Game Up for Oil Thieves?

Peter Uzoho writes on the latest move by the Nigerian National Petroleum Company and other government agencies to send oil thieves packing and save the nation’s economy from further bleeding.

Worried by the huge volumes of oil lost to oil thieves in the Niger Delta and the adverse impact of those losses on the Nigerian economy, President Muhammadu Buhari last week deployed key members of his cabinet to tackle the menace without further delay to the save the economy. Specifically, the president deployed the Group Managing Director of the Nigerian National Petroleum Company (NNPC), Mallam Mele Kyari; the Minister of State for Petroleum Resources, Timipre Sylva, and the Chief of Defence Staff, Gen. Lucky Irabor, to Niger Delta to assess the rate of oil theft in that area.

The latest government’s move was no doubt driven by the public outrage led by high profile oil and gas experts and business leaders against the massive stealing of Nigeria’s crude oil with severe economic implication to the country.

BUSINESS LEADERS’ OUTRAGE

The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, had last Monday lamented the unprecedented rate of oil theft recorded in recent times and its debilitating effect on government revenue and accretion to reserves.

Emefiele’s comment came a day after THISDAY reported similar concerns expressed by the Co-founder and former Chief Executive Officer of Seplat Energy Plc, Mr. Austin Avuru, who called for a state of emergency in the Nigerian oil and gas sector.

He revealed that up to 80 per cent of oil pumped in the country, particularly in the East, is stolen, warning that by Christmas of 2025, TotalEnergies might be the only international oil company (IOC) operating in Nigeria.

Avuru spoke a few days after the Chairman of Heirs Holdings and United Bank for Africa (UBA) Plc, Mr. Tony Elumelu, also bemoaned the worsening state of the industry, stressing that about 95 per cent of oil production does not get to the terminal.

Elumelu, had declared that between January and September 2021, Nigeria lost about $4 billion to crude oil theft alone. 

“Theft in the Niger Delta is a national menace. We (Heirs) will produce crude oil and the thieves will steal like 50,000 barrels per day. 

“In my opinion, it is one of the most lethal threats to our country because there is so much money in the hands of people who don’t pay taxes and people you don’t regulate. The country is not safe,” Elumelu said.

Earlier, Aiteo Eastern Exploration and Production Company (AEEPCO), operators of the Nembe Creek Trunk Line (NCTL) pipeline, had threatened to exit the facility due to incessant vandalism, perennial sabotage and outright theft.

ALARMING LOSSES

According to reports, Nigeria lost billions of dollars to crude oil theft or about 10 per cent of its foreign reserves in 2021. 

Apart from revenue loss, the issue of oil theft is currently threatening not only the NNPC’s quest for energy security for the country, it is also having a debilitating effect on Nigeria’s revenue earnings.

The Nigeria Extractive Industries Transparency Initiative (NEITI) had disclosed in its 2019 report that Nigeria lost about $42 billion to crude theft, as well as domestic and refined petroleum products losses from 2009 and 2018. 

The report stated that the losses include about $38.5billion on crude theft, $1.6 billion on domestic crude, and another $1.8 billion on refined petroleum products. 

Similarly, the Nigeria Upstream Petrolatum Regulatory Commission (NUPRC) had stated in a report released on Thursday during a meeting on crude oil theft with the Oil Producers Trade Section and the Independent Petroleum Producers Group, that between January 2021 and February 2022, Nigeria lost a whopping sum of $3.2 billion to crude oil theft.

The amount when converted by the official N416.25 to a dollar exchange rate translates to about N1.36 trillion.

NUPRC in the report revealed that oil theft rose significantly between 2021 and 2022, with over 90 per cent of total crude produced at the Bonny Terminal stolen in January 2022.

The commission maintained that based on its findings, average monthly value loss for the period was about $233.99 million, while the average daily value loss for the period is about $7.72 million.

The report indicated that losses were recorded mainly from Bonny Terminal Network, Forcados Terminal Network (and) Brass Terminal Network.

