Tackling The Scourge Of Oil Theft In Nigeria

Nigeria Petroleum Minister

By Benjamin Umuteme

In October 2009, Shell Petroleum Development Corporation (SPDC) declared force majeure on its operations, in 2010; it declared another one, followed by another in 2011 and also in 2012.

All this, according to Shell, is due to the activities of oil thieves who had damage its pipeline thus disrupting production.

This situation is not peculiar to Shell alone; as ENI has not also been spared by oil thieves who are bent on 'having their own share of the national cake'.

When the problem of oil theft started, not much attention was paid to it but over the years, it has become a multi-billion naira business that is undertaken by both the high and the mighty in the society.

Sadly, with the country's inability to get the exact amount of crude that is produced daily, it has had to rely on data from oil companies or at the most rely on projections about production figures.

For instance, Shell Petroleum Development Company (SPDC) Limited, a subsidiary of Shell Companies in Nigeria as far back as 2009 disclosed that Nigeria lost about $1.5 billion annually to crude oil theft.

Minister of Finance, Dr Ngozi Okonjo-Iweala, in an interview with the Financial Times of London in May, disclosed that Nigeria lost about $14 billion in 2011 to oil theft and fraud in the allocation of a controversial fuel subsidy.

In the last quarter of 2012, Nigeria lost about $2.7 billion or N426 billion from a slide in crude oil production.

According to the Central Bank of Nigeria’s Fourth Quarter Economic Report, “Nigeria’s oil revenue in the fourth quarter of last year slumped by N112.6 billion, as gross oil receipts in the Federation Account was N1.824 trillion– a 5.8 percent reduction from N1.936 trillion that was the figure recorded in the third quarter of the same year.”

The activities of oil thieves has not helped the cause of the government as it tries to woo investors to the sector without success as many have decided to assume the ‘wait and see stance’.

Thus, oil companies made edgy by the spate of oil theft and pipeline damage have been holding back investments in billions of dollars with Nigeria estimated to have to have lost about $40 billion or N6.3 trillion in projected investments in the last two years.

Even the Senate Committee on the Upstream Sector of the oil industry, in their own estimation said about $28 billion that would have accrued to the sector has been partially lost or deferred since 2010 due partly to the activities of oil thieves.

Also, SPDC is holding back on a $30billion investment in two offshore deep water projects in Nigeria. This is even as the company says they would rather observe the current trend for a while before making any further huge commitment.

Already, a loss of N191 billion ($1.23 billion) has been recorded by the country in the first quarter of 2013, due to drop in crude oil production, arising from incessant crude oil theft and vandalism along the major pipelines within the Niger Delta.

Also, the country is expected to lose N83 billion ($554.0 million) in the months of April and May, as the NNPC and Shell Petroleum Development Company of Nigeria Limited, SPDC, had earlier last month declared a force majeure on its 150,000 barrels of oil per day Bonny Light export, with the shutdown of its $1.1 billion (N174.9 billion) Nembe Creek Trunkline, NCTL.

Acting Group General Manager Public Affairs Division, NNPC, Tumini Green, was quoted to have said that daily crude oil production during the period fluctuated between 2.1 and 2.3 million barrels per day compared with projected estimate of 2.48mbpd.

“Expectedly, this fall between actual production and forecast in first quarter 2013 have resulted in a drop in crude oil revenue of about $1.23 billion (N191 billion) that should have accrued to the Federation Account,” the NNPC spokesperson had said.

Last year alone, pirates attacked 966 sailors and stole oil worth between $25 million and $75 million euros (N33 million and N100 million) with most of the stolen crude oil coming from Nigeria.

All this, is despite, the over N17billion security contract awarded to ex-militants to safeguard the country’s pipeline against the activities of unrelenting oil thieves.

And only recently, the Presidency lamented that an estimated N7billion is been lost by the country on daily basis all due to the devastating effect of people who have continued to sabotage the economy by their actions.

