Autolycus in Ancient Greek mythology achieved fame and notoriety for being a
successful robber and trickster whom no one could catch. He was a source of
trouble for the king and the kingdom in Ancient Greece. Autolycus, were it be
in today’s Nigeria, would have been a trainee in Nigeria’s crude oil-thieving
empire, which is somewhat of a mystery. The quantity of crude stolen daily
and yearly varies from one stakeholder to another, meaning we do not even
know the exact quantity stolen. In a recent interview, the Chief Of Naval Staff,
Vice Admiral Awwal Gambo, raised fundamental issues about the estimated
quantity of crude oil stolen daily, which he considered unrealistic and
outrageous, literarily describing the given figures as the latest wonder of the
world.
The thieves’methods are not fully understood and have different dimensions.
Those involved in the stealing are only a matter of conjecture. However, many
believe that the highest level of government officials, powerful business
people, security personnel, oil industry operators and the host community
stakeholders are involved. The crude oil thieving cartels are generally thought
to be highly organised, sophisticated and at the same time complicated. The
impact of the stolen crude on the national economy and other aspects of
national life is now biting all Nigerians in one form or the other .
Recent statistics regarding crude oil theft and its implication on our national
politics and economy are dire. The past three months have seen a more
catastrophic and massive decline in the volume of crude exported. In June,
Nigeria produced 1.238million bpd , July dropped to 1.083million bpd and it
dropped to an all-time low of 972,394 bpd in August. The August production is
the lowest in the last 20 years, and if it stays the same ,could amount to a loss
of about $20bn in the year under review at an average price of $100 per
barrel.
Like has been argued elsewhere, it is not only a loss of revenue but also of
jobs, opportunities, and possibilities. USD20bn can cushion our debt burden,
increase our distributable income, and shore up our foreign reserves. Another
impact of the drop in oil revenue attributable to crude oil theft is that NNPC Ltd
did not contribute to the federation account for more than four months.
This crude oil theft has been on for years and seems to defy every solution. It
has become a national embarrassment, especially now that the oil price is at
its peak, and other nations and corporations are smiling to the bank, rebuilding
their economy from the proceeds of the oil windfall, while Nigeria’s revenue is
at risk and is bleeding with complicated economic challenges. Today, this
column will focus on three aspects of this endless cycle that has literarily
threatened our national life: Its impact on gas revenue generation, overall
investment in Nigeria, and national revenue.
Revenue from gas export and feedstock sales to the Nigeria Liquefied Natural
Gas Limited (NLNG) hit $243.57 million in the first quarter of 2022 (Q1’22),
surpassing receipts from crude oil export by 259.4 per cent under the same
period. This revenue which has a potential of reaching $300m per quarter plus
future investment in gas
growth ventures, is threatened by massive insecurity and pipeline vandalism .
The reason is that NLNG feedgas mix comprises associated and non-
associated natural gas sources, most of which are sourced from
onshore/swamp area oil and gas production assets of its upstream gas
suppliers.
The incidences of pipeline vandalism are primarily concentrated in these
shallow offshore/swamp areas, resulting in significant feedgas supply
disruptions to the NLNG Plant whenever these assets are impacted. Year to
date, 2022, the NLNG Plant has operated at about 65% utilisation capacity (
compared to 95-98% availability and reliability) because of feedgas shortages
occasioned by frequent disruptions of
upstream oil and gas operations following these vandalisation incidences. The
difference between plant availability and current utilization translates to over
2billion dollars in revenue. So far, in 2022, NLNG has recorded significant
production opportunity losses, impacting revenues.
Nigeria’s gas reserve is estimated at 208 trillion cubic feet by 2022 . Gas
resources are a vital pillar of Nigeria’s energy transition plan, and this could be
under serious threat if the crude oil stealing and pipeline vandalism continue
unabated.