The development has no doubt become a major cause for concern to the federal government as the huge losses could have a devastating impact on the economy if not tackled head on.

The unfortunate incidence of crude oil theft and attendant losses have plunged Nigeria into not being able to meet its quota by the Organisation of Petroleum Exporting Countries (OPEC) for the past few years.

Data from OPEC showed that Nigeria was only able to produce crude oil averaging 1.417 million barrels per day in February 2022. 

When analysed, this figure is about 463, 000 barrels per day lower than the 1.88 million barrels per day approved by the federal government in the 2022 budget.

Although, crude oil price is currently trading above $100 per barrel, driven by the supply shortage induced by the Russia-Ukraine war, the losses being suffered from oil theft is making it difficult for Nigeria to take advantage of the surge in global crude oil price.

NNPC CONFRONTS MENACE 

Following the president’s order to tackle oil theft and save the nation from further bleeding, Kyari, alongside his team, stormed the forests and creeks in Rivers and Bayelsa States to get first-hand information on cases of oil bunkering and illegal refineries.

Kyari conducted an on-the-spot assessment on the losses being suffered by the country through oil theft.

The tour of the Niger Delta creeks was part of a holistic strategy to deepen oil production in the country and effectively end illegal oil mining and associated threats in the sector. 

Some if the factors that aid crude oil theft include inadequate security, poor community engagement, economic challenges, poor surveillance, stakeholder compromises and exposed facilities.

Given this scenario, the team, which was joined by the Operation Delta Safe Joint Task Force went into the forest to see many sites where illegal refineries were being done.

Without much ado, the security forces began shutting down many sites based on the presidential directive. 

The drive to end losses in the sector is informed by the government’s drive to ramp up production and boost foreign earnings for the country especially now that the Russian-Ukraine war has exposed the sector to high level of volatility.

The government has been targeting to raise Nigeria’s oil reserve to 40 billion barrels and daily oil production to 3 million barrels per day.

However, this aspiration has been been proving difficult to achieve, largely due to the massive losses being recorded on a daily basis to oil theft.

It was in a bid to arrest the losses besetting the country that Kyari designed new operational strategy involving multi-sectoral agencies, to play critical role. 

The team stepped into the thick forest of Ibaa in Emeoha Local Government, where a serious message was sent to oil thieves that their days in the illegal trade were numbered.

The team gathered at the site that Nigeria loses about 1,500 barrels per day at Ibaa alone and that in Rivers state alone, many of such illegal refineries exist, costing the country huge revenue earnings.

Urging oil thieves to stop their illegal activities, Kyari warned that the full wrath of the law will be brought against them if they continue.

He pointed out the fact that the country cannot continue to suffer such huge losses amid needs to carry out infrastructural development by this administration.

From Ibaa, Kyari and his team moved to the 146 Battalion, Finima, Bonny Island, where he urged the men of the Nigerian Naval force to step up their game to quickly bring oil theft to an end.

The GMD also charged the task force to ensure that there was zero tolerance for illegal activities across the oil and gas sector.

Also, at the Gogokiri site, which is said to be the biggest bunkering in Bayelsa, the Kyari-led team did not only shut down the facility, it ensured that the connection point and storage facility at Igbalele in Bayelsa State, was destroyed and saved huge volumes of oil for the country.

The NNPC boss also ensured the destruction of Okarki, where oil thieves had laid pipeline and tapped oil from a community in Abua community bordering Rivers State. 

In another community in Rivers State called Ogoda, it was reported that brass pipeline was blasted to enable the vandals syphon crude but this had been quickly replaced by the government to ramp up production.

Despite reports gathered about the activities of oil thieves, Kyari stated that the bid to put an end to their activities will be relentless until the country gets rid of them.

He expressed optimism that the strategy being adopted will finally arrest the situation.

Underscoring the work of the security team, he commended them in the effort to stop those denying the country the much-needed resources.