But it seems the Nigerian Government has woken from its slumber as the Minister of Foreign Affairs, Mr. Gbenga Ashiru earlier last week had warned that Nigeria would no longer listen to plea from foreign missions to release crew or ships involved in illegal activities on Nigeria’s territorial waters.

The Minister said, “The Nigerian Navy and NIMASA have been directed to take firm measures against any ship caught in unwholesome activities, including oil theft on Nigeria’s territorial waters. In the past, ambassadors have come to me or my permanent secretary to plead for the release of either their ships or the crew members caught in illegal activities. This is to serve as a warning that henceforth, I will not be able to grant audience to people coming to plead for the release of their ships or crew members”.

Disturbed by the loss of about 400,000 barrels (of which in monetary terms totals about N7billion) daily to crude oil theft, government has approved the establishment of a legal task force to commence prosecution of proven cases. At the moment, there are over 500 oil theft cases nationwide.

The task force which will be headed by the Attorney-General of the Federation, Mohammed Adoke, is expected to use relevant laws, particularly the Miscellaneous Offences Act, which carries a sentence of 21 years without option of fine to prosecute oil theft offenders.
The legal task force will be made up of representatives from the NNPC, the Armed Forces, Civil Defence, Police, SSS and other related agencies and it is expected to be operational for one year starting July, 2013.

The good thing about the taskforce is that it would continue the prosecution of established cases and all convictions given wide publicity.

But analysts have faulted its establishment saying that what the government lacks is the political will to ‘go after the sponsors of these activities’.

According to Mr. Evans Adesina, “there are laws already in our statues book to deal with issues of oil theft but somehow; the government has refused to act in the process turning a blind eye to the activities of these economic saboteurs.
“What is needed is to strengthen the law enforcement agencies to carry out their primary responsibility.”

National Industrial Relations Officer of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Mr. Chika Onuegbu, reiterated that although the Section 8 of the Miscellaneous Offences Act, provides for life imprisonment for anyone stealing crude oil or petroleum products or vandalizing the pipelines, hardly is anyone caught or prosecuted. “It is obvious the oil thieves have powerful allies in government.”

“It is also clear that the security agencies are complicit in this menace of our national resource, and government needs to step up to the plate and summon the required will to fight this patent threat to our nation. The truth is that the continued unabated theft of crude oil will obviously lead to divestment by the oil and gas companies, and the attendant socio-economic crises and significant job losses as a result.

Over time, there have been allegations that top government functionaries are neck deep in the business with fingers particularly pointing to past defense and security chiefs, who according to a Niger Delta source who spoke to FrontiersNews on condition of anonymity, have had to use their extensive security connections to facilitate the perpetuation of the “this illegal oil theft business.”

There is a story of a Naval personnel with a couple of years to retire from the service had to work his transfer from Lagos to Port Harcourt so he can make money to sustain life after retirement.

According to the source who spoke to frontiersNews in pidgin English, “you know the money when all these navy people dey make for here. Na Ghana must go dem take they carry their money.”

Mr. Adesina posited that if the government can summon the courage to go after the big fish then the small ones will have no choice than to stop knowing that their sponsors have been arrested and are facing prosecution.

And it seems the National Assembly is thinking in the same direction with the Executive when recently, Speaker of the country’s House of Representatives, Mr. Aminu Tambuwal wa quoted to have said that to deal decisively with the matter, there is need for collaboration between African, Caribbean, Pacific and European Union (ACP-EU).

However, Organised Labour has called on the National Assembly to use the opportunity provided by the ongoing debate of the Petroleum Industry Bill (PIB) to order the genetic fingerprinting of Nigeria’s Petroleum assets to check the massive theft of the nation’s crude oil, warning that Nigeria is bleeding and needs help.

Analysts and industry experts are of the opinion that with the new posturing of government the once booming business of oil theft would be a thing of the past and Nigeria and Nigerians would be the better for it.

Rather than appealing to the international community to help curb the menace of oil thieves, Nigeria should take their destiny in their own hands.

Credit: Frontiers News