NEITI: Nigeria Lost $42bn Oil, Refined Products to Thieves

Dr. Orji Ogbonanya Orji

Chineme Okafor in Abuja

The Nigeria Extractive Industries Transparency Initiative (NEITI) yesterday put the value of volumes of crude oil and refined products stolen from Nigeria in the last 10 years at $41.9 billion.

NEITI said the theft occurred between 2009 and 2018 with the value of stolen crude put at $38.5 billion while that of refined petroleum products amounted to $1.8 billion.

It also noted that another $1.56 billion worth of domestic crude oil allocation usually to the Nigerian National Petroleum Corporation (NNPC) was stolen from the country in the period under consideration.

A statement from NEITI’s Director of Communications and Advocacy, Dr. Orji Ogbonnaya Orji, explained that the information was contained in a policy brief titled, ‘Stemming the Increasing Cost of Oil Theft to Nigeria’ which the natural resources transparency agency published.

To stem the tide of such heavy hydrocarbon theft, the NEITI in the statement urged the government to embrace oil fingerprinting technology, comprehensive metering infrastructure of all facilities, and other creative strategies to combat the menace which it added was growing.
It further expressed concerns that in the face of current dwindling revenues, paying priority attention to curb oil theft in the country’s oil and gas industry has become both necessary and urgent to expand the nation’s revenue generation.

According to the agency, Nigeria loses an average of $11 million daily which translated to $349 million in a month and about $4.2 billion annually to crude and product losses arising from stealing, process lapses and pipeline vandalism.

The statement quoted the report to have said that: “While figures from government put the loss at between 150,000 to 250,000bpd (barrels per day), data from private studies estimate the figure to be between 200,000 to 400,000bpd.

“This implies that Nigeria may be losing up to a fifth of its daily crude oil production to oil thieves and pipeline vandals.”
On comparative analysis of the size and implication of the losses to the country’s current dwindling revenue profile, the NEITI said it wanted the government to curb oil theft to reduce budget deficits and external borrowing, adding that the value of crude oil and allied products so far lost were equal to the size of Nigeria’s entire foreign reserves.

“Stemming this hemorrhage and leakages should be an urgent priority for Nigeria at a time of dwindling revenues and increasing needs,” it stated.
It added that what the country lost in 20 months in fiscal terms was “enough to finance the proposed budget deficit for 2020; in 15 months to cover total proposed borrowing or increase capital budget by 100 per cent and in five months to cover pensions, gratuities and retirees’ benefits for 2020.”

“In terms of volume, 138,000 barrels of crude oil was lost every day for the past 10 years, representing seven per cent of average production of two million barrels per day.

“Nigeria lost more than 505 million barrels of crude oil and 4.2 billion litres of petroleum products between 2009 to 2018. What is stolen, spilled or shut-in represents lost revenue, which ultimately translates to services that government cannot provide for citizens already in dire need of critical public goods,” it said.

NEITI identified other effects of oil theft to the nation to include pipeline vandalism, criminal sabotage, illegal refineries in oil producing communities, which threatens the safety and livelihoods of the environment where these illegal refineries operate.

On the environment, it said the impact and implication of oil spills were monumental, including degrading the environment and negatively affecting the livelihoods of host communities.

Examining the reasons for increase in crude and product theft, NEITI stated that they included inadequate legal sanctions to serve as deterrent, stringent laws, deployment of technology designed to swiftly detect, localise and cut off flows to specific pipelines as soon as leakages occur.
It thus recommended operational, security, legal and global governance instruments to combat crude theft.

“Among them is efficient response and containment time in checking oil theft and pipeline vandalism, urgent review of the status of various security organisations currently involved in crude pipeline and product surveillance,” NEITI noted.

Given the increasing rate of stealing and sophistication of the illicit trade, NEITI called for forensic investigation into the activities of syndicates operating in the oil and gas industry, adding that, “curiously, the volume of losses does not particularly reflect the rate of pipeline breaks for the corresponding years, suggesting either that the criminals are becoming more efficient, or crude theft is occurring increasingly elsewhere. This may require further probing.”

It also suggested that the government reconstitute a special security task team for Nigeria’s oil and gas assets, with a specific mandate to minimise crude theft and vandalism.

According to it: “This task team should include the oil companies and technical expertise in relevant fields. Command and control responsibility should be manned by professional intelligence personnel.

“The key mode of operation should be based on seamless communication to improve response time. The command and control should have direct real time access to information produced by the leak detection and localisation systems installed and operated by the oil companies.”