‘Elite criminals’ stealing $14.6b worth of oil on yearly basis – Nexus News
As Nigerians raise concerns over heavy debt despite dwindling revenue occasioned largely by massive decrease in oil production capacity, experts in the oil and gas field have implored the federal government to adopt proactive and aggressive means to scrutinize oil theft.
There have been debating figures with respect to the level of crude oil theft in the country and the corresponding losses in monetary terms in recent times.
While some data from the Nigerian National Petroleum Company (NNPC) Limited revealed that Nigeria was losing about 250,000 barrels of crude oil per day to theft, estimating a total loss of about $1.5 billion, its Chief Executive Officer, Mele Kyari, speaking during the 49th session of the State House briefing at the Presidential Villa in Abuja was revealed to have said that the country loses 700,000 barrels of crude oil everyday to oil theft.
This is as the Minister of State for Petroleum Resources, Dr Timipre Sylva, said that the country loses 400,000 barrels of crude daily as a result of oil theft. Sylva, who made the announcement during a recent visit to Governor Hope Uzodimma of Imo State in Owerri, bewailed that the nation had fallen short of OPEC daily quota, from 1.8 million barrels to 1.4 million barrels, due to crude theft. He portrayed the development as a “national emergency.”
Nigeria’s economy has been striving and is presently faced with an annual widening budget deficit, which stands at N7 trillion for the 2022 fiscal year. The development is also causing a rising inflation rate, which has hiked prices of food items and other products, causing a high foreign exchange rate, pushed unemployment rate to about 33.3 percent while the government presently spends as much as N7 trillion budget deficit on subsidy payment.
As a result of the sustained sabotage to the nation’s oil production capacity, statistics from the Central Bank of Nigeria (CBN) revealed that crude oil revenue fell by 29 per cent in the first quarter of 2022.
In its most recent economic and statistical report for the first quarter of 2022, the apex bank disclosed that earnings from crude oil fell to N790 billion from N1.1 trillion in the previous quarter, which started from October to December 2021.
The first quarter of 2022 saw a 17.1 per cent fall in Nigeria’s crude oil and gas revenues compared to the N956 billion earned during the same time in 2021. Oil revenue accounted for 38 per cent of total earnings in the first quarter of 2022, totaling N2 trillion, while non-oil revenue accounted for 62 per cent of total earnings, totaling N1.1 trillion, according to the report.
NNPC boss, Kyari identified oil theft as a major reason for the drop in production, ultimately leading to low revenue. According to him, highly placed Nigerians, including religious, community leaders and government officials, were completely involved in the crude oil theft on a grand scale.
Faced with a challenge of data accuracy, the National Assembly also disclosed recently that about $40 million worth of crude is missing in the country daily, amounting to about $14.6 billion in a year.
KYARI had informed oil and gas investors recently that the FG was not helpless in dealing with crude oil theft, noting that a new control system has been deployed to monitor all oil sites in the country as well as an online real time incident report platform.
He revealed that Nigeria’s crude would now carry special identity numbers, a decision that would permit the country to take serious actions against countries conniving with oil thieves, who are refining Nigerian crude unlawfully.
In a bid to curb the tide of widespread oil theft, particularly through the product pipelines, the FG had recently suggested and approved pipeline surveillance contracts.
One of the beneficiaries of the contracts is former leader of the Movement for the Emancipation of Niger Delta (MEND), Government Ekpemupolo, well known as Tompolo.
Explaining the rationale for the contracts, Kyari depicted it as a right decision, its reason to award the contract of pipeline surveillance. “We need private contractors to man the right of way to these pipelines. We don’t have access to that and therefore, we put up a framework where contractors were selected through a tender process for people who can do it, not everyone can do it.”
Kyari debunked the allegations of the alleged award of a N4 billion monthly surveillance contract to Tompolo to purchase all oil facilities in the Niger Delta region, saying that the NNPC dealt with corporate entities in the contract awards. “He may have interest in the company, we’re not dealing with Tompolo, but we know that he has interest in that company,” he added.
