Oil theft has become a significant loophole in oil revenue in Nigeria. Over the years, Nigeria has lost millions of dollars to the activities of oil thieves through bunkering and illegal refineries, particularly in the Niger Delta region.
Oil accounts for 90 percent of Nigeria’s revenue. A newspaper report revealed that Nigeria has lost about $46 billion to crude oil theft in 11 years.
The National Security Adviser, Nuhu Ribadu stated in 2023 that the country lost 400,000bpd to theft.
Also, a former Minister of State for Petroleum Resources, Timipre Sylva, said Nigeria lost at least 700,000bpd to thieves in 2022.
This is far higher than in other OPEC countries plagued by oil theft like Venezuela, Iraq, Mexico, and Malaysia.
The Nigerian National Petroleum Company Limited stated in September 2022 that it lost $700 million every month to oil theft. The Nigerian Extractive Industries Transparency Initiative added that Nigeria lost 619.7 million barrels, valued at N16.3 trillion, to crude oil theft from 2005 to 2021.
In 2023, the NNPCL spent N136 billion on security, repairs, and maintenance of vandalised infrastructure, per Dataphyte.
The drop in crude oil production from 1.32 million barrels per day in February 2024 to 1.23mbpd in March 2024, per OPEC, means that output plunged by 91,000bpd. This translates to a loss of N720 billion.
For decades, Nigeria has been plagued by oil theft and pipeline vandalism. To recover the losses, the Federal Government needs to recalibrate the security architecture in the Niger Delta to curb the menace.
The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, attributed the shortfall in expected production to problems with the Trans Niger Pipeline and maintenance carried out by some oil companies.
Oil thieves and vandals have consistently sabotaged oil production in the Niger Delta, contributing to the country’s abysmal output.
The deficit is a far cry from the 2024 OPEC quota of 1.5mbpd and the federal budget benchmark of 1.78mbpd (including condensates).
According to the Nigerian Upstream Petroleum Regulatory Commission, the total volumes of crude oil and condensates produced in January, February, and March 2024 were 1.643mbpd, 1.539mbpd, and 1.438mbpd respectively.
The limited production has disrupted budgetary expectations. Crude oil and gas constitute 70 per cent of Nigeria’s budget revenues and 95 per cent of its foreign exchange earnings.
The NNPCL revealed that stemming from vandalism, over 5,000 kilometres of oil pipelines are not working, and about ten million litres had been lost at a particular time from volume pumped from Aba to Enugu.
Monies channeled towards securing oil facilities have not yielded the desired results as the menace is growing in scale and frequency.
In 2022, the Federal Government revealed that it paid ₦12.43 billion on pipeline protection and maintenance.
Despite the award of a multi-billion naira pipeline surveillance contract to a former leader of the Movement for the Emancipation of Niger Delta, Government Ekpemupolo, popularly known as Tompolo, pipeline vandalism and oil theft persist.
For instance, NNPCL revealed that 149 incidents of crude oil theft were recorded across the Niger Delta in the span of a week. This brings to question the effectiveness of surveillance contracts.
A slew of laws have been enacted over the years to combat the wave of oil theft and pipeline tampering in Nigeria.
“Monies channeled towards securing oil facilities have not yielded the desired results as the menace is growing in scale and frequency.”
The foremost is the Petroleum Production and Distribution (Anti-Sabotage) Act of 1975, followed by the Criminal Justice (Miscellaneous Provisions) Act 1975, which broadly provides stiffer penalties for damages to certain infrastructures, including oil pipelines.
The next enactment is the Miscellaneous Offences Act of 1984, initially titled “Special Tribunal (Miscellaneous Offences) Act of 1984”.
This Act created some miscellaneous offences. Like the Criminal Justice (Miscellaneous Provisions) Act, it imposes severe punishments for offences and specifies the court with jurisdiction over the perpetrators.
Furthermore, the Group managing Director of the NNPCL, Mele Kyari, disclosed the willingness of the Federal Government to set up special courts to expedite the trial of oil thieves and pipeline vandals in the Niger Delta.
Special tribunals will not eliminate the threat of oil theft. Although special tribunals will aid in administering swift justice to suspected oil thieves, their influence on preventing oil theft will be little.
Reactionary initiatives like this may dissuade people from engaging in oil bunkering. It could also imply they will find ways to avoid justice or being captured. Hence, the push forces and permissive environment for oil pipeline vandalism remain.
As a result, the government and key oil sector institutions should focus on preventing pipeline leaks.
Including host communities in the securitisation mechanism is one way to go. Including members of host communities, especially youths will create a sense of community ownership of oil facilities.
Security contracts should be awarded to organised host community groups. Their vast knowledge of the terrain and the sense of ownership it will cultivate will ensure that commensurate efforts of security agents deployed to those facilities are effectively utilised.
Government response to oil theft must go beyond community initiatives and address the region’s pervasive poverty.
The government must foster an environment that supports small businesses to reduce mass poverty’s prevalence. This will assist in providing alternative means of subsistence for those whose earnings from fishing or agriculture have been negatively impacted by the disastrous oil exploration activities.
Another way to deter illegal oil bunkering, pipeline vandalism, and militancy is through the jobs generated by communities’ involvement in securitisation.
Nigeria’s losses from oil theft highlight the need for a comprehensive analysis and discussions on issues on oil exploration, the development of oil-producing communities, and the pardoning of former Niger Delta militants.
