Crude Oil Theft: Whither Nigeria?
Anthony Osas Okungbowa, Esq.
Crude oil theft has been part of our history of oil exploration for a very long time. But in recent times, this issue has assumed dangerous dimensions with the damage caused to the National Economy and its impact on sub-nationals in Nigeria.
The print and electronic media have been awash lately with reports of discoveries of pipeline vandalism and crude oil theft in the Niger Delta, resulting in multi-million naira losses to Nigeria daily. The impact of this malaise has been so monumental that Nigeria is on the brink of the cliffs economically. The revelations have been astonishing and everyone is concerned.
In its Saturday, 8th October 2022 edition, ThisDAY newspaper carried as one of its headlines, the report that lawmakers had charged President Muhammadu Buhari to fight oil thieves, whom they said had declared a war on Nigeria. The same newspaper also reported that a former warlord, Tompolo, who had recently been engaged by the Nigerian Government to help stem the tide of crude oil theft in the Niger Delta had exposed security officials as being party to and protagonists of this criminality. The report further highlighted that “sixteen hidden tapping points on the trans-forcados/Ramos pipeline had been uncovered”.
Many more illegal pipeline tap points have since been discovered and the discoveries are likely to continue in the coming days, weeks and months. There was even a report recently of the destruction by military men of a ship which was used to convey stolen crude in an apparent effort to conceal those behind the theft. Allegations and insinuations have been rife to the effect that top functionaries of Government and prominent people in the society including the clergy are deeply involved in this illegal business. Hopefully, more facts will emerge about this in the coming days.
Crude oil theft has gone on in Nigeria for years. Unfortunately, not much has been done to stem its tide. For a country that depends almost entirely on this economic good for its sustenance, this apathy is difficult to understand.
Nigeria currently faces an existential threat. Crude oil is the mainstay of the economy. Experts say that Nigeria losses about 600,000 barrels of crude oil per day to oil thieves. The Nigerian National Petroleum Corporation (NNPC) however admits losses of 470,000 barrels per day. While this discrepancy exists, what is, however certain is that much of our crude oil is stolen on a daily basis.
From NNPC estimates, about 700million dollar worth of crude oil is lost to oil theft monthly. Between January and July 2022, Nigeria lost 10 billion Dollars to this crime and this is equivalent to 4.3trillion Naira (at N430 official exchange rate to the dollar) which is more than fifty percent of Nigeria’s Foreign Reserves. The figure is also more than double Nigeria’s total revenue between January and April 2022. It is on record that during this period, Nigeria’s total revenue was unable to service its debt. Nigeria had to borrow for everything, including payment of salaries.
Data obtained from OPEC show that the average production quota for Nigeria was 1.73million bpd during the first seven (7) months of the year. In that period, crude oil production fell to 1.1 million bpd(July, 2022) from 1.4million bpd in January (a shortfall of about 270,000bpd). Incidentally, July recorded the highest price per barrel of 117.25 Dollars in all of 2022 so far. In January, crude oil sold for an average of 93.95dollars per barrel (OPEC basket price) and in March, price jumped to 113 dollars. While Nigeria’s production quota increased to 1.71million bpd, production actually dropped to 1.34million bpd- a shortfall of 378,000 dollars resulting in a loss of 42.8 million revenue daily. In April, average price dropped to 105 dollars per barrel, however, OPEC increased Nigeria’s production quota to 1.73mbpd. Unfortunately, we could only do
1.32mbpd. In May, output further dropped to 1.23mbpd compared to an average of 1.75mbp allowed by OPEC which represents a shortfall of 520,000mbpd and a loss of 59m dollars loss daily. In July, and for the 7th consecutive month, production also dropped to 1.18mbpd as against OPEC’s 1.79mbpd quota. Production shortfall was 610,000 barrels pd (66.86million dollars loss in revenue every day). The value of oil stolen from Nigeria is said to be equivalent to the budget of Osun, Kwara and Ekiti States.
As expected, this development has occasioned severe damage to the economy and its devastating effects include, reduced exports, and the shutdown of production by some companies, factors which have virtually crippled the country’s fiscal stability.
All this is happening in the midst of an apparent oil boom, the first since 2015, with crude oil selling at an average of 112 dollars per barrel for the first half of 2022. The highest ever recorded was 147.27 Dollars per barrel in July, 2008.
