Despite another opportunity presenting itself in another bout of oil windfall, Nigeria is harvesting woes. Not only that Nigerians are not benefiting from the boom, caused mainly by the Russia/Ukraine crisis, they are harvesting environmental degradation, crime, loss of investments in the industry, to name a few. Analysts, economists and many other stakeholders ascribe the situation to crude oil theft.
Key operators in Nigeria’s oil and gas industry and political analysts have blamed laxity in commitment and deepened corruption among components of government institutions as breeding and incubating oil thieves who initially began like organised cliques, but have now transformed into a cabal, stealing the fortunes of the country.
Not only that the Nigerian National Petroleum Company Limited (NNPC) has identified them as organised criminal elements, some known operators have linked security operatives deployed to protect industry assets as culpable.
Saka Matemilola, former chairman of the Society of Petroleum Engineers (SPE), Nigeria Council, and former manager at Shell Petroleum Development Company (SPDC), told NATIONAL ECONOMY that the problem is simply lack of political will on the part of the government to stop the stealing.
Matemilola, in his opinion said that investing scarce resources in technology as suggested by some others is not the answer but that Nigeria, which is signatory to key international treaties can track movement of crude at any time.
He said the maritime agencies, navy and other agencies have trackers and have overall information as to vessels navigating Nigerian territorial waters.
Matemilola wondered how a vessel which anchored with permission, can load crude and sail away without being noticed. He further said that crude leaving the shores of the country is destined to a refining hub located in a country.
“What I am saying is that from point of departure to point of arrival every moving vessel is cleared by authorities, so it is inexplicable how in the case of Nigeria a vessel sneaks in and loads and sneaks out unnoticed,” he said.
He said except this is seriously checked the fortunes of children yet unborn would fritter away.
Former country government relations advisor, Mobil Producing Nigeria (MPN), Adedayo Ojo, said the country needs to adopt contemporary technology, including drones and change to subsurface pipelines, for example the type used for the AEPP (Amukoe Escravod Pipeline Project). Pipelines buried 15 meters or more below the ground are certainly more difficult to vandalise, he said.
According to Ojo, the founder and chief executive officer of the Caritas Group, and also board chairman at Orpheus Communications Ltd, it is equally important to involve the real inhabitants of the communities along the pipeline routes. This means going beyond a singular company or individual in the Delta region. Most of the communities are independent of each other and effective pipeline monitoring should be broken down into bits that are manageable by the different communities.
He said when the community inhabitants see direct economic benefits from protecting the pipelines, they will certainly be encouraged to protect same.
NATIONAL ECONOMY reports that the Nigerian National Petroleum Company Limited (NNPCL) said the impact of crude oil theft has been affecting its performance, disclosing that it loses 470,000 barrels per day amounting to $700 million monthly in addition to security challenges that hindered oil production in some terminals.
The group general manager, National Petroleum Investment Management Services (NAPMS), Bala Wunti, who disclosed this during a tour of facilities of NNPCL recently said the pipelines, particularly those around Bonny terminal cannot be operated due to the activities of criminals.
He added that “The Shell Petroleum Company (SPDC) trunk line, TNP transnational pipeline cannot be operated and this has been like this since March the 3rd that we put in this. Just take your calculator, 150,000, it means if you want to arrive at one million barrels per day, it means every week as a minimum, basically for one week alone, it’s four cargo and four cargo is four million barrels. Four million barrels formula bar or $100 is $400 million.
“So, you can do your calculations by yourself, take whatever price you want, take this to multiply by the number of days that have been shortened since March 3,”he said.
The NAPMS GM said Forcados is not completely secured due to some challenges, but assured that they were addressing it, and in two weeks it may be fixed.
According to him, “But we also have Brass about 100,000 barrels, which is operated by Agip and is also facing insecurity and vandalism.
“Illegal siphoning of crude oil from oil facilities by criminal individuals and groups, impacted negatively on revenue to all stakeholders, lamenting that the quantity of oil delivered into these federal oil terminals in the country has been limited by the activities of pipe vandals and organised crooks.”
Wunti said the impact of vandal activities caused low crude oil production, interrupted gas supply, countrywide interruption of distribution of petroleum products, refineries’ downtimes, increasing instability in the oil and gas market, “but I will tell you the major thing that affects us.
“Nigeria will suffer for it; the revenues are impacted, so we can only appeal to them to rein in themselves, the oil theft situation is regrettable. It’s not going on across the whole of the Niger Delta, there are trunk lines that are more impacted on, I think the Bonny trunk line ranks highest.
“Our major challenge as a country is our capability to respond and that is as a result of several factors, the terrain as well as some incapacity that we have.”
