Editorial: Stakeholders and Oil theft

The recent disclosure by Shell Producing Development Company (SPDC) that the nation’s economy lost a whopping $4.3 billion to oil thieves in the last two years at an average rate of $2.15 billion annually, underscores the urgency of the problem of oil theft that has assumed alarming proportions in the Niger Delta. The activities of oil thieves have reached both crisis and crunch points which, if left unchecked would necessitate shutting down Shell operations in the Nembe Creek Trunk Line (NCTL), which handles 150,000 bpd, in order to save the environment from complete devastation. This therefore, calls not only on the Joint Task Force (JTF) to redouble its activities but also for concerted local, national and international efforts in order to curb vandalism and oil thefts.

The loss to the economy through the alarming rate of oil pipeline vandalism and oil theft remains huge, but the accompanying massive oil spills portend social and environmental devastation in the Niger Delta region. Within the past two months; Shell alone claims to have lost about 60,000 barrels of crude oil per day, which was the highest in the past three years. According to Shell, well-funded and heavily armed oil thieves, ostensibly with the backing of international syndicates, are now setting up facilities for building barges to store crude oil for eventual shipment abroad. The oil thieves are operating on a scale beyond the capacity of one oil company to handle. At the same time, government authorities are claiming that efforts by the JTF have drastically reduced the level of crude oil theft.

Featuring in the ministerial press briefing in Abuja last Friday, the Minister of State for Defence, Dr Olusola Obada, said the nation’s military has “enhanced protection of oil and gas facilities through air and ground patrols of pipeline networks to deter vandals from sabotage activities. Troops were deployed on most critical platforms on a 24/7 basis to enhance their security.” According to the Defence Minister, a total of 1,653 suspects were arrested and 3,778 illegal refineries destroyed in the in the ongoing anti-illegal bunkering patrols by the JTF (Operation Pulo Shield) in the Niger Delta, in the last one year alone. In addition, 120 barges, 878 Cotonou boats, 161 tanker trucks, 178 illegal fuel dumps and 5,238 surface tanks were also destroyed by the JTF within the same period.

This is clearly a case where one song is played but everyone hears a different tune. The optimism and rather comforting view of the Defence Minister is contradicted by the blunt assessment of the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, who lamented the problem at the recent Offshore Technology Conference (OTC) in Houston, Texas, USA; blaming the situation on the “increasing sophistication of oil theft in the Niger Delta.” Oil theft, according to her, accounted for an estimated total loss of over 300,000 bpd, or, about $1 billion (N160 billion) a month in revenue. This situation is unacceptable and must not be allowed to continue.

If oil theft is a problem hindering Nigeria’s progress, the government must develop the political will to deal with the scourge. Ordinarily, such a battle cannot be waged without adequate military involvement. However, as recent experiences of the JTF in the Niger Delta have illustrated, the military approach has not worked. It has become another avenue for patronage, illustrated by the fact that the rank and file of the military lobby intensively for deployment into the zone.

Parenthetically, there is an aspect of oil theft that is clearly feeding on necessity. The JTF has reportedly destroyed about 5,000 illegal crude oil distilleries, which produce mostly diesel. These distilleries, which resprout, are the only source of diesel supply to the thousands of rivercraft in the extensive Niger region. It is unthinkable to expect the people resident in the creeks to rely only on the fewer than ten conventional maritime fuel filling stations in the entire riverine Niger Delta region. Shell and other crude oil producing companies should, therefore, devise a practical solution to this specific need in the Niger Delta region so as to stem the widespread crime and of course, social and environmental devastation.

Regardless, when all issues that underpin militancy are resolved, there would not be any further presence of creek-based heavily armed bands intent on stealing crude oil and ready to confront the military in order to have their way. Similarly, with no armed militants to be used as cover, ill-motivated state operatives and criminals may not successfully organize crude oil thefts for sale to pirates on the high seas. Indications are that there are about eight choke points through which stolen crude oil leaving the creeks must pass. It should be possible even now for the Nigerian Navy and other coastal security forces to effectively patrol the choke points and prevent stolen crude oil being ferried for sale to pirates on international waters. And high scale oil thefts as well as incidents of vandalism to pipelines would cease to be significant with increased transparency and accountability in the sector.

Thanks to advancement in science and technology, there are now standardized measures of oil production the world over. Good enough, the available technology, usually deployed to measure oil production directly from the wellhead, is reportedly not so sophisticated or difficult to apply. According to experts on oil production meters and well-flow management, a meter can be installed in just 30 minutes. And it does not need routine maintenance. Such meters are also powered by solar energy. Given the spate of recklessness and corruption in the oil sector, that Nigerian government officials do not appear interested in such technologies is totally unacceptable.

While the JTF, despite its seeming ineffectiveness in combating the sabotage, will remain relevant to the war against oil theft, more attention must be devoted to the Petroleum Industry Bill (PIB) now in tatters. Partisan wrangling and maneuvering have derailed comprehensive reform of the oil and gas sector some five years after the first version of the PIB was presented to Parliament. Meanwhile, well connected companies and officials continue to benefit from an opaque system of management and operation that has cost Nigeria as much as US$100 billion from oil and gas revenue over the past decade, according to the report by the Nuhu Ribadu-led committee. Adequate efforts should be made to ensure that the resultant Petroleum Industry Act, apart from dealing clearly with the issue of measurement of oil production, has transparency, accountability and control measures as its nucleus. This is the right path to follow, if this scandalous oil theft is to be curtailed from a crisis to a manageable nuisance.