How Nigeria Lost ₦16.25 Trillion to Crude Oil Theft in 12 Years
In Nigeria’s ostensibly “lucrative” oil industry, a covert menace has surreptitiously siphoned away the nation’s wealth, leaving behind a trail of economic devastation. From the exorbitant cost of oil subsidies, which has bled the country over ₦13 trillion in 15 years, to the glaring inefficiencies plaguing the nation’s three refineries, which have squandered ₦4.8 trillion in operational expenses – despite their abysmal fuel production record – Nigeria’s oil sector grapples with a multitude of intricate challenges. Yet, one adversary stands out as both enigmatic and alarmingly costly: crude oil theft.
Yesterday, October 10, 2023, Senator Ned Nwoko of the Peoples Democratic Party representing Delta North, during a plenary session at the Red Chambers claimed that some military personnel connives with “unscrupulous figures” in the oil sector to orchestertrate bunkery.
“These individuals collaborate with unscrupulous figures within the oil industry to undermine the nation’s economy. It has come to our attention that oil theft in Nigeria thrives due to a troubling collusion between security forces, militia groups, the local population, and certain employees within oil companies,” he asserted.
Senator Nwoko’s assertion echoes similar claims made by other Nigerians, including industry experts, who contend that bunkering in Nigeria is a meticulously coordinated endeavor, either facilitated or allowed to persist by security operatives.
Owing to Nigeria’s inability to meet its oil production quota as stipulated by the Organisation of the Petroleum Exporting Countries (OPEC), a situation frequently attributed to theft, the organisation has consistently reduced Nigeria’s allocated oil quota. OPEC recently scaled down Nigeria’s quota from 1.742 million barrels per day in June 2023 to approximately 1.38 million barrels per day due to diminished production. However, Senator Nwoko maintains that the country achieved a production rate of 1.51 million barrels per day in the first quarter of 2023. Despite these discrepancies, theft remains a pernicious issue in the oil sector, inflicting devastating consequences upon the nation’s economy.
The Elusive Faces Behind Nigeria’s Crude Oil Theft
During his campaign trail in October 2022, Peter Obi, the Presidential Candidate of the Labour Party, asserted that for oil to be surreptitiously siphoned in Nigeria, security operatives, particularly the Navy, must be aware of these activities.
“To pilfer oil, a vessel must enter Nigerian territorial waters and engage in the illicit loading of oil. However, no ship can enter the territorial waters of any nation without the Navy’s awareness,” he said.
On October 10, 2023, Neusroom conducted an interview with a drilling contractor based in Port Harcourt, the capital of Rivers State, who wished to be identified solely as David.
“Oil is being illicitly transported out of Nigeria via unlicensed vessels. These vessels operate outside the bounds of legality, but it does not mean that government agencies are unaware of their activities. Thus, there is no conceivable way that the Navy and other security operatives could remain ignorant of these vessels’ actions over an entire year,” David told a correspondent from Neusroom.
According to the Nigerian Extractive Industries Transparency Initiative (NEITI), between 2009 and 2020, Nigeria lost 619.7 million barrels of crude oil valued at ₦16.25 trillion ($46.16 billion) to crude oil theft between 2009 and 2020.
Notably, in an earlier report on October 8, 2023, Neusroom revealed that the ₦13 trillion expended on oil subsidies in 15 years could have financed the construction of a refinery comparable to Dangote’s refinery. Nonetheless, the challenges confronting the oil sector, which still contributes to over 70 percent of Nigeria’s export revenue and constitutes 5.34 percent of the Gross Domestic Product (GDP), extend deeper than initially imagined.
As 2023 draws to a close, the Senate disclosed that the nation has already incurred a loss of N2.3 trillion due to crude oil theft, an amount nearly 11 percent of the entire 2023 budget. In 2022, Nigeria witnessed a daily loss of 437,000 barrels of crude oil, amounting to a cumulative loss of $23 million. Nevertheless, David contends that ships are not the sole conduit for oil theft.
Within the oil-rich delta regions, illegal oil bunkering and refining have become thriving enterprises. Despite the Department of Petroleum Resources claiming that Nigeria has 159 operational oil fields and 1,481 wells, David posits that the actual numbers are likely considerably higher.
“Ships do not represent the sole method employed for oil theft. Numerous bypasses are utilised by companies to ensure that drilled oil does not find its way into official records. It is feasible to drill a well and construct numerous bypasses, diverting the oil away from the official flow line to be clandestinely sold, even within the country,” David claimed.
Recall that on October 3, 2023, an explosion at an illegal oil refining site in Rivers State claimed the lives of at least 37 people, including two pregnant women.
In February 2023, the former administration under President Muhammadu Buhari reported the discovery of over 5,000 illegal refineries in the Niger Delta region.
It is widely believed that some of these illicit refineries, operating within the Niger Delta, receive crude oil through some of these clandestine bypasses and pipelines.
But Davide said that “numerous technologies exist for identifying these bypasses. So, if the government is determined to address this issue, the requisite technologies are at its disposal.”
