$42 billion lost to crude oil, products theft in ten years ― NEITI

NIGERIA Extractive Industries Transparency Initiative (NEITI), on Wednesday, urged the government to embrace oil fingerprinting technology, the comprehensive metering infrastructure of all facilities, and other creative strategies to combat the growing menace of theft of Nigeria’s crude oil and refined petroleum products.

In a Policy Brief titled “Stemming the Increasing Cost of Oil Theft to Nigeria” released and made available to newsmen in Abuja, the agency alerted the nation that crude oil and refined product worth $41.9 billion were stolen from Nigeria in the last ten years.

A breakdown shows that the nation lost $38.5billion on crude theft alone, $1.56billion on domestic crude and another $1.8billion on refined petroleum products between 2009 and 2018.

It, therefore, expressed concerns that in the face of current dwindling revenues, paying priority attention to curb oil theft in the country’s oil and gas industry has become both necessary and urgent to expand revenue generation.

The policy brief, which was signed by its Director, Communications and Advocacy, Dr Orji Ogbonnaya Orpington, further disclosed that Nigeria loses an average of $11million daily which translates to $349 Million in a month and about $4.2Billion annually to crude and product losses arising from stealing, process lapses and pipeline vandalism.

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“While figures from government put the loss at between 150,000-250,000 BPD, data from private studies estimate the figure to be between 200,000-400,000 BPD. This implies that Nigeria may be losing up to a fifth of its daily crude oil production to oil thieves and pipeline vandals.” The report said.

On comparative analysis of the size and implication of the losses to the country’s current dwindling revenue profile, NEITI renewed its appeal to the government to curb oil theft to reduce budget deficits and external borrowing.

The transparency agency stated that the value of crude oil and allied products so far lost are equal to the size of Nigeria’s entire foreign reserves. “Stemming this haemorrhage and leakages should be an urgent priority for Nigeria at a time of dwindling revenues and increasing needs,” it stressed.

According to the report, “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 the capital budget by 100% and in five months to cover pensions, gratuities and retirees’ benefits for 2020.

“In terms of volume, 138.000 barrels of crude oil were lost every day for the past 10 years, representing 7% of the 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 2009-2018. What is stolen, spilt or shut-in represents lost revenue, which ultimately translates to services that the government cannot provide for citizens already in dire need of critical public goods.” It added.

The report further identified other effects of oil theft to the nation to include: pipeline vandalism, criminal sabotage, illegal refineries in oil-producing communities, which threatens the safety and livelihoods of the environment where these illegal refineries operate.

On the environment, the NEITI policy brief remarked that the impact and implication of oil spills are monumental, degrades the environment and negatively affects the livelihoods of host communities.

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The report examined the reasons for an increase in the incidence of crude and product theft and reviewed current containment strategies; These include, inadequate legal sanctions to serve as a deterrent, stringent laws, deployment of technology designed to swiftly detect, localize and cut off flows to specific pipelines as soon as leakages occur.

The agency also recommended operational, security, legal and global governance instruments to combat crude theft. Among them is efficient response and containment time in checking oil theft and pipeline vandalism, an urgent review of the status of various security organizations currently involved in the crude pipeline and product surveillance.

The report also called for 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 remarked.

It also suggested that the Government should reconstitute a special security task team for Nigeria’s oil and gas assets, with a specific mandate to minimise crude theft and vandalism.

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