The menace of oil theft has gone on for too long without reasonable response
When last year, the EOS Risk Group warned the Nigerian authorities about “the resurgence of ‘petro-piracy’, involving the hijacking of tankers for oil theft”, there was no sign that anybody paid attention. But the Minister of Transportation, Mr. Rotimi Amaechi, recently described perpetrators of illegal oil bunkering in Nigeria as the seventh largest oil producers in Africa because of the volume of oil they steal from the country. Shortly after Amaechi’s apt summation, the National Economic Council (NEC) disclosed that the nation lost about 22 million barrels of crude oil production to theft between January and June 2019 according to Edo State Governor Godwin Obaseki and Chairman of the NEC Ad-hoc committee on crude oil theft.
While Nigerians now have an idea of the quantum of their oil being lost to some thieves, the pertinent question remains: Who are these people and what are the authorities doing to contain their activities? From the NEC’s figures, it is estimated that the country lost approximately 121,546 barrels of oil in every of the 181 days within the six months. In his explanation of the depth of the crisis, Obaseki even raised the alarm that with the current trend, the figure could double by the end of the year.
The international community has for several years been paying attention to the monumental loss of Nigeria’s prime asset. But it would appear that the local authorities seem to have given up on any serious attempts to rein in the criminal gangs. Yet there can be no solution until Nigerians themselves resolve to fight the menace. In 2016, the Nigeria Extractive Industries Transparency Initiative (NEITI) disclosed that the nation lost over 136 million barrels of crude oil estimated at $10.9 billion through pilfering and sabotage between 2009 and 2011. This was one of the findings in the audit report of operations in Nigeria’s oil and gas industry, which covered the period under review.
More disturbing is that the recent disclosures by both Amaechi and Obaseki coincided with that of the Nigeria National Petroleum Corporation (NNPC) in its June 2019 Monthly Financial and Operations Report (MFOR), which stated that it recorded a staggering 77 per cent rise in cases of oil pipeline vandalism across its network of pipeline infrastructure. According to the report, 106 pipeline points were breached, representing an alarming increase from the 60 points vandalised in May 2019. The corporation in fact explained that products theft and vandalism have continued to make it impossible for it to maximise value addition. It indicated that between June 2018 and June 2019, it recorded a total of 2,038 vandalised points on its oil lines, from where theft is perhaps also carried out.
Exploring the political economy of oil theft in Nigeria, its causes, dimensions and efforts to curb the practice which had largely been unsuccessful, the NNRC report reviewed previous discussions on oil theft and some of the key recommendations. The NNRC explained that there seems to be an increased cooperation for the menace because of little or no deterrence from enforcement agencies. Several investigations, according to the NNRC, have high-lighted the complicity between state actors, oil companies and militant elements in all categories of oil theft. For example, the report explained that over lifting is another form of oil theft in Nigeria and it refers to the underestimating of the total number of barrels received at any point of the extraction process, but typically after it has been refined in order to sell the remaining on the black market.
As we have consistently argued on this page, while oil theft poses great danger to our economy and our security, it is also evident that the problem persists because there is some form of official complicity in what has become an organised crime. Aside the loss of enormous revenues, the security implications of these criminal activities are better imagined against the background that a huge chunk of the proceeds are used to buy arms. It is therefore time that the authorities took serious interest in unmasking who these criminals are, checkmating them and bringing them to book.
While oil theft poses great danger to our economy and our security, it is also evident that the problem persists because there is some form of official complicity