Nigeria: The Challenge of Massive Oil Theft

10 January 2022

As damning as a recent report that Nigeria may have lost about 200 million barrels to organised theft in the first 11 months of 2021 would seem, it came as no surprise. Going by figures from the Nigerian Upstream Regulatory Petroleum Commission (NURPC) obtained by THISDAY, while Nigeria was expected to pump approximately 635 million barrels of oil by last November, only 441 million barrels were produced within the period. This aligns with a report from the Nigerian Extractive Industries Transparency Initiative (NEITI) released earlier last year that Nigeria loses 138,400 barrels of crude per day (about 7% of its total production) to theft, oil-spills, or shortage-in production. The loss, according to the report, is "neither hypothetical nor episodic. It is real and endemic."

It is unfortunate that oil theft has for decades remained a huge drain on the economy of Nigeria without concerted efforts to deal with the problem. No doubt, these illegal funds from stealing the crude could have been channelled to other sectors of the economy. Besides, because the criminal cartels involved need illicit arms and ammunition, they have contributed significantly to our national security challenge. Sadly, the political will to enforce actions and measures that would or could curb these nefarious acts that benefits only a few is sorely lacking. In fact, many security operatives lobby to be posted to Niger Delta because of what they will benefit from illegal oil business.

The apparent lack of transparency in Nigeria's oil sector is reflected in the fact that government relies heavily on operators to provide data without any independent verification. In a report on the mismanagement of the oil and gas sector in Nigeria in 2016, for instance, The London Economist wrote: "... oil is also being stolen at a record rate and traders' figures show output at well below the government's figures. Information about Africa's biggest oil industry is an opaque myriad of numbers. No one knows which ones are accurate; no one knows how much oil Nigeria produces. If there were an authoritative figure, the truly horrifying scope of corruption would be exposed."

There is no shortage of laws to deal with the problem assuming the federal government is serious. Some of the various laws that have been passed include a 1975 act sanctioning the death penalty for pipeline sabotage, although needs amendment to include lines carrying crude and not only products. But the federal government seems helpless despite the huge sum of money being thrown at the problem. Among the strategies suggested by NEITI was calling for the Department of Petroleum Resources (DPR) to put molecular markers into products. This would allow the authorities to trace where such supplies go. More drastic measures should include that government officials involved in oil stealing be made to forfeit all benefits to them, whether in or out of service.

In August 2019, the Nigerian National Petroleum Corporation (NNPC) reported losing as much as 22 million barrels of oil at more than 120,000 barrels per day (bpd) to theft in the first half of the previous year. Despite that disclosure, Nigerian authorities appear helpless in dealing with the problem. Yet, at a very difficult period in a country almost wholly dependent on oil revenue, we cannot afford the luxury of allowing a few people to illegally corner to themselves our collective wealth. This menace persists in the oil and gas sector because of the existence of an assured off-taker market.

There is an urgent need to address this challenge if Nigeria is to derive the maximum benefit from its oil and gas resources. The federal government must ensure that the perpetrators of this crime are apprehended and brought to justice.

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