The Oil Thieves Of Nigeria
By Reuben Abati
The economics, mathematics, cost and politics of oil theft point in one direction: the need for the country to put in place a strong surveillance mechanism.
The lead story in This Day newspaper of December 30, 2021 brought the year to a close with a reminder of one of the many ills that bedevil Nigeria, encapsulated in a telling headline: “With Rising Theft, Nigeria Records 193 million barrels of crude oil deficit in 11 months.”
This is otherwise translated into an estimated $3.5 billion of revenue lost to crude oil theft in 2021 alone, in other words, about 10% of the country’s foreign reserves. For a country that depends on petroleum products for about 85% of its total exports revenue and has been unable to define a future for itself beyond oil, oil theft is akin to a national calamity, a massive erosion, and an economic sabotage of the highest order.
Even if it may not be the only factor that contributes to crude oil deficit, its impact is worth investigating. With regard to oil theft, ThisDay newspaper was not exactly reporting any new trend. Oil theft has been perennial and unceasing and indeed, it gets worse by the year.
In its latest audit report, made public in July 2021, the Nigeria Extractive Industries Transparency Initiative (NEITI) indicated that in 2019, Nigeria lost 42.25 million barrels of crude oil to oil theft, valued at 2.77 billion dollars. This was actually meant to be an improvement (imagine!) because in 2018, 53.28 million barrels were stolen.
And then in 2021, 193 million barrels of crude vanished from Nigeria’s resources. The value of stolen crude in Nigeria is enough to fix many of the country’s problems and reduce the obsession with borrowings. This is the reason why oil theft must be stopped.
On the average, Nigeria loses about 200, 000 barrels per day. What is stolen in concrete terms is not just crude oil, but jobs, opportunities, and possibilities. Oil theft is also a veritable example of grand corruption, and this is the point that has been made consistently in NEITI’s audit reports. The opaqueness that dominates the entire oil and gas value chain in Nigeria accounts for oil theft and loss of revenue. The absence of political will to tackle the problem makes it worse. Shell, ExxonMobil, Chevron and Total divested from Nigeria in part because of oil theft.
In September 2021, the Federal Government decided to set up an Inter-Ministerial Committee on the recovery of crude oil and illegally refined petroleum products in the Niger Delta Region comprising the Department of Petroleum Resources (DPR), the Nigeria National Petroleum Corporation (NNPC), the National Oil Spill Detection and Response Agency (NOSDRA), all backed by the security agencies – the Nigerian Army, the Navy, the Nigeria Security and Civil Defence Corps (NSCDC) and others.
The committee’s mandate is drawn from the provisions of the Assets Tracing, Recovery and Management Regulations 2019. Yet, by the end of the year, 193 million barrels of crude oil had disappeared and certainly that must be an under-valuation, an estimate.
It is well known that there is no proper documentation of anything in Nigeria. We don’t even know how many we are. The National Population Commission (NPC) has no accurate register of births and deaths. Should it therefore be any surprise that there is no mechanism in place for monitoring how many barrels of crude oil Nigeria produces or the exact volume of it that is sold?
Three years ago, there was some fancy talk about the introduction of technology to monitor output and activities along Nigeria’s oil pipelines network to detect sabotage, human interference and protect critical infrastructure. Oil was discovered in Nigeria, in Oloibiri, Bayelsa state in 1956.
In 2022, Nigeria is still talking about how to protect pipelines through the adoption of technology. Even if technology is deployed through automation, the internet of things, drone technology, and the electronic monitoring that certain commentators recommend would still be an excuse to award contracts and make more money. Whatever works in other countries, Nigeria takes the same ideas and turns them upside down.
The people who want to stop oil theft are really not interested in stopping anything, so it seems, for indeed, oil theft is an organized crime, with a network of stakeholders that cuts across many layers of interest. And that includes the same agencies saddled with the responsibility to stop it. Illegal oil bunkering: hot tapping or cold tapping, or the smuggling and diversion of petroleum products is an expensive enterprise that involves the collusion of both state officials and their agents.
It may not be incorrect to argue, in fact, that nothing has been done because those who should take the decision or their agents are themselves involved, or they have been compromised. Crude oil in the international market has a signature imprint that indicates the source, but somehow, stolen crude from Nigeria simply disappears into a sinkhole, without trace. There are also illegal refineries in the Niger Delta. Every Minister of Mines and Steel Development develops a plan for addressing the menace of illegal refineries, but nothing ever gets done. Even Governors complain about illegal refineries.
