Nigeria: Unending Oil Theft
The National Economic Council (NEC) last week put the amount of crude oil stolen from Nigeria in the first half of 2019 at 22 million barrels. Edo State Governor, Mr. Godwin Obaseki, who is the chairman of the ad-hoc committee of the NEC on crude oil theft, prevention and control, gave the alarming figure at a meeting of stakeholders in Abuja. Obaseki was reported to have painted a dire picture of the oil theft menace, warning that “if nothing was done to curtail the ugly trend, the figure could double by the end of the year”.
According to him, oil theft and pipeline vandalism are beginning to pose a threat to the national economy. Obaseki’s dire warning was preceded by statements from the Nigerian National Petroleum Corporation (NNPC) wherein it raised the alarm that 106 pipeline points were breached on its pipeline infrastructure in June, representing an astounding increase of 77 per cent from the 60 points vandalised in May 2019.
In a report in The Guardian of last week, Shell alone, with a network of approximately 4,000 kilometres of oil and gas pipelines and flowlines, said the crude oil theft it experienced on its pipeline network resulted in a loss of around 11,000 barrels of oil a day in 2018, which was more than approximately 9,000 barrels per day in 2017. It should be recalled that 40 per cent of Shell’s total security expenditure totaling about $383million was spent on protecting its staff and installations in the Niger Delta, from 2007 to 2009. Yet, the problem of vandalism has persisted and is growing in scope and sophistication.
The Group Managing Director (GMD) of NNPC, Mr Mele Kyari, just last week reeled out frightening figures on the menace of pipeline vandalism at the Nigerian International Pipeline Technology and Security Conference in Abuja saying that the corporation had recorded a total of 45,347 pipeline breaks on its downstream network between 2001 and mid-2019. He lamented that the cost of vandalism, which includes “fatalities, loss of revenue, asset and environmental degradation, possible loss of employment, collateral damage to national image, loss of investor confidence, etc. will obviously affect everyone in the long run”.
No doubt, part of the huge environmental pollution in the Niger Delta is caused by pipeline vandalism which is doing incalculable damage to the ecosystem. It is not enough to blame only the oil companies for oil spill without taking cognisance of the criminal actions of a few unscrupulous profiteers in the host communities.
A report of the Nigeria Natural Resource Charter (NNRC) stated that in 2016, about N3.8 trillion was recorded as losses from crude oil theft, sabotage and pipeline vandalism. Compare that figure with the national budget of N6.06 trillion of 2016. If I may ask, who is losing the money that could have gone into development? Of course, the Nigerian state and its people. Who are those benefiting from those losses? Criminals and their conspirators. It is painful enough that Nigeria does not know the exact volume of the crude oil that it actually produces beyond rough estimates. This country is an economic basket case.
The same report in The Guardian also referenced the Managing Director of Aiteo Group, Victor Okoronkwo, an indigenous upstream company and operator of OML 29, which operates one of Nigeria’s strategic pipeline assets, Nembe Creek Trunkline (NCTL). Okoronkwo revealed to journalists that vandalism has cost Aiteo losses in excess of $2b in the last four years. Can anyone just imagine what that means? The company was recently forced to declare a force majeure on Nembe Creek Trunkline due to a fire incident it blamed on “third-party interference”. It’s multiple jeopardy for the companies that incur costs to fix the breaches, are subjected to loss of products, loss of production hours, and also contribute huge amounts to supporting security personnel deployed in the zone.
The background to all of this comes amidst the huge amounts spent on it, the security of the pipelines is lax underlined by the massive benefit that comes with vandalism. What is worse is that Nigeria’s security operatives have been sucked into the criminal syndicate that specialises in oil theft. Then again, what has happened to the huge pipeline protection contracts awarded to several companies? How well are these companies protecting these pipelines? What is the guarantee that these same contractors are not colluding with vandals just to have their cake and eat it?
As big as the threat is to the nation’s economy, the government approach has been lackadaisical to say the least. Instead of focusing on the big picture of taming the monstrous theft of its mainstay, it is more concerned with distracting our attention from its failures with all sorts of sham probes, just chasing shadows.
In The Guardian report earlier referenced, Mr. Anyakwee Nsirimovu, who was a member of the defunct Technical Committee on Niger Delta regretted that government’s failure to implement their recommendations was partly responsible for the growing cases of oil theft. He added that the Department of State Services (DSS) had presented a list of persons involved in oil theft to the committee, but the government failed to act on it. So what has happened to the list of oil thieves presented to the National Security Adviser, the Economic and Financial Crimes Commission (EFCC)? Why is the government dragging its feet in dealing decisively with these people?
The NNPC lost control of security of its pipelines when troops were first deployed to protect the assets. Since then, its losses have progressively been on the increase despite all measures the corporation and successive governments have put in place over time to address the constantly evolving menace. The NNPC, International Oil Companies (IOCs) and the Independents are all taking a hit from oil theft, and are incurring huge losses. Vandalism is now so prevalent that many independent producers are now considering buying barges and pumping oil directly from wellhead into them for transportation to vessels offshore.
