Oil theft: Are we ready for the ‘evil day’?

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BY DAN ONWUKWE

THE recent figures released by the Minister of State for Finance, Dr. Yerima Ngama, shortly after the statutory Federation Accounts Allocation Committee(FAAC)meeting in Abuja, were grim enough. It was an admission of the devastating effect of oil theft on the industry and revenue accruing to the Federal Government.

The figures showed that projected revenue for the month of July,2013,dropped by N125.78bn.Government had projected to revive a gross revenue of N623.76bn for July. Instead, it earned N465.98bn.The amount was N361.93bn from mineral sector and N136.04bn coming from  non-mineral sector.

Besides,the amount earned in July was N365.04bn lower than the budgeted income of N863.026bn in the month of June. Dr. Ngama who doubles as the Chairman of FAAC, also attributed the sharp drop in revenue to leakages in petroleum products’ pipelines at various terminals which have disrupted crude oil production and lifting. Also responsible for the decline in

revenue,he said, were High Power(HP)compressor failures and ongoing  repair works as well as the downward review of some companies’ estimates and the recent judgment debt by the Tax Appeal Tribunal on Education levies introduced by the Federal Government on oil majors’ earnings.

One of the immediate consequences, as the figures released by Dr. Ngame revealed, is a significant drop in the total revenue to be shared by the three main tiers of government, Federal,State and local governments. With the recent discovery of massive shale gas in the United States, the likely effects will further reduce government revenues in the months and years ahead.

However, none of these factors poses as serious danger to the economy as the continuous theft of crude oil and government apparent failure to put in place effective regulations to check the illicit trade that is still booming in the creeks of the Niger Delta.

In spite of the Amnesty programme set up by the Federal Government in 2009,to  pacify militants in the Niger Delta, investigations show that dotted along the creeks are dozens of large drums used for boiling up crude oil with pipes protruding from them leading to troughs into which the products are collected.

They are taken away in barges or inland on trucks by the traders, many of them highly-placed individuals who make big financial fortune at the expense of the oil sector and the economy of the country. To worsen the grave impact on the economy is the existence of illegal refineries in all the oil-bearing States of the Niger Delta. In the past one year alone, the Joint Task Force(JTF)in the region said it uncovered and destroyed 3,778  illegal oil refineries operating in these areas.

Only last week, JTF said it destroyed 48 illegal oil refineries. About 1,653 suspects are said to have arrested so far. According to the Minister of State for Defence, Mrs Olusola Obada, almost all states in the Niger Delta have become havens for illegal production of petroleum products. Expectedly, the telling effects have been unimaginable. Statistics from government and oil majors tell the devastating story, in both revenue losses and oil facilities.

A recent figure released by the Co-ordinating Minister for the Economy and Minister of Finance, Dr.Ngozi Okonjo-Iweala, showed that Nigeria loses about 4000,000 barrels of crude per day to oil thieves.

This amounts to N6bn or $1.2bn per month, representing abount 17 percent of Nigeria’s daily production. While the Petroleum and National Gas Senior Staff Association of Nigeria(PENGASSAN)says the country loses over N1trn annually to oil theft, a recent audit report by the Nigeria Extractive Industry Transparency Initiative(NEITI)says Nigeria lost a hefty N17.62trn to oil thieves between 2009 and 2011.This represents 7.7 percent of total revenue projected by the Federal Government within the two- year in review.

The figure for last year and this year could be much higher. Also, independent report by the Nigerian National Petroleum Corporation(NNPC)speaks in similar vein: it says at least N105bn of refined petroleum products are lost to oil thieves annually. This threatens Nigeria’s ability to meeting its projected quota of 2.3 bpd.

One of the oil majors, Royal Dutch Shell is also counting its losses to oil theft and vandalization of its facilities. Shell puts its figure to at least 150,000 bpd. It has reported $700 million loss from its operations , according to its outgoing Chief Executive, Peter Voser.

This, he said, has compelled the company to abandon its target to deliver 4million bpd of production by the year, 2017.The consequence is a loss of $2.2bn charge against the group’s shale business.The negative impact is even greater, considerating that Shell’s share of onshore production in the country has fallen to 158,000 bpd in the second quarter of this year, from 260,000 last year.

This has forced the oil giant to be selling its Nigerian offshore assets. The company revealed recently that it would be getting rid of about 80,000 to 100,000 barrels of production  this year.

At least it has reportedly put four of its oil blocks for sale, a testament that oil theft and other issues in the Niger Delta, plus a weak United States’ shale liquids are hurting its operations, just as these issues are having their toll on Nigeria’s economy. Shell’s predicament is Nigeria’s dilemma as well. It shows how the oil industry is  and how oil firms are struggling to translate investment into profitable business.

All of this leaves at least two important questions: First: what concrete answer does government have(if any) against oil theft and other niggling issues that are causing the continuous decline in oil revenue?

This adds to the fact that over 80 percent of expected revenue comes from oil? Secondly, and central to the problem: what alternative plans beyond oil does the Federal Government have? Again, this is against the backdrop  of falling oil prices In the first instance, many believe that the Federal Government is yet to apply tougher measures against oil thieves.

Recently, visiting members of the African/Caribbean/Pacific and European Union Joint Parliamentary Assembly to Nigeria, called on the National Assembly to enact stiffer legislations against oil theft and illegal bunkering.

Senate President, David Mark even went a notch higher by advocating death penalty against the culprits. But will the presidency support any condine punishment against this organised crime which is an economic sabotage?

The central issue in view of dwindling oil revenue is what alternative source of oil is government charting? Little on ground shows that government is thinking outside the envelop.

This was the kind of a bleak future that stakeholders painted at the Nigeria Guild of Editors’ Conference held in Asaba, the Delta State capital last week,. with an apt theme:” “Nigeria beyond oil”

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2 Comments

  1. Let us be frank, gej will never act to de benefit of Nigerians. Do u want to tell us that he doesn’t know who this oil theft are, of course he knows but they are his people, n gej feels his people are above de law. Let me draw ur attention to one important incident, instead of gej to ask either civil defence or soldiers to be manning de oil pipes, he awarded that contract to Tonpolo n Asri Dokuba, even though, job could be given to these two institution at no extra cost to Nigerian govt. Can u now see why this oil theft will continue for a long time until a competent president is elected to lead us in Nigeria. No good thing will ever come from this yeyenatu called “GEJ”. Who knows perhaps his jesibe’s wife is taking part in that illegal business. Can anybody take any thing past that fat ass woman.

  2. Since the discovery of oil in Nigeria, the average Nigerian has never benefitted from it. Those who make peaceful coexistence impossible will not be able to make violent over throw impossible. I wish there will be zero revenue from the oil so everyone will go their separate ways.

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