Dealing With Nigeria Crude Oil Theft

Time enough for the government to wield the big stick as crude oil theft continues to darken the economy

In the first quarter of this year, that is between January to March 2013, official figures from the Nigerian National Petroleum Corporation (NNPC) confirmed that our nation lost about $1.23 billion (N190 billion), to incessant crude oil theft and vandalism along the major pipelines within the Niger Delta. The Corporation, which explained that the NNPC/SPDC JV (Shell Petroleum Development Company Joint Venture) recently declared a  force majeure on Bonny Crude due to incessant crude oil theft, predicted that the situation could actually be worse in this second quarter.

According to a statement by the NNPC acting Group General Manager, Public Affairs, Tumini Green “investigations showed that 53 break points were discovered along the 97km Nembe Creek Trunkline; repair work is expected to last about six weeks. This will further reduce our April and May monthly average to about 2.2mbpd and further decrease crude oil revenue by about 554 million dollars (N83 billion).”

While these indeed are worrying developments, it would appear that the Federal Government is merely interested in passing the buck by putting the onus on the international buyers of the stolen crude. Yet the Coordinator of the Nigeria’s Honourary International Investment Council, Baroness Lynda Chalker, recently challenged the administration to provide solution to oil theft if it was desirous of convincing foreign investors to come to Nigeria.

Just recently, the Nigerian Agip Oil Company (NAOC), a subsidiary of the Italian energy major, ENI, suspended its operations in Bayelsa State. The company said “the decision was taken due to an intensification of bunkering activities andsabotage ofthe pipelines” which have in recent times seriously affected oil production activities in the area. This came at about the same time that the SDPC also raised an alarm over the criminal breach of its multimillion dollar Nembe Creek trunk in the Bayelsa State.

While it has become very clear that what we are dealing with is an international criminal cartel, it is baffling that the relevant authorities seem clueless about how to contain these acts of sabotage that have serious economic and security implications for our country. What’s more, with these criminal cartels getting more and more emboldened, they are investing in barges, canoes, speed boats and large wooden boats which they use in their illicit business.

Today, there are reports that a quarter of Nigeria’s crude oil production is unaccounted for and this massive leakage has been going on for years. Local refineries are also springing up with all the dire implications for the environment given the pollution that come with the activities. To underscore the gravity of the situation, there are propositions before the Senate to prescribe capital punishment for oil thieves.

In adding his voice to the call in the course of inaugurating the Senate Joint Committee on Petroleum Industry Bill (PIB), Senate President David Mark said the committee should recommend ways of curbing oil bunkering. Mark insisted that “the law must have stiff punishment for those that steal our oil to serve as a deterrent to other people who plan to stealing our oil. The Bill must also ensure that the current rate of oil theft in the country is minimised to the barest minimum. It seems we are having a bad name internationally because of the rate of oil theft in the country. Oil theft deserves capital punishment”.

There is no doubt that the incidents of theft of crude oil now pose a deleterious threat to the nation’s economy. But even as we lament this deplorable situation, it is evident that the problem persists because there is some form of official complicity in what has become an organized crime. It is therefore time that the authorities took serious measures against these criminals. We have heard enough of empty rhetoric.