Nigeria’s fight to curb oil theft appears to be reaching a breaking point as sophisticated criminal networks outmanoeuvre existing surveillance measures.
Africa’s largest oil producer is estimated to be losing billions of dollars annually due to crude oil theft, a problem that has plagued the nation for decades.
The country’s security forces have confiscated thousands of small boats, made many arrests and invested in pipeline surveillance contracts awarded to ex-militant Government Ekpemupolo, popularly known as Tompolo, to track pipeline breaches and illegal oil bunkering activities.
BusinessDay findings showed no senior figures in the illegal trade have been prosecuted while oil thieves have grown increasingly adept at bypassing detection methods, employing tactics that range from sabotaging pipelines in blind spots to bribing officials for tip-offs on patrol routes.
Mele Kyari, group chief executive officer of the Nigerian National Petroleum Company (NNPC) Limited, said the current level of illegal connections on oil pipelines in the country is “unbelievable”.
“Some of the scale of the infractions that we see is unbelievable. We are not able to deal with it. When you remove one connection, the next day in the same location, someone will replace it,” Kyari said while addressing lawmakers on March 13.
“In most of these locations, they are less than a hundred metres from settlement. Some are even less than a hundred meters from the local government headquarters.”
Kyari said oil theft has made it nearly impossible to predict the daily output of crude oil.
“These evils are being perpetrated unabated, that this makes it impossible to guarantee the production that would happen the next day,” the NNPC boss said. “We are struggling to meet the budget estimate of 1.6 million barrels per day. This by no means is related to crude oil theft.”
Alhassan Ado-Doguwa, chairman of the House of Representatives Special Committee on Oil Theft said the illegal connections are not only on oil pipelines.
“It is saddening to note that these infractions do not stop with the pipelines; daily breaches are also recorded at the oil well heads, flow stations, loading, and export terminals, among others,” he said. “We are compiling the facts and figures.”
According to Ado-Doguwa, instances, where approvals are hastily granted to vessels involved in crude theft just to cover official complicity are reported.
“Incidences of undeclared liftings are noted, and all these and several other infractions, particularly in our offshore marine environment, contribute to the huge volume of crude oil theft being reported,” he added.
Data from the Organization of the Petroleum Exporting Countries (OPEC) showed Nigeria’s oil production declined to a six-month low by 105,000bpd to 1.32 million bpd in February 2024, based on secondary sources.
“Everything about Nigeria’s oil sector is messy; the country has installed capacity to produce over 2.0 million bpd and has a current OPEC quota of 1.8 mbpd but cannot meet it because the state cannot stop oil theft cartels,” Aisha Mohammed, an energy analyst at the Lagos-based Center for Development Studies said.
“Like Saudi Aramco and Norway’s Equinor, crude oil leakages should be combated with various technologies like leak-detection sensors, acoustic sensors, fibre optic sensing, satellite surveillance, pressure drop analysis, and corrosive monitoring,” she added.
Industry experts said the inability of existing surveillance measures to effectively monitor pipelines and deter theft are reasons fewer investments and fewer developmental projects are carried out in the Niger Delta region after years of billion-dollar investments.
“Nigeria’s oil wealth was insufficient to spark a Middle Eastern-style economic miracle in the Niger Delta back then. Now, with a population three times larger and decreasing investment, it is woefully inadequate,” Chinedu Onyeka, an energy sector expert familiar with upstream business, said.
“The gusher of oil money also fuels the corruption and unrest that has long plagued the Niger Delta region,” he added.
A Chatham House report examined in detail the murky and complex trade in stolen Nigeria oil, worth between $3 billion and $8 billion a year.
The report, titled ‘Criminal Crude’, said politicians, military officers, local communities, criminal groups and oil workers and traders are all profiting from the so-called ‘bunkering’, which started in the late 1970s, but has mushroomed in recent years because of lax oversight and high prices.
“Nigerian crude oil is being stolen on an industrial scale,” the report said. “Proceeds are laundered through world financial centres and used to buy assets in and outside Nigeria.”
Transparency International, a leading anti-corruption watchdog, also released a report alleging that Nigeria’s thriving crude oil theft business flourishes due to widespread military complicity.
The report, written in partnership with the Civil Society Legislative Advocacy Centre and first published in 2019, detailed a network of illegal actors, including rogue officials, security personnel, and organised crime syndicates, who siphon billions of dollars’ worth of oil annually.
It also noted that the researchers observed busy scenes where refined oil products were unloaded in Port Harcourt, Abonnema Wharf Jetty, Creek Road jetty, Woji jetty, Marine Base Jetty and Iwofe Jetty within the period.
The report claimed that military involvement in the menace is seen at the tapping points and bush refining during the transportation stage.