It was learnt that the contract terms included a regional consultation with officials, including traditional rulers, leaders and former militants in the region as well as security services.
Meanwhile, the pipeline surveillance contract may be causing fresh tension between the northern part of the country and the oil rich region of Niger Delta, and even among youths within the area.
In a reaction to the contract award, the Amalgamated Arewa Youth Groups, comprising 225 youth organizations had given a seven-day ultimatum to the national oil company to revoke the contract or face sustained protests.
The group had emphasized that Chief of Defense Staff, Lucky Irabor, was involved in the contract and may publicly be playing the ethnic card by surrendering the “security of the economic valves and nerves” of the country to Tompolo. The group noted that the contract award was in no way different from the call to hire mercenaries to address terrorism or banditry in the North.
But some Niger Delta leaders who spoke with Newsmen reported that the North has a hand in oil theft in the region, stating that northern youths may be calling for war with the protests.
The Niger Delta leaders reported that while over 90 top staff at the NNPC were from the north, most of the top security officers across oil loading facilities are of northerners and play vital roles in crude oil theft and unlawful refining.
Recommending solutions to the persistent oil theft challenge, energy expert and founder at Nextier, Patrick Okigbo said using the communities, instead of private sector companies, to provide surveillance, was the best approach to the humongous theft.
“The communities can set up companies to provide this service. The payment goes to the communities instead of a private company. Such a structure aligns the interest of the government, oil companies and communities to ensure the oil continues to flow. Any community unable to provide the surveillance will lose the contract and money,” he said.
Managing Partner, The Chancery Associates, Emeka Okwuosa said that oil theft was inversely affecting all sectors of the economy because the country depends on oil for a major part of its earnings.
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“Government should be more proactive and aggressive in trying to checkmate these oil thefts. I am also inclined to believe that military and government officials are complicit in the oil theft,” he said.
Okwuosa explained the need for multi-faceted and multi-dimensional, which would help the government use blockchain technology to forestall the oil theft in a transparent manner, while calling for a portal wherein whistleblowers and other indigenes could forward confidential reports of people responsible for the oil theft.
Okwuosa implored the government to enhance its intelligence gathering sources in the sector to stop theft forthwith and systemic reading of riot act with punitive penalties to government and security officials.
Also, a former management staff at the NNPC and Chairman at the International Energy Services Limited, Dr. Diran Fawibe said that the surveillance contract may not achieve projected gains.
According to him, the contract may not serve the purpose of ending crude oil theft as expected despite the amount of money being used on it.
He raised concerns over the fall out if the government decides to cancel the contract, noting that the development is worse as it has been a serious organized crime fuelled by complicity by high-ranking officials.
Fawibe’s worries are the investors, whose investment is put at risk over the theft, which he said seems to be defying solutions.
“Oil production in the country is now becoming an exercise in futility,” Fawibe said, adding, “I sympathize with the producers of the oil, who have invested billions of dollars to explore and ship oil and gas to the international market.”
Bewailing that government revenue is now at risk than ever, Fawibe expressed apprehension over how investors would get return on their investments.
For geologist and publisher, Toyin Akinosho, operators must query how they allowed the situation to get to this stage in the first place.
“We must always bear in mind that not every crude oil pipeline in the Niger Delta has been as prone to vandalism as the Nembe Creek Trunk line, a mere 11-year-old facility, operated by AITEO; the Trans Niger Pipeline operated by Shell and the Brass pipeline operated by ENI (Agip).
“There are three other crucial pipelines, and they don’t have this level of challenge. Why have those three other evacuation lines had more robust uptimes than the three I mentioned? The second point I will borrow from Osten Olorunsola, a former Director of DPR. He says we have thousands of reservoirs (the subsurface tanks from where these crudes come from) and hundreds of platforms and flowstations (from where these crudes are primarily treated), so why should we have less than 10 pipelines to take these fluids to the terminals? The system should be graded. There should be redundancies,” Akinosho said.
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