The level of crude oil theft in Nigeria is incredible
Nigeria’s desire to increase crude oil production to four million barrels per day (mbpd) and grow the reserves to 40 billion barrels by 2020 may be mired by the activities of oil thieves which have continued to retard the country’s oil output.
The Nigerian National Petroleum Corporation (NNPC) in its annual statistics bulletin released recently revealed that Nigeria lost about N77.87 billion worth of crude oil and other petroleum products in 2013. The NNPC stated that 327,480 metric tonnes (MT) of petroleum products were lost, while a total of 2.312 million barrels of crude oil were stolen from pipelines in the period under review. According to the NNPC bulletin, pipeline vandalization increased by 58 per cent over the previous year, as a total of 3,570 line breaks were reported on NNPC pipelines. Of these line breaks, about 3,505 were as a result of vandalism, while 65 cases were due to system deterioration resulting in a loss of 327,480MT of petroleum products worth about N38.88 billion.
Furthermore, the report stated that 865,482 barrels of Bonny Light, valued at N 14.598 billion were stolen in the period under review, while 1.408 million barrels of Escravos Light, valued at N23.75 billion were lost to thieves. Also, 25,706 barrels of Urals crude were stolen leading to a loss of N433.58 million, while 12,490 barrels of Ughelli blend valued at N210.67 million were stolen in the period under review. Giving a breakdown of products losses by region, the report stated that Mosimi recorded the highest incidences of loss with 268,760MT valued at N31.364 billion; followed by Kaduna with 39,620MT valued at N5.488 billion. Warri recorded petroleum products loss of 16,860MT, valued at N1.785 billion, while 2,230MT valued at N244.46 million were lost from the Port Harcourt area.
It is now obvious that theft from Nigeria’s crude oil pipelines has grown into a major problem for the country, which derives about 80 percent of revenue from the oil industry. According to some Analysts, besides robbing the country of an estimated $6 billion a year in revenue, it causes pipeline shutdowns since thieves often sabotage the lines before tapping the crude.
Although, the Minister of Petroleum Resources, Diezani Alison-Madueke was reported to have claimed that Nigerian authorities are clamping down on the illegal trade and that the federal government has taken measures to tackle the nuisance, the statistical bulletin invalidates the effectiveness of government efforts. For a problem that the NNPC budgets as much as $94 million in a year to equip security agencies in the fight against crude theft, the magnitude of theft is unacceptable, especially for a country where more 60 percent of the population live below poverty line.
According to the London-based research group, Chatham House, oil is being stolen on an ‘industrial scale’ in Nigeria, and the country’s politicians and security officials are among those profiting. Many have attributed the major cause of crude oil theft to pipeline vandalism as the root cause of our nation losing $3.65 billion annually to oil theft, this assertion begs the question; because, the problem of oil theft in Nigeria is more than pipeline vandalization.
Thus, a lot needs to be done in the fight against crude oil theft and now is the time for government to adopt genuine ways that can help stop the problem. According to experts, the solution to the problem requires both national and international efforts; the European Union, is already putting in motion a procedure that will require sellers of stolen crude to produce the certificate of the origin for their products, hence, the Nigerian government urge the United States and other countries to follow suit as was done during the diamond crisis in the Congo and Liberia. Stakeholders in Nigeria should articulate its own multi-point, multi-partner strategy for addressing oil theft.