The Nigeria Extractive Industries Transparency Initiative
(NEITI) has said in its latest report that Nigeria lost about $42 billion to
crude theft as well as domestic and refined petroleum products losses between
2009 and 2018.
In the report entitled ‘Stemming the Increasing Cost of Oil Theft to Nigeria’ released by NEITI’s director, communications and advocacy, Dr. Orji Ogbonnaya Orji in Abuja yesterday, the agency said stolen crude stood at $38.5 billion; domestic crude theft, $1.56 billion and refined products loss, $1.8 billion.
On a daily basis, the report stated that Nigeria loses an average of $11 million, which translates in $349 million in a month and about $4.2 billion annually to crude and product losses arising from stealing, process lapses and pipeline vandalism.
“While figures from government put the loss at between 150,000 and 250,000 bpd, data from private studies estimate the figure to be between 200,000 and 400,000 bpd. This implies that Nigeria may be losing up to a fifth of its daily crude oil production to oil thieves and pipeline vandals.
“What the country lost in 20 months 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 per cent and in five months to cover pensions, gratuities and retirees’ benefits for 2020.
“In terms of volume, 138,000 barrels of crude oil was lost every day for the past 10 years, representing seven per cent 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 and 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.
“Stemming this hemorrhage and leakages should be an urgent priority for Nigeria at a time of dwindling revenues and increasing needs,” the report stated.
Expressing worry over the huge amount lost in the face of current dwindling revenues, NEITI maintained that there was the urgent need to pay what it described as “priority attention” to curbing oil theft, as the value of crude oil and allied products so far lost were equal to the size of Nigeria’s entire foreign reserves.
Other identified effects of oil theft to the nation includes: pipeline vandalism, criminal sabotage, illegal refineries in oil producing communities, which threatens the safety and livelihoods of the environment where these illegal refineries operate.
In comparison, the report said the size and implication of the losses to the country’s current dwindling revenue profile have heightened the need for government to take steps to curb oil theft to reduce budget deficits and external borrowing.
“What the country lost in 20 months in fiscal terms is enough to finance the proposed budget deficit for 2020, while in 15 months, it will cover total proposed borrowing, or increase capital budget by 100 per cent, and in five months to cover pensions, gratuities and retirees’ benefits for 2020,” the report said.
The report examined the reasons for the upsurge in the theft while reviewing current containment strategies.
They include inadequate legal sanctions to serve as deterrent, stringent laws, deployment of technology designed to swiftly detect, localise and cut off flows to specific pipelines as soon as leakages occur.
NEITI’s recommendations included operational, security, legal and global governance instruments to combat crude theft, an efficient response and containment time in checking oil theft and pipeline vandalism as well as urgent review of the status of various security organisations currently involved in the crude pipeline and product surveillance.
The report demanded a forensic investigation into the activities of syndicates operating in the oil and gas industry, given the increasing rate of stealing and sophistication of the illicit trade.
“Curiously, the volume of losses does not particularly reflect the rate of pipeline breaks for the corresponding years, suggesting either that the criminals are becoming more efficient, or crude theft is occurring increasingly elsewhere. This may require further probing,” the report said.
The agency suggested the reconstitution of a special security task team, consisting the oil companies and technical expertise in relevant fields, for Nigeria’s oil and gas assets, with a specific mandate to minimise crude theft and vandalism.
