This oil theft story is no longer interesting

FOR several decades, the quantity of crude oil produced in Nigeria has remained an issue of speculation. The figures often bandied hardly represented the amount of oil drilled in a day. Then came the quantity of oil exported from the country’s terminals which followed a similar narration. Now, the issue has been the amount of crude oil stole from the wells and terminals. The figures thrown around by various official agencies in the industry are as crude as the oil they produce and sell. No one seems to have the real figures; but the fact remains that a large volume of the liquid gold disappears from the official records of those who should keep them. The oil and gas industry is one of country’s most opaque sectors, operated like the coven of secret cults, by cultists who have so far defied unravelling. 

Unfortunately, the Ministry of Petroleum Resources whose duty is to oversee activities in the sector is worse off, always bandying, at every other event, figures that are humongous and barely reasonable. The ministry has been chasing shadows since its creation and is often overwhelmed by the Nigerian National Petroleum Corporation (NNPC) which was last year unbundled by the Petroleum Industry Act (PIA 2021) and made an operator in the public-private space. 

The dithering and often moping facade of the ministry shows the level of disorganisation and rot in the farm of the goose that lays the country’s golden egg. The oil and gas sector might not contribute an overwhelming quota to the country’s gross domestic product (GDP), but it is surely the highest foreign exchange earner. At a point, it was the alpha sustainer of the Nigerian economy and the country was seen as running a mono-cultural economy as a result. 

Even today, the strength of the oil and gas industry determines the health of the country’s economy. That is why the terrible malaise in the sector occasioned by the unbecoming activities and lack of diligent and honest supervision in the sector has set the economy on a tailspin, with galloping inflation and unprecedented sagging of the exchange rate of the local currency. 

Although the issue of oil theft is not new in the country’s crude oil operations, it has now reached a pandemic level in recent times. The Organisation for the Oil Exporting Countries (OPEC) officially allowed daily output for Nigeria is 2.2 million barrels of petroleum oil a day (mbpd), made up of 1.8mbpd for crude oil and 400,000mbpd for condensate; but Nigeria’s actual production levels for this year has been oscillating between 1.18mbpd (September) and 1.39mbpd (January). Production levels have been consistently dropping. February was 1.25mbpd, March was 1.24mbpd, April was 1.22mbpd, and May was 1.02mbpd. It moved up a bit to 1.16mbpd in June and dropped again to 1.08mbpd in July. The September figure which plummeted to an average 937,766mbpd was 3.56 per cent lower than the August output which was 972,394mbpd. 

These output levels posted some of the worst figures in recent history in the country’s crude oil production. Even when the petroleum ministry has not been able to say what the actual production levels are, it tries at every point to give the difference between the declared figures and the OPEC daily production quota as the volume of oil stolen by local and international oil bandits. This is unbecoming and absolutely nauseating. That is why officials of both the ministry and the NNPC are mouthing differing figures as the volume stolen. 

Curiously, the ministry does not seem to know the difference between volume through oil theft and volume lost to production exigencies, as in the case of the down time experienced on the Forcados line, a very critical line which was off production for a considerable period, through shut-in. That line alone has the capacity to shore up production by between 350,000 and 400,000 bpd, which is capable of taking the production level to about 1.5mbpd; something close to the OPEC daily quota crude oil, excluding condensate. Industry regulators and observers put actual theft figures at between 80,000bpd and 100,000pbd, with the difference due to shut-ins and other operational deficiencies.

As earlier indicated, the story of oil theft is not new; it is the dimension that seems to be. The level of theft and the level of connivance by industry operators as well as the complacent nature of the authorities are mind boggling. Nigeria’s crude oil is being stolen, some are exported and proceeds are laundered through financial centres. Those who are in the business use the proceeds to buy assets within and outside the country. 