On its impact on investment, Crude oil theft and related pipeline sabotage
have forced some companies to shut down production and / or sell off their
assets. Shell, Chevron, Mobil, and other international oil companies (IOC) are
divesting their land and shallow offshore assets mainly because they no
longer see growth potentials in them. It is also the same for marginal field
operators. They all cite the significant difference between what they produce
at wellhead and output at terminals as an operational challenge that makes a
mess of their investment. This difference in crude production at terminals, plus
the cost of cleaning up the environment and other security challenges, is a
disincentive for new investment to come into the sector and the country.
Persistent crude oil theft and pipeline vandalism has contributed significantly
to the loss of investor interest and confidence in the oil and gas space. This
partially explains why Nigeria is no longer mainly an attractive destination for
foreign direct investment.
The micro and macro-economic impact of crude oil theft are apparent. With oil
theft and illegal bunkering taking as much as 200,000 to 400,000 barrels per
day of the country’s oil production, the country’s fiscal stability is threatened.
While the economic impact of the new wave of oil theft ravages the nation,
losses to oil thieves and official leakages could overtake official receipts of oil
revenues into the Nigerian treasury. Already, Nigeria, today, has the 25th
highest inflation rate in the world, with price cost rises mainly driven by higher
energy and food prices. The Naira had lost almost 95% of its value in five
years, crossing N705/$ in the parallel market.This depreciation of value is
among other factors linked to our dip in revenue.
There is a need for an urgent national emergency response. Some influential
individuals have hijacked the Nigerian state and are bent on strangulating it
financially. The crude oil thieves are committing treason and destroying
Nigerians’ present and future hopes and economic potential. The inability of
the government to deal with this situation demonstrates the abysmal state of
governance in Nigeria or that the non-state actors in connivance with some
elements within the government and security sector are more powerful than
the state and are holding the Nigerian state to ransom.
An inexplicable dimension is the embarrassing failure of our security and
defence forces in protecting oil pipelines and installations.
After over 20 years of insurgent disruptions of oil and gas installations in the
Niger Delta, it is curious that the Nigerian armed forces
have not yet developed a specialized capacity to protect this vital sector.
Instead, military officers deployed in the region, working with other actors have
become part of an endless racket of oil thieves and vandals. Crude oil theft is
not surreptitious and requires a highly planned and organised operation. How
can big ocean liners used to lift crude oil that is stolen move freely within our
territorial waters and succeed without detection from all the security agencies
and government officials working daily in these areas? If this continues
unabated, it will bring Nigeria to its knees financially, economically, and
politically.
The state of things in Nigeria is not only embarrassing but stifling and
suffocating the hopes and aspirations of its citizens, and it calls to question
Nigeria’s very essence and existence. These actions are gradually becoming
the norm instead of the exception, and those responsible for acting on our
behalf abdicate responsibility and shift blame while the Nigerian economy
gradually caves in .
A recent report by Proshare Research, titled “The anatomy of crude oil theft in
Nigeria:understanding the graft, impact, and implications” proposed that
stopping oil vandals would require a combination of public policy, market
action and military operations. I agree, but most importantly, the leadership’s
political will, backed by a firm commitment to stop the bleeding, will make the
difference. Realising that crude oil theft and pipeline vandalisation can imperil
national survival, the government can elicit some intense action to curb it.
Negligence is not an option, and the buck stops on the table of the
government. If the government fails to tackle this problem and eliminate crude
oil theft, it should be directly, vicariously, and precariously liable for the impact
and consequences of such inactions.
It is evident that some influential individuals at different strata of public, private
and security sector leadership, taking advantage of their privileged position
and vast network, have converted state assets to personal assets under the
guise of oil theft. This has made curbing crude oil theft almost impossible and
should not be the case. This is a crime against the state and must be treated
as such. The government must go after perpetrators of this dastardly act and
severely punish them as a deterrent to others. Economic sabotage is a severe
crime against the state and is very reprehensible. It is even more dangerous
when people doing it directly or in cahoots with others are in high government
and security positions. The greed and corruption among officials are the
banes of Nigeria.