Most recently, on January 1, 2022, Governor Nyesom Wike of Rivers State, in his New Year address, devoted some paragraphs to the challenge of the environment in the state. He condemned the pollution of the environment by the operation of illegal refineries. He even knows their location: “illegal crude oil refining sites along Creek Road and adjoining areas of the city…” and he wants them shut down with immediate effect. He added that all local government Chairmen should work with “community leaders to locate and identify those behind illegal bunkering and crude oil refining sites in their localities and report to my office for further action…” It would be a miracle indeed if either Wike or any other Governor in the Niger Delta would be able to put a stop to illegal oil bunkering activities in the entire region. The big-time oil bunkerers are major figures in the communities and key financiers of political processes!
Oil theft is further tied to the politics of Nigeria and the ownership of mineral resources. Section 44(3) of the 1999 Constitution, item 39 Schedule II of the Exclusive Legislative List and Section 1 of the Petroleum Act, 1969 vests the ownership and control of natural resources in any part of Nigeria in the Federal Government for the benefit of the people. (Also see Attorney General of the Federation vs. AG Abia State).
For decades, the people of the Niger Delta and others have argued that this is a departure from the Federal principle that Nigeria claims to embrace and that as operationalized, the Federal Government’s ascribed ownership of mineral resources amounts to gross injustice more so as the Niger Delta which produces the mainstay of the economy remains dispossessed, marginalized and underdeveloped compared to other parts of the country that contribute less, and yet seek to control what does not belong to them.
The battle over what is termed “Resource Control” has taken many dimensions over the years including the agitations that led to the Willinks Commission Inquiry on Minority Rights of 1957/58, the heroism of Isaac Adaka Boro (1966), the Ogoni people’s Struggle for Survival, the Kaiama Declaration, the politics of agitation for resource control, Niger Delta militancy and calls for a complete restructuring of Nigeria.
In 2004, Niger Delta Representatives walked out of the National Political Reform Conference when a consensus could not be reached on the subject of resource control and derivation. Niger Delta activists have since taken up this matter by insisting that derivation is inadequate, development initiatives such as the Niger Delta Development Commission and OMPADEC before it, amount to mere tokenisms, and that total resource control is what the people want.
This matter reared its head again recently, and apparently will never go away, given the North vs South alignment around it. Former President Olusegun Obasanjo had expressed the opinion at a public seminar that Nigeria’s crude oil does not belong to the people of the Niger Delta but to all Nigerians and to say anything to the contrary would be illegal and unconstitutional.
President Obasanjo correctly stated the position of the Nigerian Constitution, but in so doing he stirred the hornet’s nest as Niger Delta stakeholders led by Chief E.K. Clark attacked him as “an enemy of the Niger Delta”. Niger Delta activists and many other Nigerians think that the 1999 Constitution is a dubious military decree that should not be quoted as Nigeria’s grund norm.
President Obasanjo’s argument must have reminded them of that other argument actively pushed by Northern intellectuals in the 80s and 90s that the oil in the Niger Delta actually came from Northern Nigeria and settled in the Delta, as part of a given process of geological sedimentation. The consensus in the Niger Delta is that this is a thief’s argument and that the real thieves of crude oil are those who exploit other people’s resources and who then turn around to insult the real owners.
It is also in this regard that local players in the Niger Delta who are involved in illegal oil bunkering do not consider their activities theft or crime. In a curious good thief vs. bad thief binary at the heart of oil politics in Nigeria, they justify their own oil theft, and openly flaunt their ill-gotten wealth because they believe that they cannot be taken to task for stealing what belongs to them, their grandfathers and generations yet unborn. They find ready allies across Nigeria and the rest of the world, because everyone else is anxious to make a quick buck.
Many young persons in the Niger Delta would rather be a militant or an oil thief. Thievery, by the way, is a national pastime, a national creed, in Nigeria. Everybody is looking for something to steal: from gold in Zamfara and Ilesa to bitumen in Ondo, crude oil in the Niger Delta Basin, and the vaults of the Central Bank, if possible.
The economics, mathematics, cost and politics of oil theft point in one direction: the need for the country to put in place a strong surveillance mechanism. The country’s pipeline network is decayed, hence making the work of the oil thief easy. There was a recent blow out at AITEO’s OML 29 well-head in Santa Barbara River, Nembe, Bayelsa State. It took nearly a month for NOSDRA to be aware of it, and for any agency of government to take any action at all.
It is important to have the necessary infrastructure and technology in place, and to treat oil theft strictly as economic sabotage. The penal structure for the crime should also be strengthened. Given the cost to the nation, the minimum sanction for oil theft should be life or death sentence. The politics of oil ownership or trusteeship cannot be advanced as an excuse for criminality.
Until Nigeria decides to address its divisive politics, and public officials stop their hollow sloganeering about national unity, the resort to self-help, in the form of oil theft or illegal bunkering, should not replace the rule of law. Crude oil refining has also been a problem. When will Nigeria’s refineries begin to function again at optimal capacity and profitably too?