OrderPaperToday – Oil theft is one of the biggest problems bedeviling the petroleum industry in Nigeria. Every day, huge quantities of crude and refined oil products from the pipelines of multinational oil companies and supply lines of the Nigerian National Petroleum Corporation (NNPC) are lost to the detriment of the country.
Oil theft and Nigeria’s economic hemorrhage
Nigeria’s oil resources are constantly carted away through vandalism, sabotage, deferred production and outright theft with negative consequences for the country’s revenue, environment, security and citizens’ livelihood. Host communities like the Ogonis for instance have suffered severe impacts ranging from respiratory diseases and cancer cases.
According to the Nigeria Extractive Industries Transparency Initiative (NEITI), crude oil theft and sabotage stood at 27 million barrels in 2015 but sharply increased to 101 million barrels in 2016, an increase of 274%. This was aside losses due to deferment, which in 2016 was put at 144 million barrels which also went up by 65% when compared to the 87.5 million barrels in 2015. Overall, NEITI has revealed that crude oil and refined product worth $41.9 billion were stolen from Nigeria between 2009 and 2018. A breakdown of the lost revenue shows that Nigeria lost $11.47 million a day, $349 million a month and $4.19 billion annually to the scourge of oil theft. Further analysis shows that $38.5billion was lost by oil companies, $1.56billion by the NNPC on domestic crude and another $1.8billion on refined petroleum products during a decade long period of unchecked theft.
A foreign based journal, ‘The Economist’, in a publication in 2015 noted that over 100,000 barrels of crude are estimated to be stolen per day. Also, on August 30th, 2019, the National Economic Council (NEC) through a submission by NNPC put the amount of crude oil stolen in the first six months of 2019 at 22 million barrels. NEITI valued these 22 million barrels at $1.35 billion (N486 billion) which is about 5% of Nigeria’s N8.9 trillion 2019 budget.
Furthermore, a policy brief by NEITI titled “Stemming the Increasing Cost of Oil Theft to Nigeria”, notes that what the country lost in 20 months between 2018 and 2019 in fiscal terms is “enough to finance the proposed budget deficit for 2020; in 15 months to cover total proposed borrowing or increase capital budget by 100% and in five months to cover pensions, gratuities and retirees’ benefits for 2020”.
NEITI added that “in terms of volume, 138,000 barrels of crude oil was lost every day for the past 10 years, representing 7% of average production of two million bpd. Nigeria lost more than 505 million barrels of crude oil and 4.2 billion litres of petroleum products between 2009 – 2018. What is stolen, spilled or shut-in represents lost revenue, which ultimately translates to services that government cannot provide for citizens already in dire need of critical public goods”.
Earlier, in 2012 reported that the Senate Committee on Petroleum Upstream estimated that about $28 billion dollars that should have been invested in the oil and gas sector has been partially lost or deferred since 2010 due to oil theft and pipeline vandalism. A Tell Magazine publication in 2012 also revealed that Shell Petroleum Development Company stalled on investing about $30 billion in two offshore deep water projects in Nigeria due to the same problem of oil theft and vandalism.
Stemming the tide of theft
In safeguarding the pipelines in order to address the issue of oil theft, experts have posited that there needs to be a security overhaul, community engagements and diplomacy, in addition to stopping markets for stolen crude and refined products. Also, there is need to review and introduce legislations that will ensure stiffer sanctions against oil theft and specify enforcement mechanisms.
Furthermore, the government needs to put in place a special security task team for Nigeria’s oil and gas resources, with a stated obligation to curb crude theft and vandalism.
However, some have identified technology as a potent and effective tool for addressing the issue of oil theft, especially the computerisation of measurement and surveillance mechanism in the country’s oil and gas industry.
Oil producing countries like Kuwait, Russia, Saudi Arabia and United Arab Emirates (UAE) have all implemented computerised management systems that record the quantity of oil produced, quantity sold and at what price. The computerised oil management system assists in the pipelines protection, trigger off alarms when any section of the pipeline is disturbed for whatever reason. The system detects if there is a weak section along the stretch of the pipeline, indicates the position and point of such section as well as advises on how to mend or go about it. The same system captures pictures of suspected intruders on the pipeline.
The computerised management facilities are equipped with fire-fighting gadgets in the event of fire outbreak associated with oil and gas production and exportation.
It is line with this that the Senate called on President Muhammadu Buhari to set up a consortium of experts to appraise the possibilities of installing computerized oil facilities management gadgets to curb multifaceted problems associated with oil and gas production, transportation, and sales business in Nigeria.
The lawmakers via a motion debated in 2019 subsequently directed its Committees on Petroleum Upstream, Downstream and Gas Resources to hold a public hearing with stakeholders to ascertain “the quantity of oil and gas produced daily; the quantity control mechanism as currently engaged by NNPC, and if adequate; the amount of waste of petroleum products through pilfering, pipelines vandalization, leakages, and from any other forms; international best practice of computerized oil and gas business management, including pipeline protection and quantity and quality control; and any other advice that could improve the oil and gas business in the country.”
NEITI Audit and the RemTrack Intervention
Meanwhile, NEITI, in its 2017 Oil and Gas Audit Report, identified oil theft as a key issue requiring remediation and recommended, among others, that:
- NNPC should ensure proper surveillance (land based and aerial satellite photography and geo-phones trenched pipelines) to minimize vandalisation and crude oil theft, and the pipeline networks need to be updated.
- The Federal Government needs to ensure the success of oil and gas industrial parks in the Niger Delta region to ensure the development of oil and gas infrastructure in the oil-producing states and also create employment for the populace in the Niger Delta.
It is important to note that ordinary Nigerian citizens are also stakeholders in the industry and own it a duty to keep track of the implementation of the recommendations stated above. To help achieve this goal, RemTrack, a technology for development tool developed and deployed by OrderPaper Advocacy Initiative and the Civil Society Steering Committee of NEITI, provides the platform for citizens to engage and monitor the progress made in addressing critical issue in the oil and gas industry including oil theft. RemTrack dissects and simplifies the multifaceted concept of remediation in the extractives sector into assessable user and citizen-friendly information. By merely commenting and sharing thoughts and posts on the app, citizens are invariably raising awareness on the vexed issue and opening up windows for its resolution.
In era where the government is constantly raising alarm over paucity of funds to drive development, all stakeholders – Government, Oil Companies, and Citizens must embrace the use of technology for better efficiency in the management of the country’s oil wealth by ensuring that large scale oil theft is completely dealt with for the good of the country. This is the prime place that RemTrack has come to occupy. Citizens and groups now need to expand the occupation by engaging.