Oil theft: Battle far from over as government tackles perpetrators
The menace of oil theft, illegal refineries, pipeline vandalism has affected government revenue in recent times. Following Federal Government directive, Diezani Alison-Madueke, minister of petroleum resources, put together the Joint Task Force on Petroleum, to check the menace. In this report OLUSOLA BELLO, energy editor, examines how far the taskforce has gone in checking the menace.
Stakeholders in the Nigerian petroleum industry have continuously decried the high rate of crude oil theft and pipeline vandalism in the country, which is costing the nation over N960 billion ($6bn) annually.
The country lost at least 100,000 barrels of oil per day (b/d), about 5 percent of Nigeria’s total output, in the first quarter of 2013 to theft from its onshore and swamp operations alone.
According to Chatham House report, “Some of what is stolen is exported. Proceeds are laundered through world financial centres and used to buy assets in and outside Nigeria, polluting markets and financial institutions overseas, and creating reputational, political and legal hazards. It could also compromise parts of the legitimate oil business.”
It added that officials outside Nigeria were aware that the problem existed, and occasionally showed some interest at high policy levels, “but Nigeria’s trade and diplomatic partners have taken no real action, and no stakeholder group inside the country has a record of sustained and serious engagement with the issue.”
It said it was not clear how much of Nigeria’s oil is stolen and exported. The best available data suggest that an average of 100,000 b/d vanished from onshore, swamp and shallow-water areas in the first quarter of 2013. This figure does not include what may happen at export terminals. It also assumes the integrity of industry numbers.
The effects of this massive oil theft is already impacting on Federal Government finances, with government being forced to withdraw from its Excess Crude Oil Account to make up for the shortfalls in monthly revenue allocations to the three tiers of government not too long ago.
At some point last year, the ECA was down to about $3.598bn due to the withdrawal. According to the Nigerian National Petroleum Corporation (NNPC), about $2.23bn (N191bn) revenue that should have accrued to the federal government from oil proceeds was lost to the activities of crude oil thieves in the first quarter (1Q) 2013, with an estimated $6bn lost annually to the menace.
When Peter Voser, chief executive officer of Royal Dutch Shell plc, recently raised the red flag that the security situation in Nigeria had worsened, not many Nigerians were taken aback. Voser in a speech posted on the company’s website noted that “the stealing and sabotage of crude oil intensified in 2013 thereby threatening its multi-billionaire-dollar business” and opined that Shell alone cannot tackle the issues.
Shell’s exposé reveals that colossal sums of money were been stolen through oil theft by criminals who act in concert with powerful and well connected Nigerians including even some unscrupulous officials of the nation’s security organisations.
Earlier this year the company closed the 95,000 barrels per day Nembe Creek Trunk oil pipeline to stop leakage caused by oil theft. The pipeline pumps the Bonny Light grade of crude oil and the Bonny Light export shipping lists for April showed that 95,000 barrels per day would be pumped through the NCTL.
The oil major invested $1.1bn in 2010 to replace the Nembe Creek pipeline, but the key oil transport channel has been repeatedly hit by sabotage and theft since 2011, forcing Shell to repeatedly shut it.
Shell had last year announced plans to sell off the 97-kilometre, 150,000bpd of oil NCTL in the Niger Delta and experts said this might not be unconnected with the activities of oil thieves on the pipeline.
The company said it lost $250m in the second quarter of 2013 due to oil theft and other operational challenges in Nigeria. Eni, Italian oil giants, also blamed oil theft in the country for the loss of 55 percent revenue in the second quarter of 2013.
The International Energy Agency also said Nigeria was losing about $7bn annually to oil theft. The IEA had blamed Nigerian oil theft for damage to pipeline infrastructure as well as cutting OPEC’s output volumes.
The government has risen to the occasion by putting in place in series of plans that could help to bring this situation under control. But the question is, how far has these plans been able deter the oil thieves and vandals from continuing in these acts in which people in high places and low places are allegedly involved?
The huge financial burden on the country and further efforts to combat the recurrent episodes of oil theft propelled by the escalating cases of pipeline vandalism and illegal oil bunkering forced the Federal Government, through the Minister of Petroleum Resources to establish a joint oil industry and military task force.
