europe are the major buyers of stolen Nigeria crude oil. Such vessels are often arrested in Nigeria waters for buying stolen crude. Late last year, a ship loaded with 1.3 million barrels of stolen crude oil was arrested and destroyed by the JTF in the Niger Delta. The stolen crude oil was siphoned from a Manifold belonging to the SPDC in Abonnema, Rivers State.


Following the consistent failure of previous steps taken to address the menace, there are fears that the theft of Nigerian crude oil will continue for many more years to come. Powerful and highly placed Nigerians are speculated to be behind the nefarious business. Security agents are also alleged to have compromised because of the huge amount of money passed down to them by the oil thieves. The government on its part has displayed more of words than action.


Tags: Nigeria, Featured, Business, Minister of Petroleum, Dizeani Allison Madueke

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