How oil thieves ruin Nigeria’s economy

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Wherever you go in the country, it is the topic on every lip. In recent times, oil theft is undoubtedly the biggest threat, facing the multi-billion dollar oil and gas industry in Nigeria.
The menace, experts have noted, predates the administration of President Goodluck Jonathan, which is now deploying all efforts to end the inherited problem.

The petroleum industry in Nigeria and by extension, Africa, is the largest industry and main generator of Gross Domestic Product (GDP) in the continent’s most populous nation. Since the discovery of oil in the Niger Delta in the late 1950s, the oil industry has been marred by political and economic strife due to a long history of corrupt military regimes and the complicity of multinational corporations, notably Royal Dutch Shell.

However, it was not until the early 1990s, after the Nigerian state’s execution of playwright and activist, Ken Saro-Wiwa, that the situation was given international attention, leading to the immediate suspension of Nigeria from the Commonwealth of Nations.

Nigeria is identified as a major issue, regarding human rights and environmental degradation by the international community and the firms that operate in the country. The Nigerian government, oil corporations, and oil-dependent Western countries have been criticised as too slow to implement reforms aimed at aiding a desperately underdeveloped area and remediating the unsustainable environmental degradation that petroleum extraction has caused. This long history of oil production is, however, accompanied by militancy, which gave rise to oil theft.

Economics of crude theft

The federal government, through the Nigerian National Petroleum Corporation (NNPC), acknowledged that Nigeria was losing about 150,000 barrels of crude oil per day each time the pipelines, connecting the country’s oil export terminals were shut down, as a result of vandalism.

The Group Managing Director of the Corporation, Andrew Yakubu, who blamed the fluctuation in the country’s daily crude oil production levels on persistent attacks on major pipeline arteries, supplying crude oil to export terminals, said the impact of the menace on the economy was enormous.
Yakubu, who spoke during his submission to the Senate and House of Representatives Joint Committee on the Medium Term Expenditure Framework (MTEF), for the period of 2014 to 2016, lamented that the continuous crude oil theft, pipeline vandalism and production shut-ins have seriously constrained the sector’s capacity to meet its revenue projection targets.

“The critical and most important point to note here is that when the artery, conveying crude oil to the terminals is hit, this reduces our production volume by 150,000 barrels per day,” Mr. Yakubu said. “From February to date, we have witnessed so much breaches, and each time, we go down by about 150,000 barrels per day.”

Noting the efforts of the President Goodluck Jonathan administration in tackling the menace of crude oil theft and pipeline vandalism, Mr. Yakubu said the problem have received the highest intervention which resulted in the constitution of a committee by the National Economic Council (NEC), comprising some governors, NNPC, Department of Petroleum Resources (DPR), International oil companies (IOCs), security agencies and other relevant bodies to work out modalities to mitigate the menace.

On the daily crude oil production figure, the NNPC GMD said the figure had been fluctuating between 2.2 and 2.3 million barrels per day as a result of the several incidents of attacks on the arteries since February last year to date.

Efforts to end menace
The Vice President, Namadi Sambo, recently held a crucial meeting with a delegation sent by the United States President, Barrack Obama, to assist Nigeria in solving its oil theft menace.

The closed door meeting, held at the Presidential Villa, Abuja, lasted for over two hours and was attended by the U.S Ambassador to Nigeria, James Entwistle.
The U.S Assistant Secretary of Defence, Sharon Burke, led the U.S delegation, while the Minister of Petroleum Resources, Diezani Alison-Madueke, and the Group Managing Director of NNPC, Andrew Yakubu, were the leaders of the Nigerian delegation at the meeting.

Entwistle, who briefed State House correspondents after the meeting, said the delegation was in Nigeria on the request of President Goodluck Jonathan to Obama.

“A request was made to the U.S President, Barack Obama, by President Jonathan to see how the U.S can help Nigeria deal with the scourge of crude oil theft.
Based on that request, President Obama put together this delegation and instructed it to come here and see if we can help.

“This delegation has been to Delta and Abuja for few days and met variety of government people and citizens and oil companies.
“We are not arrogant to think that as Americans, we can just come here and solve a problem on behalf of your country.

“But, what we are trying to do in this delegation is to listen and learn so that we can understand Nigeria and this oil theft problem.

“And of course, there is international dimension to the problem and we want to make sure we completely understand Nigeria and the problem.

“We have had very good meetings including with the vice president, and we have come to understand that the more you talk to people, the more you understand the problems,’’ he said.
Burke spoke in the same vein, informing that members of the delegation were drawn from the U.S Department of Energy, the White House and the Department of State and U.S Force for Africa.

“We were told to come and listen to people and understand the nature of the oil theft, revenue loss and what the problem is.

“We have had opportunity to speak with a great range of people and we have had a great deal of ourselves. We have just met with the Vice President and we will be returning home, digest the information we have got, sieve it and then report it to Mr. President.

“We are going back to Washington tonight. We will review our notes and discussions and then present our findings to President Obama,” Entwistle said.
Alison-Madueke said the Federal Government sought the much-needed assistance of the U.S government to address oil theft because of the international dimension to the scourge. She noted that the effect of oil theft had both national and international dimensions.

“The U.S president, as you have heard, responded to that partnership and as you can see, a high-powered delegation has come to discuss and they have been able to discuss with a number of people.

“We are very hopeful that as they go back, we will continue with the discussion and come with a very salient solution to help us push back the scourge of oil theft once and for all,” she said.
Before this, a joint multi-national sea exercise tagged “African Winds” and aimed at showing the country’s readiness to flush out crude oil thieves in the Niger Delta was held at the Lagos Takwa Bay Beach.

The exercise, which was jointly carried out by Spain, UK, US, Netherlands and Nigeria, was in line with the objectives of the African Partnership Station (APS) to stamp out maritime illegalities.
After the exercise, the Chief of Naval Staff (CNS), Vice Admiral Dele Ezeoba reiterated the Navy’s commitment to stamping out all illegalities from the nation’s maritime domain, especially in the Gulf of Guinea.

Ezeoba described the joint exercise as a milestone recorded by the participating countries in the area of strategic partnership.
He said the exercise was aimed at ensuring a secure and safe maritime space, adding that there was no one country that could handle security challenges alone.

He said: “Maritime security is a primary responsibility of everybody because the oceans and seas of the world are common global heritage to mankind.
“The concerted efforts at the sub-regional and multi-regional levels are to ensure that we continue to cooperate and collaborate, because that is a new paradigm in terms of security imperatives.”

Ezeoba added that the exercise would further enhance their human capacity, which would enable the Navy develop technical expertise that will further create the impetus they need to enhance maritime security not just in Nigeria but in the Gulf of Guinea.

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