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Published On: Fri, Oct 18th, 2013

How State Supports Theft of Crude Oil and Refined Petroleum Products

LAGOS OCTOBER 18TH (URHOBOTODAY)-Crude oil and refined petroleum products theft in Nigeria is increasing by the day, constituting a serious threat to the economy. Being an extremely organised crime, it poses a huge challenge. The theft involves siphoning crude from pipelines into makeshift vessels from where they are disposed.
About 20 percent of crude oil is stolen daily, besides the unquantifiable refined petroleum products that are pilfered daily. Although militancy attacks on oil facilities by Niger Delta militants has stopped, crude oil and refined petroleum products theft has surged despite billions in contract awarded to top militant leaders to stop the theft and protect pipelines and oil installations. The militant leaders on their part have fingered high level authorities as being behind the theft. And there is also the curious question of why the Administration will hand over the security of critical maritime assets to militants when there is a substantive Navy and maritime security in place; that to key observers is a deliberate subversion of the statutory powers of the Navy and the nation’s maritime security.
Whatever the case, what we do know from our investigations is that the theft is massively organised with high sophistry; it is heavily funded and has the backing of insiders in the industry and highly connected and powerful individuals within and outside the government. Authentic sources tells us that virtually all security agencies in the country, including the military, the police and the Nigerian Security and Civil Defence Corps (NSCDC) are involved in the theft directly or indirectly; directly by participating in the stealing or indirectly by taking bribes and looking the other way. Accordingly, the so-called criminals reportedly caught occasionally are the greedy ones that refuse to settle the security agencies and the authorities.
The petroleum industry accounts for over two-thirds of government spending; it represents at least eighty percent of export earnings and fiscal revenues in Nigeria; new investments in the oil sector has been severely hampered because the NNPC (Nigerian National Petroleum Corporation), the nation’s oil company, which operates joint venture with the oil majors as a concessionaire with controlling interest is riddled with mindless corruption, and the critically important oil industry regulatory legislation {The Petroleum industry Bill (PIB)} is yet to be passed. The Bill has been before the National Assembly since 2009, and is in part responsible for the decay in the sector. As a result of the uncertainties over the PIB, oil majors such as Shell and Chevron have had to delay approval of vital projects; they had also been compelled to sell crucial assets to indigenous players, and focus instead on deepwater operations.
Available records from the National Bureau of Statistics (NBS), the Nigerian Extractive Industries Transparency Initiative (NEITI) and the International Energy Agency (IEA) reveals that oil production in the last nine months hovered between 1.9milion barrels per day (bpd) and 2.2million barrels per day (bpd) as against the standard 2.5million barrels per day (bpd) due to oil theft; it is the lowest since the 1.5millionbpd in 2009, the nation was producing at the height of the militancy in the Niger Delta. This has resulted in the depletion of the excess crude account (Not External Reserve) from $9bn in December 2012 to $5.1bn in July this year. Thus, an estimated 500,000bpd is lost to theft; if you do the math at the current price of $104 per barrel of crude in the international market, you realise the Nigerian economy suffers a daily loss of $52million daily to oil theft; that is aside the stealing of unquantifiable refined petroleum products.
Besides this, illegal bunkering of refined petroleum products also takes place daily. The term bunkering actually refers to the process of supplying fuels to ship for their own use. It is legal when you have the license for it, and illegal when you don’t have the license for it; and that is what is done by those who use thousands of fifty litres jerry cans to collect refined products and wait till night fall to sell elsewhere. One of such places where illegal bunkering and stealing of refined products occurs, aside the creeks of the Niger Delta region, is Arepo in Ogun State, and it is done daily in collusion with the police and the NCSDC; a boat ride through the Majidun River confirms this; the bunkered fuel or stolen fuel as the case may be is then transported in boats mostly at nightfall to the Lagos Lagoon and other places for disposal.
That is not all; even the allocation of refined petroleum products to marketers by the Petroleum Ministry is filled with bribes and settlements to the Ministry. Industry players and insider sources say they have never had it so bad before as is now obtainable under the current Federal Ministry of Petroleum Resources; according to them, if you don’t settle, you won’t get allocation. The rot in the sector is indeed legendary.
However, in a propaganda Statement three weeks ago, the NNPC through its Acting Public Affairs General Manager, Ms. Tuminu Green stated that 400,000bpd of crude has been restored by the re-opening of the three major trunk lines (The Trans Niger Pipeline, the Nembe Creek Pipeline and the Tebidaba-Brass Pipeline), which were shut down due to the activities of pipeline vandals; the Statement also said the Security Strategy Committee set up by the Petroleum Ministry aided in this regard. It remains to be seen though, how these supposed efforts will improve the sector. What is now true and clear to all is that there is crisis in the economy as revenue allocations to the 36 States and 774 Local Councils and key parastatals are still being owed, and salaries for months has not been paid to Federal and State workers alike. And the crisis is deepening by the day with the increasing strikes by essential workers in the education, health and other critical sectors of the economy. The Administration really does need to wake up from its slumber and lethargy, and get a handle on these issues.
With strength and determination,
Eneruvie Enakoko, Tunde Adetula, Papa Siakpere, Nojeem Ekeolere, Wole Adebayo and all of the Conscience Reports Team.
(+2348082588868, 08033188864)

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