The nation is bleeding terribly from the ongoing criminality. Yet no determined action has been taken against the perpetrators of this brazen criminality. Why? Because the people involved are highly connected in government circles. If the nation is able to arrest the massive theft of its oil resources arising from pipeline vandalism, can anyone just for a moment imagine, how much would be recovered for this country? It will be by far more than whatever our loudmouthed, noisy anti-corruption agencies have claimed to have recovered in their phoney war against corruption being fought on the pages of newspapers and bought into by the wilfully blind.
I hate to sound like a broken record, but it is worth reiterating. Fighting corruption is not about chasing political opponents, or forgiving the “sins” of others the moment they switch to the ruling party. It is not about announcing the number of corruption cases you have in court against individuals and corporations or the number of cases you have won. It’s for the government to put in place systems and strong institutions that can operate unhindered from political considerations, and can hold anyone accountable for breaches, however minor they may be.
Once your sympathies lie with the ruling party (just read the recent exposé of the pension thief, Mr Abdulrasheed Maina) you can literally get away with anything. When I say anything, I really mean just anything, including picking a gun and killing people at the Eagle Square in broad daylight. That is the difference between our country and the civilised world. As we say in pidgin, abeg leave matter for Mathias jor.
Let’s return to the central focus of this piece after that brief digression. Illegality and impunity thrive in Nigeria. Vandalism is now a multi-billion dollar business and the easiest way to make fast money. You see, there is a very serious lobby among security officials to be posted to the Niger Delta. It is a dream come true when they are finally posted there, and they waste no time to immerse themselves in the nefarious trade and millions of dollars would just be rolling into their pockets. Suddenly, these criminals begin to cruise around in exotic wonder-on-wheels, and even in private jets, openly flaunting their wealth, arresting mansions begin to sprout up everywhere, and are able to send their children to Ivy League schools abroad. Contrast this with the secret lobby NOT to be posted to Borno State, Boko Haram hotspot.
Captains, Majors, Colonels, Generals, etc., across the armed forces and senior police officers are competing with private entrepreneurs and politicians in capital accumulation in a country that is the poverty capital of the world.
In May this year, the Rivers State Governor, Nyesom Wike, accused the General Officer Commanding (GOC) 6 Division of the Nigerian Army, Major General Jamil Sarhem, of running an illegal oil bunkering squad for the purpose of financing his (Sarham) quest to be appointed Chief of Army Staff. Wike wondered what the joint task force, Operation Delta Safe would do when they encountered the illegal oil bunkering team of the GOC. Has the allegation by Wike against the General Jamil Sarhem been investigated? The answer is NO.
In July 2018, Aiteo had cause to accuse the Joint Task Force (JTF) in the oil region, under the then commander, Rear Admiral Apochi Suleiman, of involvement in the illegal trade “and offering protection/escort services to those allegedly responsible for oil theft”. Were the allegations against Suleiman ever investigated? The answer is again NO!
In order words, allegations against some members of the top echelon of the military brass are not new and government is very well aware and knows the perpetrators. But what is new is the alarming escalation and brazenness it is now being carried out without a proportional deterrent response on the part of government to curb their activities, even as the country bleeds on all fronts. Government’s indifference to this menace is remarkably startling.
For the avoidance of doubt and as many experts have stated, it is near impossible for criminals to succeed in stealing the country’s crude oil without the active connivance of security operatives. The NNPC knows it, the IOCs and the Independents know it, and the government knows it.
Now let’s go to the question begging for answer: where does the oil feeding the illegal refineries scattered all over the Niger Delta come from? The public has a right to know or don’t they? The connivance of security operatives and government officials in the fleecing of Nigeria is from the top to bottom and vice versa. It is now beyond the NNPC and the oil companies. The syndicate operating in the Niger Delta has grown in sophistication. It is now beyond just breaking of oil pipelines. They now have their own pipelines cleverly attached to the NNPC pipelines, IOCs pipelines, and those owned by Independents that directly funnel crude to their barges for shipment to the black market offshore, or transport the stolen crude to storages feeding many of the private refineries scattered all over the Niger Delta.
So each time the NNPC, IOCs and Independents pump oil from their various wellheads, a significant volume is diverted to the illegally attached parallel pipelines owned by criminal syndicates which are directly connected to their pre-stationed barges. This is happening daily in the full glare and connivance of our security operatives deployed to protect the oil infrastructure and possibly insiders in the NNPC and other oil companies. Just imagine the loss to the nation in hard currency!
Instead of toying with the idea of increasing the tax burden on the people, it is high time this government woke up to its responsibilities and acts decisively against all, including its security operatives found to be directly or indirectly culpable of oil theft.