Oil theft and the Economy

Some disquiet has gripped the Nigerian oil sector following recent disturbing reports of the discovery of over 400 illegal refineries across the Niger Delta region. This has resulted in a huge loss of $5 billion (about N760 billion), representing the theft of 150,000 barrels per day (bpd) by oil bunkerers in four months alone.  

The Managing Director of oil giant, Shell Petroleum Development Company (SPDC), Mr. Mutiu Summonu, made  the startling revelation in Port Harcourt recently. Shell, a dominant oil company in the Niger Delta, Mr. Summonu said, has been a major casualty in the criminal  act, with a daily production loss of 43,000 bpd. Government is reportedly losing about 400,000 metric tonnes of crude daily to oil thieves. 

The theft, according to Mr. Summonu, has caused over 118 incidents in its facilities, leading to a loss of over 11,800 bpd of oil spills for last year alone. The Minister of Finance and Co-ordinating minister for the economy, Dr. Ngozi Okonjo-Iweala, the Nigeria National Petroleum Corporation (NNPC) and the chairman of the National Task Force on Petroleum Revenue, Mallam Nuhu Ribadu, all corroborated the same worry over the high incidence of oil theft and illegal refineries in the Niger Delta and its negative impact on the economy.  

The Finance minister had told members of the House of  Representatives Committee on Finance in Abuja that oil thieves in the Niger Delta are currently fleecing Nigeria of 17 per cent of her daily crude production. This is about 408,000 barrels of OPEC’s approved daily target of 2. 6 million bpd for 2012. NNPC also said that the country’s current total crude oil loss had outstripped the present production capacity of Ghana which is pegged at 120,000 bpd.  

These disclosures come on  the heels of reports by the military Joint Task Force (JTF) that it discovered a total of 218 illegal refineries in Delta and Rivers states in recent months. The figure could be more. This, the force said, excludes the discovery of 151 surface tanks and oil dump sites in the two states. But JTF said it has destroyed them in a raid recently. Also, soldiers attached to the 144 Battalion of the Nigerian Army in Asa, near Aba, in Abia state, have equally reported a discovery of 200 illegal refineries and the seizure of 28 boats used by oil bunkerers. 

This illegal operation of refineries is disturbing. In the main, it is a measure of the lawlessness that currently exists in the country, especially in the Niger Delta region. The sheer number of the illegal refineries and the free reign which the bunkerers have had over the years make the development very disheartening. It is, indeed, a paradox that while government is still struggling to fix our refineries, criminals are building illegal refineries with ease and raking in huge illicit revenue from sale of oil within and outside the country. 

This should be a great challenge to government and the relevant security agencies charged with policing these areas. They must rein in these oil thieves and stop the operations of the illegal refineries. Since oil accounts for the bulk of government revenue, this task must be carried out with commitment. So far, that does not seem to be so. 

While we applaud the efforts of the JTF in uncovering these illegal refineries, questions have been raised on the possible complicity of the military operatives in the operation of these illegal refineries. Accusing fingers have been pointed at the JTF personnel by some communities in the Niger Delta as co-partners of the illegal refineries. There are also allegations that military men lobby to be posted to the oil-bearing communities in the Niger Delta where they allegedly get involved in, or aid the illegal business. Some soldiers protecting oil pipelines have also been accused of engaging the services of vandals in collusion with some foreigners to burst oil valves and connect them to some desired locations. In the light of these allegations, government should thoroughly investigate the military personnel allegedly involved.  

The existence of illegal refineries and oil bunkering underline the hemorrhage that has long bedeviled our oil sector, and the huge loss in revenue to the economy. These acts may not be unconnected with years of lax supervision and monitoring in both land and sea that have consequently prepared a fertile ground for these illegal refineries to thrive. A lot is expected from those charged with the national duty of safeguarding our oil facilities in the Niger Delta. Effective policing of our territorial waters by the Navy is vital since it is the gateway for bunkerers to export stolen oil. 

We believe that the existence of these illegal refineries is an organized crime that must be tackled as a matter of urgency.