The cartel is huge and intimidating: Politicians are involved, military officers are involved, militants are involved, oil industry operators are involved, oil traders are involved, even the community people are also involved in this whole thing. Then we also have the organised criminal groups that rule the mangrove landscape. This, however, goes beyond stealing of oil; the booming cartel gives impetus to criminal activities. It supports transnational and organised crime. A great deal of the arms that come into this country is through these dubious mercantilists. They bring arms in exchange for oil. Some of these merchants are also part of those who support the criminal activity and are major enablers of the insecurity in the country, as it diverts attention from their nefarious activities.  

The damage all these have done to the country’s economy is huge. The economy is down and the country is going cap in hand all over the globe looking for loans, the load of which is already overbearing. Instead of the relevant authorities waking up to their responsibilities, they are busy preaching the sermon of oil theft from every pulpit, with numbers that have now thrown up data conflict. They are talking about discoveries of illegal pipelines as if it is something that can be done through easy constructs by the locals, particularly when the volumes involved is considered.

Anyone with a little knowledge of pipelines, whether oil or water, knows the danger involved in tampering with those pushed by high pressure. Bursting high pressure oil pipelines is a deadly affair. Here, we are talking about people tapping not just service and feeder lines but trunk lines transporting crude and finished products to export terminals. We are talking about attaching pipes and siphoning products to private terminals, to barges, and then to tankers in the sea. These activities happen in communities where people live or pass through creeks, with vigilante groups and an assortment of security personnel whose primary duty is to check these anomalies; but whose complacency and connivance has led to the present woes. Barges, for instance, are very slow moving vessels which can be easily spotted and readily arrested.

It would be difficult to convince any rational being that these activities have been going on without anyone knowing, especially people in high places, security agencies, and even the government. Suddenly, a Mungo-Park in the mould of Tompolo is discovering illegal pipelines that have lived with the people for years. Again, it shows our priority as a people and as a country.

It is obvious that Nigeria offers a very strong enabling environment for this scale of affliction because of our long association and relationship with corruption and greed. The discoveries made so far may just be a tip of the ice-berg and might also be the ones owned and operated either by those who have fallen out of favour with the cartel, or likely to expose the nefarious business the more. The authorities may just have been jolted by the fallouts of the high level of insecurity in the country which has landed a fatal blow on other sectors and opened the underbelly of the economy that had over the years been hidden by oil proceeds. 

It is a shame for Nigeria to be discussing pipeline tapping and crude oil theft of this magnitude at this age of digital and surveillance technology. And this is perhaps the most critical sector which the country is a leader in the continent. Saudi Arabia has a larger oil production portfolio than Nigeria, yet the kind of sordid stories being told here by the ministry and NNPC are never heard from there where Saudi Aramco Corporation runs the business on behalf of the state.   

Oil business is a good business that has profited endowed countries. The wealth acquired by Saudi Arabia from proceeds of oil and the level of infrastructure attainment is obvious and monumental. Same applies to Brazil where PetroBras runs the business and Malaysia where Petronas does same for the state using latest technology to explore, produce and deliver products. In other oil producing countries in OPEC, where Nigeria also belongs, the level of investment, social infrastructure and human development index shows that their oil is being put to good use. In Nigeria, instead of visible corporate development, what is obvious are high net worth individuals who cannot honestly explain the source of their wealth. It is high time economic and financial crimes’ agencies began the interrogation of these calibre of persons as a starting point to curbing the impunity of those who are converting the commonwealth of this country into personal acquisitions.

Of all the OPEC countries, Nigeria seems to be the only one that faces massive problems of oil theft, oil production decline, fuel shortage and long queues at fuel service stations. Other than corruption and greed, Nigeria has no plausible reason not to deploy modern cutting-edge technology, which is readily available, to once and for all end this embarrassing issue of vandalism and oil theft. 

Those assigned responsibilities in this sector must been seen to be diligently discharging them or be made to face very stringent sanctions to serve as deterrent to others.  Government should desist from the unwholesome attitude of shying away from naming, shaming and prosecuting criminal elements that have turned the sector into their farmland. Operators in the sector must be made to answer questions about their stewardship, including those who are supposed to provide surveillance and carry out oversight functions. This story of oil theft and infrastructure vandalism is no longer interesting; a new and positive narrative is desirable.    

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