Oil Theft Fueled by Insufficient Penalty, Others, Says FG

Timipre Sylva

The federal government has agreed that Nigeria lacked effective penalties to limit the stealing of her crude oil when applied.

It also said the other reasons why oil theft has continued to thrive in the country were because of active market for sale of the product, weak measurement mechanism and non-inclusion of host communities in containment strategies that exist.

The Minister of State for Petroleum Resources, Mr. Timipre Sylva, said this recently when he hosted a press briefing in Abuja.
The minister explained that the government has realised why oil theft has lingered and was working out effective strategies to limit the practice.

In his remarks at the briefing, Sylva said the government plans, “to address security situations around oil and gas installation, specifically to curtail theft of petroleum product and crude oil.”
According to him, theft of crude oil is currently being contained with legislation, security, surveillance, community engagement and diplomacy; which have not helped to curtail the practice.

He noted that the reasons why crude oil theft lingers included, “an active market for stolen crude and products, weak measurement and surveillance mechanism, weak and inadequate sanctions, low cost and high incentive for theft, lack of infrastructural development and lack of community inclusion and engagement.”

On what would be done to get this to stop, the minister said the government would include, “technology for pro-active leak detection, community participation in the oil and gas assets, engage PTI (Petroleum Technology Institute) in the training of unemployed youths in the region, encouraging modular refineries, continuous sensitisation of the host communities,” in its strategies.

He also noted that other recommendations such as the revamping of security architecture, increase of products supply to underserved areas, development of social infrastructure for the region, creation of incentives for the host communities to participate in security of oil assets, as well as increase in community stake-holding would be adopted.
The government, he added would also design and enforce stiffer legislations as well as mobilise the global community – traders; refiners; regulators, international groups, in its strategy against oil theft.

Similarly, Sylva explained that in its implementation of the Nigerian Gas Flare Commercialisation Programme (NGFCP), the government would aim to reduce Nigeria’s greenhouse gas emissions by 13 million tonnes per year and subsequently earn between $400 and 500 million worth of carbon credit.

This he stated was consistent with the country’s commitments to the reduction of greenhouse gases under the Paris Climate Change Agreement.
He further said: “On the gas export market, part of our strategic aspiration for gas is to strengthen our footprint in high value gas export through LNG and aim to secure about 10 per cent of global market share of traded LNG.”

According to a recent policy brief titled “stemming the increasing cost of oil theft to Nigeria” from the Nigeria Extractive Industries Transparency Initiative (NEITI), crude oil and refined product worth $41.9 billion were stolen from Nigeria in the last 10 years.

The NEITI had explained that the country lost $38.5 billion on crude theft alone, $1.56 billion on domestic crude and another $1.8 billion on refined petroleum products between 2009 and 2018.

“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 had stated.