How Nigeria lost N2.4trn to crude oil theft in 28 months
Nigeria has lost crude oil worth over N2.453 trillion to theft within two years and four months, computation by Daily Trust on Sunday of data from petroleum industry reports has shown. The situation has been described by stakeholders as a national emergency that needs stringent actions. Nigeria lost N15.71 billion worth of crude oil […]
Nigeria has lost crude oil worth over N2.453 trillion to theft within two years and four months, computation by Daily Trust on Sunday of data from petroleum industry reports has shown. The situation has been described by stakeholders as a national emergency that needs stringent actions.
Nigeria lost N15.71 billion worth of crude oil in 2020, N1.67trn in 2021, and just from January to April 2022, the country has lost N623bn worth of crude, totaling N2.453trn in 28 months.
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In the 2020 Petroleum Industry Report released by the Nigeria Extractive Industries Transparency Initiative (NEITI), indicate that at least 39.16million barrels (mmbls) of crude, valued at N15.71bn as at then, was stolen, with an average loss of 107,293 barrels per day (bpd).
More so, data from the Nigerian National Petroleum Company (NNPC) Limited obtained in April shows that in terms of the financial loss to the country, in 2021, the total volume of crude oil stolen was 200,000bpd, amounting to 73m barrels of crude for the year. At an average price of $55 per barrel, the total loss for the year was worth $4.015bn or N1.67trn.
The NNPC data further showed that between January and April of this year, the volume of crude stolen had risen to about 250,000bpd, and at $100 a barrel oil price, the NNPC data estimated the loss at N623bn.
How theft denies Nigeria gains of higher oil price
Nigeria as an oil-producing country ought to be enjoying a windfall now with the sudden rise in the price of crude oil in the international market due to the Russia-Ukraine situation. Before the Russia-Ukraine crisis, crude was selling between $96 and $97 per barrel.
It shot up to $105 per barrel the following day after the conflict began. It has since then been hovering between $110 and $125 per barrel.
Also, crude theft, according to reports, has further cut down the ability of Nigeria to meet the quota given to the country by the Organisation of Petroleum Exporting Countries (OPEC). Recently, OPEC raised Nigeria’s production quota from April’s 1.735 million barrels per day to 1.753 million barrels per day for May 2022.
However, industry reports show that Nigeria’s daily production has been around 1.417m barrels per day since February due to crude theft, vandalism and other acts of sabotage. This was also corroborated by the OPEC Oil Market Report for March 2022.
Latest industry data indicate that crude oil production has dropped to an all-time low of 1.29million barrels per day (without condensate). The addition of condensate brings Nigeria’s current production to 1.49mbpd.
Before the oil theft worsened, the average production in 2020 was at 1.77mbpd, even at a time when the world suffered from COVID-19 and oil price glut. At a time, the price of crude oil crashed to sub-zero levels with unprecedented demand dip.
However, the crude oil theft report noted that oil glut resulted in zero crude oil theft in Nigeria at some point, ‘obviously because there was no market for the thieves to sell their stolen crude. This saw the country recording its highest production level of 2.49mbpd on April 17, 2020.’
According to the Group Managing Director/chief executive officer of the NNPCL, Mallam Mele Kyari, what that development showed was that Nigeria had the capacity to produce that figure (2.49mbpd) on any normal day because there was no special intervention of any kind that led to that peak production on that day.
However, as normalcy began to return and the price of oil began to experience a steady rise, the oil thieves began to step up their game and upstream operators began to experience production losses, which have been growing since in almost direct proportion to the rise in crude oil price in the international market.
Schemes thieves devise to siphon crude
The suspected oil thieves are said to have devised various means to steal crude oil from pipelines, with a high rate of pipeline breakage, reports showed. For instance, the NEITI report of 2020 noted that the average of 107,293 barrels per day crude loss in the year occurred through 349 cases of pipeline vandalism. The figure was even higher in 2019, reaching up to 1,387 cases.
A latest official report on crude oil theft obtained by this newspaper has it that the rate at which the crude pipelines are breached with insertions is rising. On a stretch of 20 kilometre pipeline, there were 85 insertion points in three weeks in a series of attacks. For instance, the Trans-Forcados Pipeline from Delta State now records about 19,000bpd loss day, even when it used to be the safest onshore pipeline. There are also cases of sheer vandalism, where the lines are just blown out with explosives, resulting in spillages and environmental hazards.
An NNPC report further corroborated the strategies of the crude oil thieves, especially around the Trans-Niger Pipeline or the Nembe Creek Trunk Line, which are major pipelines conveying crude oil to the terminals for export. For instance, in January 2021, out of about 239,000bpd pumped into one the lines, 190,000bpd was recovered with 19,000bpd loss recorded. As at March 2022, there was zero recovery from all the volumes that were pumped into the line.
It was also observed that the trend for the thieves was more with the Joint Ventures (JV) assets and those that belong to the independent producers, mostly onshore and swamp or shallow waters, than with the Production Sharing Contracts assets, which are offshore and in deep waters.
The size of pipes inserted on the crude lines and the technology used for the insertion also show the sophistication of the thievery. It has been reported that pipes inserted to steal crude oil from the lines are small and fitted in an amateurish way, suggesting that the perpetrators may be artisans and criminals operating a slew of illegal refineries in the Niger Delta.
However, some of the pipes fitted into the lines to siphon crude oil are big and could be the same size as the pump used to load crude into vessels at the expert terminal,) big time criminals and oil engineering professionals.
While these big-time thieves pose real economic threat to Nigeria, according to experts, the artisinal criminals and illegal refiners are of grave danger to communities, with pollution and risk of inferno as witnessed in Abaezi forest in Mbahu community of Imo State, causing the death of over 100 persons and property destruction.
More efforts to tackle menace
As the oil theft menace reached an all-time high, President Muhammadu Buhari, in March ordered the Chief of Defence Staff (CDS), Lucky Irabor, to lead an onslaught against the criminals. The CDS and the minister of state, Petroleum Resources, Timipre Sylva; NNPC boss, Mallam Kyari, among other officials, visited crude oil theft sites in Rivers State.
A day after, troops attached to the Operation Delta Safe in the South South region raided some communities in Delta State where they destroyed 49 illegal refineries.
The troops, within a period of two weeks, neutralised one militant, arrested 70 persons, recovered 6,679,000 litres of illegal refined diesel; 4,436,000 litres of stolen crude oil, a gunboat, guns and ammunitions, motorcycles, wooden boats, pumping machines, two trucks, speedboats, engines, keke and vehicles.
It was further learnt that arrest had been made while the NNPC also deployed community-based security to monitor the pipelines, while it is working on deploying technological tools for more effective surveillance and monitoring of the lines and facilities.
The Economic and Financial Crimes Commission (EFCC) and the Nigerian Financial Intelligence Unit (NFIU) are said to be tracking movement of funds relating to the criminality.
Oil theft, a national emergency – Expert, NNPC boss
Commenting on the spate of oil theft, the GMD/CEO of the NNPC, Mallam Mele Kyari, described it as a national emergency on account of the proportion, dimension and sophistication it has taken in recent times.
Also speaking, William Onuh, a biochemical engineer in Abuja, said only urgent actions from the government could curb the situation.
He said, “It actually requires emergency action because for now, oil fund is the livewire of the country; and if this sabotage continues, Nigeria is in danger.
“Imagine at a time that oil price has risen above $100 per barrel and Nigeria is not cashing out big because its crude oil production is lower than its approved quota,” the energy expert noted.
Onuh further urged the NNPC to intensify community actions to sensitise residents of the dangers of abetting oil thieves.