Curiously, in addition to the crushing effect of oil theft, Nigeria continues to bear the huge burden of fuel subsidy fraud. The Federal Government says it will cost Nigeria N6.9 trillion to fund subsidy in 2023. The Economist in the latest edition of its monthly breakfast meetings at the Lagos Business School reported that between 2015 to 2020, 5.5 billion dollars was spent on subsidy. But in 2021 alone, Nigeria spent a whooping sum of 3.8 billion dollars on subsidy and 6.2 billion dollars in just the first quarter of 2022. The projection for subsidy in 2022 is 15.7 billion dollars which is almost double the budget of all the 36 states of the federation in 2021 which was an equivalent of 9.8 billion dollars.
From all these, many questions readily come to mind. Who are those responsible for this “attempted homicide” on Nigeria? What action is being taken to stem the tide? Are the revelations which we now see new? What was done in respect of similar revelations in the past? Did we learn anything from our previous experiences and what action(s) were taken to prevent a recurrence? Many many questions. Not enough answers.
Crude oil was first discovered in commercial quantity in Nigeria in 1956. Previously, there had been 50 years of unsuccessful attempts at oil exploration in the country. The discovery on Sunday, 15th January, 1956 in Oloibiri, a small town in Bayelsa State ended that failure. The first Nigerian oil came onstream in 1958 with 5,100bpd.
Crude oil theft started long before today- around the late 1970s and early 80s when the country was under military rule. The story is that members of the top military brass in Nigeria started stealing the nation’s crude oil and allowing others to steal it around this period. The theft has grown exponentially since then to what it is now- criminality with sophistication.
According to Mr. Mele Kyari, the Group Managing Director (GMD) of NNPC, the illegal pipeline taps are so sophisticated now, that in some cases, they run for 3-4 kilometers and would have involved cranes, and at least 40 workers to build. In point of fact, according to the NNPC boss, in one illegal line alone which measures less than 200km, there were found not less than 295 illegal connections. He has also revealed that the rate of theft forced the shutdown of two production fields.
As to who are those responsible for oil theft in Nigeria, Kyari provides a measured answer. Speaking during the ministerial briefing by the Presidential Communications team at the State House, Abuja in August, 2022, Kyari fingered “high placed” Nigerians, (including the religious), community leaders and Government officials as being fully involved in the theft. No names were mentioned He also disclosed that stolen products were warehoused in churches and mosques with the knowledge of all members of the society where the incidents occurred, including the clerics. He revealed that at least 122 persons involved in the various activities had been arrested from April to August this year. Nigerians await the publication of the list of the so-called “high-placed” Nigerians and Government officials involved and how they are dealt with. Unless this is done, crude oil theft will not stop.
I am confident that the present administration at the federal level has the capacity to stem the tide of crude oil theft or at least significantly reduce it before it exits office In spite of avoidable hesitation initially, government appears to have picked up the gauntlet. The first right step has been taken in intensifying the pressure on the oil thieves. But beyond this, the revelations now emerging from the Niger Delta of possible involvement of the high and mighty must be taken seriously and handled in a manner that is fair, transparent and acceptable to all. There should be no sacred cows. Everyone involved, no matter how highly placed, must be brought to book, according to extant laws and regulations in force.
Diversification of the economy has long been touted as the much-needed answer to our national economic question. But as long as crude oil remains a source of national income, and continues to be highly valued in the international market, its exploration will continue to be a veritable source of national income. It is therefore unacceptable for any person to appropriate its benefits for private use.
It is a national imperative that in dealing with this rather entrenched criminality, Nigeria must up the game in the nature and quality of sanction to underscore the importance and devastating nature of crude oil theft. It is particularly disheartening that inspite of the severity of the crime and its impact on our national economy, the prescribed penalty for crude oil theft remains annoyingly low. In his article titled “the mystery of Nigeria Crude Oil Theft, published online on September 19, 2022, Dakuku Peterside, a former Governorship candidate in Rivers State and former MD of NIMASA opined “that crude oil theft is a crime against the State and must be treated as such. The Government must go after the perpetrators of this dastardly act and punish them as a deterrent to others. Economic sabotage is a severe crime against the State and is very reprehensible”. Nothing can be truer.
