It is regrettable that Nigeria lost N1.6 trillion ($4billion) in nine months, from January to September, 2021, due to the activities of oil thieves. Oil theft remains a great threat to the nation’s economy and the environment. The country also loses about 400,000 barrels of crude oil daily, or about $250 million per day.
This means that on the average, 150,000 barrels of crude are stolen by oil thieves daily. The chairman of Heirs Holdings and United Bank for Africa Plc, Mr. Tony Elumelu, disclosed this recently to members of Course 30 of the National Defense College.
Also, worrisome is the revelation by Nigeria Natural Resources Charter, a Think-Tank on crude oil monitoring that the economy lost N4.75 trillion in three years, from 2015 to 2018 to crude oil theft, while N60 billion is reportedly spent to repair vandalized oil pipelines across the country.
Within a 10- year period, 2009-2018, the total amount of crude oil theft reported by oil companies, the Nigerian National Petroleum Company (NNPC) and the defunct Directorate of Petroleum Resources (DPR) was $41.9 billion. The latest figures suggest that Nigeria lost a total of 193 million barrels of crude oil in 11 months last year.
This poses a big threat not only to the environment, but also to the security of the country. It also has far-reaching implications for livelihoods and health. The statistics on oil theft and pipeline vandalism are staggering. Between 2019 and September 2021, a total of 1,161 pipeline points nationwide were vandalized.
This has put Nigeria on the oil sector map as the most notorious nation in the world for oil theft. Mexico, the second-worst affected country, recorded between 5,000 and 10,000 barrels per day of stolen oil. Data from the National Oil Spillage Reduction Monitor Agency shows that between 2015 and this year, the total number of spills recorded in the Niger Delta was 4,919, while the volume of oil spilled into the environment was 235,206 barrels.
The revenue lost to oil thieves who don’t pay taxes would have been put to better use to develop key sectors of the economy such as education, healthcare, housing and improve the welfare of the people. Also, oil companies have lost huge revenue as a result of the frequent pipeline vandalism. Sometimes, oil companies are forced to declare force majeure to avoid serious operational cost.
It is high time the government began to make use of technology such as the use of drones to enhance the role of the Joint Task Force on security operations and the prosecution of the vandals. The illegal activities of oil thieves require strategic leadership to deal with. Besides, there is a need to enforce the relevant laws and regulations, in line with the Environmental Impact Assessment (EIA) Act.
The EIA Act ensures that measures are put in place to assist in the reduction of the effects on the environment as well as the protection of the health of the oil-bearing communities. The need to increase awareness on the negative consequences of oil theft and vandalism has become more urgent now.
Also, the government should look into reports by the Nigeria Extractive Industries Transparency Initiative (NEITI) that the nation loses about $4.1m (N123billion at official exchange rate of N305/$) annually due to poor crude oil production metering. In the report, the oil and gas industry watchdog said unless the government took appropriate and urgent measures, limitations in the metering of crude oil production would continue to pose a serious threat to the nation’s revenue target.
Already, the government could realize only 58 per cent of its projected revenues from January to June 2022. This is a confirmation of how inadequate oil production could rob Nigeria hefty losses in revenue.
To check oil theft, the government should leverage technology such as deployment of drones to detect sabotage or pipeline burst. According to data from the agency, Nigeria is the only oil-producing country without metering to ascertain the accurate quantity of crude produced at any given time. As a result, the installation of the facility in the 258 oil fields in the country has become imperative. Such technology will also help reduce the recurring cases of oil theft.
In its earlier audit reports from 2012-2015, Nigeria reportedly lost over $9.89billion worth of crude oil due to poor metering infrastructure. Within this period, over 107 million barrels of oil were not accounted for.
Considering the huge revenue losses and the current volatility in the price of crude oil in the international market, and the shortfalls in projected revenues, the government should not hesitate to put metering infrastructure in place. Government should make the laws against oil theft much stiffer.
The Sun (Editorial)
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