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Nigeria’s Massive Oil Theft; More Difficult to Address

Nigeria’s Massive Oil Theft; More Difficult to Address 


Oil was first found in Nigeria in 1956, then a British protectorate, by a joint operation between Royal Dutch Shell and British Petroleum. The two begun production in 1958, and were soon joined by a host of other foreign oil companies in the 1960s after the country gained independence and, shortly after, fell into civil war.

The rapidly expanding oil industry was dogged in controversy from early on, with criticism that its financial proceeds were being exported or lost in corruption rather than used to help the millions living on $1 a day in the Niger delta or reduce its impact on the local environment.

A major 1970 oil spill in Ogoniland in the south-east of Nigeria led to thousands of gallons being spilt on farmland and rivers, ultimately leading to a £26m fine for Shell in Nigerian courts 30 years later. According to the Nigerian government, there were more than 7,000 spills between 1970 and 2000.

In 1990, the government announced a new round of oil field licensing, the largest since the 1960s. Non-violent opposition to the oil companies by the Ogoni people in the early 1990s over the contamination of their land and lack of financial benefit from the oil revenues attracted international attention. Then, in 1995, Ogoni author and campaigner Ken Saro-Wiwa was charged with incitement to murder and executed by Nigeria’s military government. In 2009, Shell agreed to pay £9.6m out of court, in a settlement of a legal action which accused it of collaborating in the execution of Saro-Wiwa and eight other tribal leaders.

In an escalation of opposition to the environmental degradation and underdevelopment, armed groups began sabotaging pipelines and kidnapping oil company staff from 2006, with a ceasefire called in 2009 by one group, the Movement for the Emancipation of the Niger Delta. A year later it announced an “all-out oil war” after a crackdown by the Nigerian military.

Hundreds of minor court cases are brought each year in Nigeria over oil spills and pollution. Last year, Shell admitted spilling 14,000 tonnes of crude oil in the creeks of the Niger delta in 2009, double the year before and quadruple that of 2007.

THE Nigeria Extractive Industries Transparency Initiative’s reiteration of Nigeria’s huge losses from oil theft, sabotage, and crude oil adjustments amounting to N4.3 trillion 2017 to 2022, conflates prolific criminality, the complicity of state actors, and incompetence, and carelessness by successive governments. President Bola Tinubu, the new helmsman, should stop this malfeasance.

The Executive Secretary of NEITI, Ogbonnaya Orji, speaking at the Nigeria International Pipeline Technology and Security Conference in Abuja, said 7,143 pipeline vandalism cases were recorded in the five years under review, with 208.63 million barrels of crude and product losses.

During the period, the country spent N471.49 billion to repair and maintain the pipelines. NEITI’s 2021 Oil and Gas Industry Report said 68.47 million barrels of crude, amounting to N1.96 trillion, was lost in the year.

Nigeria’s tepid response to the massive haemorrhage baffles the world. As Orji reminded the audience, the oil and gas sector accounted for 72.26 per cent of Nigeria’s total export and foreign exchange earnings, and 40.55 per cent of the government’s revenue.

Meanwhile, the country is broke, and borrows for everything, including capital and recurrent expenditure. It borrows to service debts!

In August, the National Security Adviser, Nuhu Ribadu, visiting some oil production sites in the Niger Delta, admitted that 400,000 barrels of crude were being stolen daily, equivalent, he said, to $4 million lost every day. Since then, Nigerians are yet to see any new positive action to stop the heist.

The theft has become sophisticated, with the thieves deploying electronic surveillance systems in their illegal enterprise. The state has not responded adequately.

Reports persist of collusion between the security agents –military, police, Nigerian Security and Civil Defence Corps – and this requires strong, decisive action. Years of awarding lucrative pipeline protection contracts to private security companies, some of them run by ex-Niger Delta militants previously accused of sabotaging infrastructure, have also had limited impact.

For one, the companies accuse the military, notably Nigerian Navy personnel, of disrupting their work, and being allegedly neck-deep in the theft.

All security personnel currently deployed in the fight against oil theft should be shipped out of the theatre, and new teams trained and deployed there.

The government should stop pretending to be helpless and stamp out oil theft. Nigeria is number one among the world’s top five countries with the highest incidence of oil theft; its 400,000bpd loss drowns out all the other four combined. Mexico in second place loses 5,000 to 10,000bpd; the next three, Iraq, Russia, and Indonesia combined, lose less than 15,000bpd according to Canada’s Financial Post newspaper.

The Nigerian National Petroleum Company Limited says it spent N34.5 billion on pipeline maintenance in the 18 months to June 2022, and awarded a N48 billion per year security contract to a private security company. The results have been middling.

There should be a thorough investigation of the theft and of the security personnel charged with the oil assets protection. Ex-Rivers State Governor and current FCT Minister, Nyesom Wike, publicly accused security personnel of involvement in illegal oil bunkering and crude theft.

Nigeria’s dysfunctional governance is deepened by the bizarre practice of the Navy burning seized vessels and their illegal crude cargo without investigation, prosecution, or court order. Tinubu should order an immediate halt to such outlandish behaviour. To secure the pipelines, it needs new strategies, new leadership, and external help.

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