One reason why criminals are punished in society is to deter them and others from crimes and criminality. According to Wikipedia, in relation to criminal offenses, deterrence is the idea or theory that the threat of punishment will deter people from committing crimes and reduce the probability and/or level of offending in the society. It is one of the five objectives of criminal punishment. Deterrence has spiral effects on people and crimes. If sanctions are accorded infractions, not only will the guilty be punished and society is able to feel a sense of closure, the society would also have conveyed a strong message of disapproval for criminality and would-be criminals would be consequently dissuaded.
One major defect of our criminal justice system which has served as a veritable incentive to crude oil theft in Nigeria over the years is the failure of sanctions or insufficiency of it. According to the Oxford Dictionary, “sanction” means a strong action taken in order to make people obey a law or rule or a punishment given when they do not obey. The Blacks’ Law Dictionary defines “sanction” as “a penalty or punishment provided as a means of enforcing obedience to a law”. In maintaining societal equilibrium and ensuring obedience to laws and respect for order, sanction is, therefore, an imperative.
Even in smaller units of authority like the home/family or community, the need for sanction when breaches occur cannot be overemphasized. In the absence of sanction, society loses its capacity to self-regulate and criminal-minded people readily exploit this lapse and make life unbearable for decent members of the society.
Unfortunately, the regime of sanction/punishment available against oil theft in Nigeria and its application have left much to be desired. For instance, it was reported and published in the online media on January 20, 2022 that some crude oil thieves and their vessel caught with 200 million naira worth of stolen crude oil had, through the instrumentality of a plea bargain, been allowed to walk virtually free with a fine of N2,000. In a judgment delivered on 24th November, 2021, the trial Judge noted that the plea bargain filed by the prosecutor (an officer in the Federal Ministry of Justice) was “dirty”, “sordid” and “unpleasant”. The Judge also opined that he was seeing for the first time where a charge was amended to give the defendant “a soft landing”.
It is a shame that the plunder of our commonwealth has gone on for so long without perpetrators being punished adequately for their crimes. Evidently, the protagonists of this serious economic crime include the high and mighty in the society who have appropriated for themselves and their generations the right to use and gratify themselves with our commonwealth. In any society where this happens – where a privileged few have a sense of entitlement to the commonwealth and flagrantly, shamelessly, fearlessly and unapologetically display it as happens in Nigeria, genuine growth and development are impossible.
It is difficult to imagine that many of these illegal activities happen in communities in the Niger Delta to the knowledge, approval and in some cases, connivance of ordinary people. It is a shame and an embarrassment to us as a people.
It is therefore suggested that a tougher regime of sanctions be introduced. This writer is of the firm view that the death penalty or life imprisonment should be introduced for crude oil theft and enforced no matter whose ox is gored. Oil is the source of life for Nigeria. Theft of it in any guise must attract the highest possible penalty.
It is also suggested that the Federal Government should declare a national emergency on crude oil theft and deploy massive resources to identify, follow up, and prosecute offenders. Government should make a show of the criminals and create a National Register of Shame to name & shame those involved directly or indirectly in the crime.
The time to invest in and introduce technology in the management of our oil resources is now. It is unacceptable that after many years of crude oil exploitation in Nigeria, we still cannot account for our oil. In some other countries, every drop of oil exploited is completely accounted for. Also, as a matter of national emergency, a Special Court should be constituted to try offences of crude oil theft. Some of our best legal minds should sit on those panels. Happily, Nigeria is not in short supply of such legal minds. Also, trials of such cases should be open and on national television. It is also suggested that the decisions of Courts in these cases should be highly publicized, simplified, and included as a module in the teaching of history where children, even those yet unborn, can study and learn about how some people stole their commonwealth but got sanctioned for doing so.
It is important that this matter is not treated with levity by the federal government. Similarly, Nigerians must not treat this issue as a federal government issue. Oil is our collective source of sustenance as a people and all hands must, therefore, be on deck to deal with the current challenges which the enemies of Nigeria have presented against our progress and prosperity as a nation. This issue must not be politicized. Nigerians must demonstrate high patriotism of purpose in this matter and join hands with the Federal Government seeing to it that this issue is addressed and Nigeria regains its lost glory as a powerhouse in crude oil production.
However, the Federal Government must step up its efforts, intensify its grassroots approach to dealing with this issue and most importantly, be ready to disclose those behind this long-standing “pain in the neck” for Nigeria. The cooperation and support of Nigerians are most important and needed to help the Federal Government deal with the menacing threats that crude oil poses to our commonwealth and collective existence as a Nation.
Okungbowa Esq. is a Doctoral student of Constitutional Law and the Head of Service, Edo State