WHEN Nigeria discovered crude oil in the late 50s, it began to abandon agriculture. With time, cocoa and groundnut and other commodities stopped getting due attention. Oil money was good; so good that the nation’s problem was not money but how to spend it.
As of today, crude oil accounts for more than 90 per cent of Nigeria’s foreign exchange earnings. Unfortunately, so much is lost in this all-important sector because we have been unable to get hold of the substance. It is an opaque sector where the more you look, the less you see. There are conflicting figures of the volume stolen of oil. Daily production figures are doubtful, and the nation is unable to meet the quota assigned it by the Organisation of the Petroleum Exporting Countries (OPEC).
With the energy crisis induced by Russia’s invasion of Ukraine, other countries’ equivalent of the Nigerian National Petroleum Company Limited (NNPC), such as Saudi Arabia’s Aramco, are making more money. But not the NNPC and, by extension, Nigeria.
Nigeria has lost its position as the oil producing leader on the African continent to Angola. This is not surprising because, despite its four refineries, it is unable to refine enough products for local consumption. Petrol and diesel are imported, and this keeps bleeding the economy.
Our nation unashamedly wears the badge of the only OPEC member country unable to service the oil needs of its domestic market. Yet by the admission of the NNPC, over N100 billion was spent in 2021 alone for the maintenance of the refineries. The implication of the importation includes huge cost on subsidy. The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said Nigeria spends over N18 billion daily on petrol subsidy, because the landing cost of a litre of petrol is over N400.
According to records by international oil producing companies, more than 400,000 barrels of oil is stolen daily. The Minister of State for Petroleum Resources, Chief Timipre Sylva, advertises the same figure. Sylva said Nigeria had fallen short of OPEC daily quota from 1.8 million barrels to 1.4 million barrels due to crude theft.
So terrible is the situation that Shell Petroleum Development Company (SPDC) is threatening to pull out its investments. It says the volume of oil it loses daily to oil theft is mind-boggling and feels the government is unserious about ending it.
Oil theft deals the nation so many deadly blows that it is gasping for breath.
The Managing Director of Shell, Osagie Okunbor, said crude oil theft has resulted in the shutdown of two of the company’s major pipelines with hundreds of thousands of barrels per day shut-in. He linked this to Nigeria’s inability to meet its OPEC oil production quota of 1.8 million barrels a day.
When oil theft is mentioned, the first thing that comes to the mind of many is the illegal oil refineries scattered all over the Niger Delta for which security agents are said to be complicit. But common-sense dictates that losing 400,000 barrels of crude oil daily goes beyond the operators of these refineries known as “kpo-fire”.
Security agents regularly destroy these illegal refineries and arrest the foot soldiers of the operators. Still, staggering figures of losses to oil theft keeps tumbling up, a clear indication that the right direction is not being looked at.
So bad is the situation that international oil companies (IOCs) are concentrating on deep water exploration. Local companies are taking up the marginal fields and it is doubtful they have the wherewithal to withstand the debilitating effects of oil theft.
Brent crude, Nigeria’s variant, according to Market Insider, an International Oil Spot Market platform, is $96+. This means the country daily loses $38.4 million and about $1.152billion in a month. With oil price sometimes oscillating to an average of $100 per barrel, the loss in a month could be as high as $1.2billion.
The menace of oil theft impacts negatively on national revenue available for monthly sharing by FAAC among the three tiers of Government and for debt servicing, as well as reinforced national deficit budgeting. It also adds to the energy poverty that has impacted greatly on national development and the well-being of the people. The billions of Naira in oil subsidy has not impacted the lives of the average Nigerians who continuously grapple with providing for themselves refined petroleum products – petrol and diesel – in order to carry out their daily activities.
The government needs to act to save the industry and save the economy. The state and local governments as well as the oil companies have critical roles to play and must be involved in a new national strategy to curb the menace.
We believe that a forensic audit of oil theft needs to be carried out. The security agencies, as well as the Economic and Financial Crimes Commission (EFCC), must uncover the faces of those behind this huge theft. It certainly cannot be the “kpo-fire” operators alone. The huge figures suggest something more sinister is happening. It is an indictment on those manning the maritime corridors that oil vessels dock in our waters and daily disappear with 400,000 barrels of crude oil. If this is not economic sabotage, what else should we call it?
Vessels have been arrested with stolen crude oil but once a show is made on television about the arrest, everything dies down. We believe strongly there is an international dimension to the theft and the collaborators must be exposed and shamed. This should not be difficult to do. Anyone found wanting should be made to face the law. Anything short of this will not help the quest to save the industry and save the economy.
Nigeria is supposed to have established a National Coast Guard to police the coasts; so, why have we not seen the impact of their presence in fighting this menace? We strongly doubt if the Federal Government’s engagement of ex-Niger Delta militant leader, Government Ekpemupolo, a.k.a. Tompolo, in a pipeline surveillance contract is the solution to the crude oil theft.
With the President as the Minister for Petroleum Resources, we wonder why there is a disturbing lack of hands-on initiatives from him to decisively deal with this matter. Does it mean he is not receiving security reports from the Directorate of State Services (DSS) and other security agencies on this relentless economic sabotage?
We should not overlook the national security implications of the pillaging of Nigeria’s strategic national asset – oil. There is therefore the urgent need for the National Security Adviser to lead the drive for an all-inclusive National Stakeholder Engagement Retreat to dissect this menace and agree on a national framework of action to curb this humongous economic sabotage, on a sustainable basis. This is more so, particularly as Nigeria has, once again, lost her position as Africa’s largest oil producer; both incidents occurring while a Nigerian was the Secretary-General of OPEC.
We assert strongly that oil theft needs to be stopped and the time is now. What we are doing now amounts to a crude fight against crude oil theft. We must be scientific in battling this and people must pay for sabotaging our nation. Clearly, Nigeria needs external help from not only the UN, but also from other countries with expertise in dealing with crude oil theft.
Rather than focus exclusively on the front end of crude oil theft, perhaps, working simultaneously from the back end of the sales points for stolen crude, Nigeria, working with OPEC and the Extractive Industries Transparency Initiative (EITI), should spearhead a global initiative to brand legitimate crude oil, and criminalise stolen crude in the international petroleum trade exchange ecosystem. This should be fashioned after the KIMBERELY PROCESS instituted by nations and major mining companies to debrand blood diamonds when that commodity became an international mining industry menace that traced its deep roots to war-torn nations at the time, including Sierra Leone, Liberia and The Congo.
To save our economy from the effects of oil theft, we believe this is the time to give concrete expression to the diversification of the economy. All we have been hearing for years are mere talks and no concrete step has been taken on diversifying the economy. We rely on nothing but oil, oil, oil and oil; and we are suffering for it. In this information age, there is so much money to be made outside the oil and gas sector and we must key into this.
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