In recent years, Nigeria, one of the world’s major producers and exporters of crude oil, has been battling with issues of crude oil theft, pipeline vandalism, oil bunkering, and even, smuggling of refined petroleum products.
These economic challenges perpetrated by vandals, oil thieves and economic saboteurs, have limited the Federal Government from generating the needed capital required to finance the nation’s budget, run the government and build infrastructure. It has generally prevented Nigerians from benefiting from subsidised petroleum products.
Statistics show that oil brings in 90 percent of Nigeria’s foreign exchange and the bulk of government revenue, which is currently being threatened by the activities of vandals and economic saboteurs.
Oil theft comes in different ways including pipeline vandalism, which involves stealing oil from the pipelines of five largest multinational oil companies present in Nigeria including Exxon Mobil, Chevron, Statoil, Shell, and Agip.
It can also occur at the verge of transportation of the crude oil products to the oil shipping terminals for export.
Consequently, activities of these vandals and economic saboteurs have continued to pose a serious danger to the nation’s economy as they deter the country from meeting the Organisation of the Petroleum Exporting Countries (OPEC) given quota.
Currently, Nigeria’s OPEC quota is pegged at 1.8 million barrels per day (bpd) but in the last few years, the country has struggled between 1.3 and 1.4 million barrel per day.
According to the Nigerian National Petroleum Corporation (NNPC), about 200,000 barrels of Nigeria’s crude oil are stolen by vandals and saboteurs.
Alarmingly, in 2021 alone, Nigeria lost at least $3.5 billion revenue to crude oil theft representing 10 percent of Nigeria’s foreign reserves.
Meanwhile, a Nigerian National Resource Charter report on crude oil theft in Nigeria revealed that the Federal Government lost about N3.8 trillion between 2017 and 2018.
In 2019, the Nigeria Extractive Industries Transparency Initiative (NEITI), Nigeria’s oil industry auditor, released a report showing that the country lost around 138,000 barrel per day of crude oil to theft over the past 10 years valued at $40.06 billion.
While an International Centre for Reconciliation Study puts the total value of stolen crude oil and disrupted oil production between 2003 and 2008 to approximately N14 trillion.
These reported loses show that Nigerian economy is currently bleeding and huge revenue loss recorded on a daily basis in the wake of revenue shortage and growing rate of poverty in the country.
Also, some major multinational oil companies operating in Nigeria have linked their divestment in many onshore assets to the continued oil theft in the country.
Nigerians have expressed displeasure over the government’s inability to curb crude oil theft as the economy continues to be on the losing end.
Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), recently raised the alarm over the ‘unprecedented’ rate of oil theft recorded in recent times and its devastating effect on government revenue.
Emefiele raised the alarm during the second Monetary Policy Committee (MPC) meeting in Abuja.
Ghenga Komolafe, the chief executive officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), described the acts of crude oil theft and pipeline vandalism as a ‘national disaster’.
“For those who want to do legitimate business, there are government regulations on how that is done, but what we have seen here are criminals, and their activities will no longer be tolerated,” he warned.
This development has become a huge source of worry to the Federal Government as it gave directive to the NNPC through the Ministry of Petroleum Resources to put an end to the growing rate of oil theft in the country.
To stem the tide of these economic saboteurs, the NNPC has strengthened collaboration with the Joint Security Task Force and other stakeholders to tackle oil theft and illegal refineries in Nigeria.
Mele Kyari, group managing director of NNPC, disclosed this on Wednesday, March 23, 2022, during an on-the-spot-assessment of some pipelines impacted by activities of oil bunkers in Ibaa Community, EmeOha Local Government, Rivers State.
Kyari explained that the scale of crude oil theft and pipeline vandalism seen in the community was beyond explanation, adding that all hands must be on deck to contain the spate of crude oil losses in the country.
He added that through a collaborative effort of the government security agencies, host communities and oil companies operating in the area and with the deployment of the right technology, the menace would be contained.
Expressing optimism on its zeal to put an end to the problem, Kyari, underscored the need to intensify security on ground and modern technology to tackle the menace.
According to the NNPC boss, pipeline vandalism, oil theft and illegal refining activities are threatening the growth of the country’s oil and gas industry.
He however, said that the Nigerian Navy was also doing enormous work and have made several arrests and equally prevented illegal movement of oil through the vessels.
Supporting the stand of the NNPC boss, Timipre Sylva, the minister of state for Petroleum Resources, said the Federal Government will no longer condone any form of criminality on the nation’s oil and gas facilities and installations.
He warned crude oil thieves, pipeline vandals and illegal refiners to desist from their actions as their days have been numbered.
Read also: 51 companies owe FG N1.32 trillion, $2bn lost to crude oil theft in 1 year -NEITI
In addition, NNPC recently carried out bids from local and foreign investors to finance the construction and repairs of its crude oil and petroleum product pipelines.
Statistics show that NNPC runs a network of over 5,000 km of pipelines across the country that transport both crude produced in-country and imported refined products.
The corporation is also collaborating with other government agencies to curb the menace of petroleum products smuggling and crude oil theft.
The agencies include the Economic and Financial Crimes Commission (EFCC), Department of State Services (DSS), Nigeria Police Force (NPF), Nigeria Customs Service (NCS), Nigeria Security and Civil Defence Corps (NSCDC) and other relevant downstream and upstream stakeholders in the petroleum industry.
According to Kyari, the move was at the instance of President Muhammadu Buhari, who mandated the Ministry of Petroleum Resources, the NNPC, the EFCC and all other security agencies to do everything to stop crude oil theft and illicit truck-out of petroleum products.
He said the menace has hindered Nigerians from enjoying the benefit of subsidised petroleum products.
“Smuggling is not a business that should be condoned because even for deregulated petroleum products, it brings extra cost burden on this country both in terms of safety and security of supply and in securing of foreign exchange. It even constitutes more burden to this country when the product involved is a regulated product like Premium Motor Spirit (PMS),” Kyari said.
He explained that with the increasing price of crude oil at the global market and the OPEC+ production cuts, the country could not afford to shoulder the cost of smuggling.
“Our daily petroleum products consumption shot up to 102 million litres in May 2021 when we known that our consumption is not up to 60 million litres. This is why we have to pull it down by every means necessary,” Kyari assured.
He said NNPC would emplace Advanced Cargo Declaration in line with global best practices to tackle the issue of crude oil theft in the country.
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