Crude oil theft in Nigeria is organized crime and should be differentiated completely from host community issues.
This is according to the Managing Director of Chevron Nigeria/Mid Africa Business Unit, Richard Kennedy who said this in a panel session held at the recently concluded NOG Conference in Abuja.
Mr. Kennedy made this remark when he was asked to comment on the host community provisions of the Petroleum Industry Act.
Crude Oil Theft is Organized Crime
Mr. Kennedy emphasized the need not to confuse the agitations of host communities of oil-producing areas with the spate of crude oil theft being carried out in the area.
“From my experience, the issue with crude oil theft should not be confused with host community issues. It is much much much bigger than that. It is completely different from host community issues. Quite frankly it is organized crime.”
He also revealed that the level of theft is costing Nigeria millions of dollars daily in lost revenue which could have helped solve our fiscal challenges.
“The volume of crude that is being stolen is well beyond comprehension. You can see some of the figures in the press, maybe it’s about 100,000 barrels per day at $100 per barrel and that’s $10 million per day that is being stolen. And NNPC owns 60% while taxes of 85% are paid so it’s a huge loss for the country.”
The Group CEO of Oanda, Wale Tinubu also weighed in on the issue at the oil and has summit revealing about 20% of Nigeria’s daily crude production is lost to oil theft.
“There has been a 43% reduction in our production from March 2020 to May 2022. We lose almost 20% of our daily crude production to oil thieves and pipeline vandals and 20,000 barrels a day of oil is lost to oil theft. Basically some three million barrels on average yearly is lost to oil theft and pipeline vandalism.”
Challenges with oil theft
Nigeria has been experiencing some of the worst crude oil theft in its history with millions of dollars lost daily. Several allegations have been made against the ability of security agencies to guard the pipelines. Some have even alleged the complicity of security agencies in the spate of pip theft being experienced.
Recently the Chairman of Nigerian Upstream Petroleum Regulatory Commission (NUPRC) Gbenga Komolafe, revealed that only about 132 million barrels of the 141 million barrels of oil produced in the first quarter of 2022 were received at export terminals.
Komolafe said, “This indicates that over nine million barrels of oil have been lost to crude theft…this equates to a loss of government revenue of approximately $1 billion…in just one quarter,”
He added, “This trend poses an existential threat to the oil and gas sector and, by extension, to the Nigerian economy if left unchecked.”
Theft of crude oil grew from 103,000 barrels per day in 2021 to 108,000 barrels per day on average in the first quarter of 2022, according to Komolafe.
I agree with the position of this expatriate on crude oil theft. It is unfortunate that the country’s leadership has lost control of the economy and security completely and shamelessly resort to giving excuses all the time for their inactions and incompetence.
In developed countries, this would be highly intolerable, for what is the essence of a government then ? In fact, from my experience in Nigeria, it’s only law abiding citizens that bear the brunt of federal and state government economies through excessive and multiple taxations and levies, making it so difficult for people to earn a decent and honest living in this country. It is no wonder then, that many have resorted to sharp practices to make quick bucks including crude oil theft and smuggling with huge and generous bribing of security forces to avoid disruption of their illicit business. And since a large chunk of the earnings from legitimate government crude oil sales seem to be eventually embezzled by politicians and their cronies, these crude oil thieves and their abettors erroneously believe that there’re justified in stealing their own share of the national cake from source – this cake which has eluded the lot of the common Nigerian for decades.
So Buhari is presiding on a corrupt administration pretending he is fighting corruption while his kith and kins all around his government cannot show is their moral upbringing except to let us know they are a bunch of unfortunate bandits and rogues. Fire must burn them. I remembered IBB was stoned in UI when we had a Youth that can fight for their future. There is a God that fight for the people.
From public domain and historical records, International Oil Companies operating in the Niger Delta first perfected this massive theft and plundering of these natural endowment and commonwealth! In connivance with covetous state agents and players, they have siphoned away greater value than crude from the Niger Delta through Oil Spills and environmental degradation with impunity.
The estimation of the Nigerians are by far less than that of the chevron CEO. This is because those Nigerians are part of the crooks, if not the real thieves who steal or organise the stealing.
The theft will continue as long as there are buyers for the stolen crude; simple demand and supply. The solution lies in identifying, exposing and penalising the buyers. So, who’s buying our stolen crude?
You can’t stop crude oil siphoning or theft by locals because they have a common reasoning that is from their heart ,so thinking on stopping that business will amount to a normal arms struggle in the Niger delta as it is in the northern part of Nigeria ‘zamfara’ where locals are strictly on the get the gold make more money buy arms protect yourself and territory sindrome .
Until the government in power show sincerity in accounting for the much declared crude oil sofar, those that have access to its chain will continue the pilfering till it gets worse
Crude oil even has some level of accounting system, what about the solid minerals from the Northern parts of the country?
We need a serious revolution in this country. God pls let the flow of our crude oil cease for the next three years to awake the poor masses to the realization of the need for this struggle.
The government of Nigeria has weaponized poverty against your children despite your blessings to subject them to their daily killings. GOD for how long will you hold on to allow the wickedness and cruelty of our wicked rulers to continue, have mercy and hear the cry of your children .
Before nko? Our leaders in nigeria a shameless coven of barawos who don’t have a single fibre of conscience
There was a time in Nigeria when oil theft was regarded as one of the worst crimes you could commit against the state because it carried death penalty, but this is no longer the case because it is now an elite crime in which the government and the state actors themselves are complicit. It is the same reason kidnappings/ abductions are thriving. Otherwise a death penalty should have been prescribed for kidnapping long ago, just like when the government some years ago had to prescribe death by firing squad for armed robbers ( bar beach show), when the situation was getting out of hand. Armed robbery subsided immediately thereafter. But now, kidnappings and oil theft are rewarded because government cannot make a law against itself. That is the difference.
And the Minister of Petroleum Resources is the number one citizen playing the ostrich. Since both the Minister of State and the Managing Director of NNPC could not curtail the oil bunkering, then heads should start rolling. A new proactive management be an alternative.
Guess who the Minister of Petroleum Resources is? Buhari and he is also the Commander in Chief of the Armed Forces.
Clueless individual presiding over a failed state. Until we have a revolution to clear these failed leaders, it will be business as usual.
Incompetence rules the nation at all levels of governance. The reversal of the above scenario is key to a revival of the nation’s progress in all ramifications.
Being not the only oil producing country either in Africa nor the middle East, and this challenge is not the norm elsewhere, means it’s localised. .
Increased deployment of security personnel is not the solution, rather it is the application of non contact technologies that can bring succour at a relatively cheaper costs and efficiency.
As it was reported recently, the Rivers State Governor demanded the immediate removal of the Commandant of one of the Security agencies operating in his State due to glaring complicity, increasing the security personnel translates to corresponding increase in state actors in violations than curbing the menace.
Surveillance and interdiction on the high seas is crucial because the stolen crude is essentially for transhipment to our neighboring countries where new markets are emerging rapidly. Literally no stolen crude is processed here except the insignificant volumes for the artisanal refineries, which with good political will can easily be curbed or integrated and managed.
The real picture of the volume of theft seams to be grossly under reported because the problems starts from even the official production reporting which seams equally circumspect.