With a loss of 619.7m barrels of crude oil valued at N16.25 trillion ($46.16billion) between 2009 and 2020, curbing the twin menace of crude oil theft and pipeline vandalism has become a national emergency challenge, the Nigerian Extractive Industries Transparency Initiative (NEITI) has said.
Orji Ogbonnaya Orji, the executive secretary of NEITI, in a statement issued to Businessday on Tuesday, said that solutions must be found for the challenge if investors’ confidence in the country’s oil and gas industry is to be restored and trust rebuilt, towards boosting national economic growth.
As contained in the statement signed by Obiageli Onuorah, deputy director of Communications and stakeholders’’ Management of NEITI, crude oil theft and losses through pipeline vandalism pose serious threats not only to oil and gas exploration and exploitation in the country but also have huge negative consequences on the country’s economic growth, business prospects, and profit earnings by oil companies.
“From NEITI’s 2021 Oil and Gas Industry Report released last month, the sector accounted for 72.26 percent of Nigeria’s total export, and government’s foreign exchange, 40.55 per cent of government revenue, and provided 19,171 jobs.
“However, it is not a matter for debate that despite the strategic contributions, the country is yet to derive optimal benefits from its oil and gas resources, due to oil theft and losses through pipeline vandalism, pipeline integrity compromise, outright sabotage, and general insecurity in the oil-producing region,” Orji said.
Apart from findings in NEITI’s Reports over the years, Orji said recent insights from the agency’s membership of the Special Investigative Panel on Oil Theft and Losses revealed how crude oil theft was being carried out.
He said the crime was perpetrated mainly through pipeline clamping, illegal connections (ICs) on major pipeline systems, exploitation of abandoned oil well-heads, pipeline breakages, and vandalism of key national assets to illegally siphon crude oil into waiting vessels stationed in strategic terminals.
He also disclosed that Nigeria lost about 4.2 billion litres of refined petroleum products from refineries, valued at over $1.84 billion at an average rate of 140,000 barrels per day between 2009 and 2018.
“The NEITI report also showed that in the last five years (2017 -2021), Nigeria recorded about 7,143 cases of pipeline breakages and deliberate vandalism, resulting in crude oil theft and petroleum product losses of 208.639mn barrels valued at $12.74 million or N4.325 trillion.
“During the same period, Nigeria spent N471.49 bn, either to repair or maintain the sabotaged or vandalized pipelines,” he added.
Orji also noted that critical policy interventions were made to the government on how to solve the problem.
These interventions, he said include, a recent policy advisory highlighting the issues in the key areas of the sector’s reforms, to help the Renewed Hope Agenda of PresidentTinubu’su administration to make decisions on immediate steps needed to increase revenue generation and boost the sector’s contribution to economic growth.
In the policy advisory, Orji said NEITI recommended for immediate reconstitution of the Presidential Steering Committee on Implementation of the Petrol Industry Act (PIA) with industry experts and key relevant agencies as members, and tackling crude oil theft, crude losses, and pipeline vandalism.
Other recommendations included developing a gas utilization policy with linkages to Nigeria’s Energy Transition Plan; fast-tracking the repairs of government-owned refineries with adequate measures to secure the pipelines and the business environs for easy access, product delivery and evacuation, and strengthening Nigeria’s membership of the 57 member countries of the global EITI and NEITI, to support the reforms with knowledge, independent information, and data.
The NEITI Executive Secretary reminded the government about the issue of gas infrastructure, especially gas pipelines, saying at over 200 trillion cubic feet of gas, Nigeria is reputed to be endowed with the largest gas reserve in Africa and the 9th largest in the world.
“We recommended that the government urgently put in place a revised national policy on gas utilisation. Such a policy needs to be clear on the specific roles of the industry, government, and investors in the implementation of the plan,” he said.
Similarly, he said the gas utilisation plan should show the market-driven opportunities that would successfully translate the gas plans into sustainable economic growth.
For the gas utilisation policy to work, Orji pointed out that there was a compelling need for deliberate, ambitious investment in gas infrastructure, especially gas pipelines to provide connectivity across upstream facilities to processing and power plants and access the potentially huge market.
To achieve this agenda, he said an estimated investment capital of about $20bn would be needed annually to bridge the nation’s gas pipeline/infrastructure gap.
Urging the Conference and the professionals to come up with specific recommendations to bridge the existing knowledge, information, and skills gap to improve pipeline management, expansion, and utilization, and to highlight pipeline security as an important factor in building investors’ confidence and interest required for economic growth in the sector.