Clamping down on crude oil theft, pipeline vandalism

Last Sunday, President Goodluck Jonathan at the presidential media chat assured Nigerians that his administration would check crude oil theft and pipeline vandalism in the nation’s oil and gas industry, noting that if past administrations had taken decisive actions against the menace, it would have been checked.

“The problem of oil theft has started long ago, if governments at that time had done something to check it, it wouldn’t have developed into the level it is now. Today, people within and outside the country are involved in the crime. But I assure Nigerians that we are doing everything to check it.”

The Nigerian National Petroleum Corporation (NNPC) had last week said that it produced an average 2.19 million barrels per day (bpd) of crude oil over January-July, and earned $20.9 billion from crude exports over the same period, adding that output and revenue could have been higher if not for large-scale oil theft, pipeline vandalism and illegal bunkering in the Niger Delta region, which severely disrupted production and exports, Andrew Yakubu, managing director, NNPC, told lawmakers in Abuja.

“The projected budget revenues have not been realised due to significant production shortfall. The 2013 planned production was 2.45 million bpd [but] year-to-date July 2013 production has averaged 2.19 million bpd,” Yakubu said, according to a statement.

Industry analysts and watchers have continued to stress the urgent need for a permanent solution to the problem of pipeline vandalism and oil theft that have increasingly plagued the industry.

Since the President did not disclose the measures being put in place to check the oil theft, not a few analysts have argued that the government lacks the political will to combat the issue, given the president’s admittance that powerful persons are involved in what has become a lucrative business.

Pipeline vandalism, which is the illegal or unauthorised act of destroying or puncturing of oil pipeline with the intent to disrupt supply or to steal crude oil or its refined products for the purpose of appropriating it for personal use or for sale in the black market or any other outlet, has continued to impact very negatively on the potentiality of the industry as a major revenue-earner for the country.

Pipeline vandalism and oil theft have not only continued to harm the country’s oil output, it has also cost the nation huge financial losses. The nation has lost a total of about N162.6 billion from crude oil and petroleum products pipeline losses from 2009-2012 alone, not adding associated costs, according to Pipelines and Product Marketing Company (PPMC).

Government data released last week showed gross revenue tumbled 42 percent month on month to $3.1 billion in July due to disruptions to production and exports.

Recently, the Nigeria Extractive Industries Transparency Initiative (NEITI) revealed that over 136 million barrels of crude oil, worth an estimated $10.9 billion, was lost to theft between 2009 and 2011.

The loss represents 7.7 percent of the total revenue which accrued to the federation in the audit period. It was in addition to a loss of about 10 million barrels valued at $894 million as a result of pipeline vandalism in downstream operations.

Analysts have said that the oil industry would continue to stagnate until the menace of crude oil theft is tackled decisively and promptly, stressing the need for government and its relevant agencies to muster more political will.

According to Anthony Ogbuigwe, group executive director, refineries and petrochemicals, Nigerian National Petroleum Corporation (NNPC), at a recent conference, there is need for the government to develop a national plan for the protection of critical assets and declare pipelines as national critical assets.

By: FEMI ASU