The force, according to the Minister of Petroleum, was saddled with the mandate of eradicating the oil theft menace to ensure the survival of the Nigerian economy.
Testifying to the support given by the government to fight the menace, Dele Ezeoba, a vice admiral and the immediate past chief of Naval Staff, remarked that the government is aggressively trying to curb the menace by providing logistics support and praised government for prompt provision of logistics support to the navy to fight illegal bunkering.
The navy, in collaboration with other security agencies, had arrested and prosecuted many oil thieves, pipeline vandals and pirates who tried to sabotage the nation’s economy.
“The navy has recorded a lot of achievements in the area of operational capabilities, human resource development and welfare related support services, among others.
According to the former Chief of Naval Staff, “Under my watch, we have reduced to a large extent, crude oil theft and pipeline vandalism in collaboration with the Army, Air Force and the Joint Task Force contributed by the armed services.
“We are winning this battle and will continue with vigour and seriousness by securing our maritime environment to ensure economic growth and prosperity of the nation,” he said.
But a good number of industry stakeholders still feel that more still needs to be done by the government before the problem of oil theft would be brought to the barest minimum.
But beyond the establishment of a task force, the Ministry, under the leadership of Alison-Madueke, in conjunction with the Nigerian National Petroleum Corporation (NNPC), introduced other far reaching measures to safeguard the country’s crude and gas pipelines from further attacks.
Contracts are awarded to some ex-militant chieftains to safe guard the right of ways of the pipelines that convey crude oil. The Federal Government, has also been sounding a note of warning to foreign countries to desist from buying illegal crude oil from Nigeria, which it said was undermining its efforts at delivering on its transformation programmes.
Stringent measures at bringing the nuisance to an end are being put place, with the Federal Executive Council (FEC) approving the development of a special laboratory for forensic on oil products in Nigeria, which would assist in tackling the problem squarely.
In spite of all these efforts the activities of these oil thieves and vandals remain unabated as the JTF on daily basis continue to be tackle their activities.
JTF, according to its spokesman, Onyema Nwachukwu, a lieutenant colonel, recently arrested 29 alleged oil thieves and destroyed 127 illegal refineries in the Niger Delta. He explained further that in Bayelsa State, troops of 343 Regiment of the JTF in Southern Ijaw Local Government Area clamped down on 98 illegal crude oil distillation sites, which were operating with 119 illegal distillation tanks and 37 large open wooden boats (Cotonou boats) laden with stolen crude oil and illegally-distilled Automated Gas Oil (AGO).
The troops of 29 Battalion and the Gun Boat Patrol Company, in a separate operation, arrested a barge with three crew members and a vessel christened “MT Tora Eagle” with 11 crew members in Bodo waterways and Akassa creek in Rivers and Bayelsa States respectively.
He said that JTF’s Operation Pulo Shield, 19 and 3 Battalions’ troops covering Edo and Delta states scuttled 24 illegal oil distillation camps and 73 Cotonou boats. Thirty-one of such boats were intercepted at an illegal crude oil loading point close to an abandoned oil well in Warri North, while 27 of the arrested boats were intercepted in Egara Creek along NNPC pipeline in Warri South Local Government Area.
There are several other far-reaching measures by the ministry. Only recently, Vice President Namadi Sambo, and Alison-Madueke, while receiving an audience of a top-level delegation from the United States Government, led by Sharon Burke, the assistant secretary of defence, described oil theft as a gross criminal act.
Sambo pointed out that crude oil theft had made Nigeria to lose huge resources that could have easily been used in developing schools, putting in energy and many other transformation programmes that would impact positively on the people. He sought the support and partnership of the United States and other members of the international community to tackle the menace.
Going forward, there must be a well organised, multi-stakeholder approach to dealing with oil theft in the country. The President needs to exercise more political will to make this happen. The security agencies that are fighting the fight need urgent overhaul. All outfits need better coordination to arrest the situation and make the Niger Delta safer for all.
OLUSOLA BELLO