Commenting on the support of the technology in monitoring the illegal activities around the oil facilities in the creeks, he said, “I was in the Saudi Arabia infrastructure twice, and I know what they have. It’s a digital control system; it’s different from our own. digital control system is like you have the control system of all your assets in one place.
“This is beyond the digital control system; it’s also a security system and we are doing it and to tell you that this was built-in by our in-house software engineers because of the security sensitivities to it, because they are customised, the moment you give to somebody who creates that. So, we use a combination of technology to integrate and synchronise and create what we are now confident and comfortable with.”
Recently, key unions in Nigeria’s oil and gas industry began a major nationwide action to protest exponential oil theft in the country.
Our correspondent reports that the action is prelude to major mobilisation towards their resolve to expose those behind the crime.
Escalating oil theft by criminals has been described as a bleeding wound that is eating up resources of the country with industry operators calling for declaration of emergency in the oil and gas sector to halt the menace.
Several figures are in the public space showing the level of theft that has occurred at different periods.
Recently security agents operating across the country reported the recovery of stolen crude oil valued N86.2 billion in August alone.
Also, a total of 16,000 litres of diesel valued at N800/litre (N12.8m) were reported to have been recovered by members of the Nigeria Security and Civil Defence Corps in Cross River.
Confirming the situation, minister of state for petroleum resources, Dr. Timipre Sylva, said the country loses 400,000 barrels of crude daily via oil theft.
He described the development as a “national emergency” and regretted that the nation had fallen short of OPEC daily quota, from 1.8 million barrels to 1.4 million barrels, due to crude theft.
He warned that such huge economic loss was capable of crippling the nation’s economy, if not given the seriousness it deserved.
He expressed concern that the menace had persisted in spite of the efforts by the federal and state governments to arrest it.
Sylva said the problem of crude theft could not be handled by the federal government alone as it is a national emergency because the theft has grown wings and reached a very bad crescendo.
“This is because the thefts are taking place in the communities that host the oil pipelines.
“As a result, it has become necessary to involve the stakeholders, especially the host communities,” he explained.
Our investigation shows that the oil theft is orchestrated by an organised syndicate allegedly backed by security personnel specifically assigned to man key export infrastructure and pipelines.
A top industry operator who confided in our correspondent said some soldiers posted to a key export line in Port Harcourt openly threatened to kill their new commander who made an attempt to carry out changes of those assigned to guard the asset.
The workers unions have said that unless the government takes decisive steps and invests in artificial intelligence to contain the menace, the best option is to shut the industry until sanity is brought into the system.
National president of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Festus Osifo, while responding to our correspondent’s enquiry said time has come for the government to declare emergency in the sector.
Osifo said because the crime has become a well-coordinated theft with some security agents compromising their responsibilities, a shift towards investing in artificial intelligence would be a major consideration of the government going forward.
The chief executive officer of the NNPC, Limited Mr. Mele Kyari, sharing similar data, disclosed that the country loses an average of 200,000 barrels of crude per day to oil thieves, translating to 73million barrels in a year.
Using an average crude oil price of $100 per barrel, Nigeria is losing over $7.3 billion in a year or in five years (between 2016 and 2020) an estimated $14.65 billion considering the cost of oil per barrel at the years under review.
The amount when converted using the official N416.25 to dollar exchange rate, translates to N3.038trn loss in a year.
Also, data from the latest report by the Nigeria Extractive Industries Transparency Initiative (NEITI) Oil and Gas Industry showed that 272.2 million barrels (mmbbls) of crude were lost to oil theft and other forms of criminalities in Nigeria’s midstream sector.
Kyari, said recently in Lagos that the exponential growth in the oil and gas industry theft has shortened the country’s production output.
Also, speaking at an oil and gas event in Lagos, chief executive officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, said the agency has developed a roadmap for tackling the security challenges in the industry
Komolafe said NUPRC has identified and is working towards implementing areas of collaboration between the government and operators and ensuring that operators realise their full production potential.
Under the plan the Commission is liaising with the top echelon of Nigerian Security Forces for a robust security framework that ensures government security forces (GSF) provide pipeline and asset security.
The plan will promote the implementation of nodal surveillance technologies on the main trunk lines at each manifold for real-time loss detection that will enable swift and more proactive responses.
It will also enforce installation of tamper detection technologies as part of designs for pipeline and related oil & gas production facilities for approval of the Commission and ensure that operators implement approved security protocols in areas within their control and promptly identify/ remove illegal connections and conduct remedial works in record time.
In addition, a massive public enlightenment campaign to educate citizens on the dangers associated with crude oil theft and pipeline vandalism, in collaboration with relevant agencies such as the National Orientation Agency (NOA) would be carried out.
