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Oil thieves frustrate efforts to curb $7bn revenue loss

By on June 30, 2013

Crude oil theft, which is denying Nigeria about $7bn in revenue annually, has shown no sign of easing despite stakeholders’ efforts to stop it.

In view of its effects on revenue generation and budget implementation, our correspondent learnt on Friday that the Federal Government had become frustrated and was considering a new approach to tackle the problem.

President Goodluck Jonathan has thus directed governors in oil producing states, service chiefs and multinational companies to work out an aggressive approach.

The Minister of Petroleum Resources, Mrs Diezani Allison-Madueke, confirmed this, lamenting the high rate of oil theft was adversely affecting the country’s revenue.

She said, “Crude oil theft at this point in time has become quite critical to the point that it is affecting our excess crude and revenue accruing to the federation account from the proceeds of our output.

“Mr. President has called governors of affected states, all the multinationals, all the service chiefs as well as Nigerian Petroleum Development Company, Nigerian National Petroleum Corporation and other ministers who are related stakeholders.”

Diezani had in 2012 said the country was losing approximately 180,000 barrels of oil equivalent daily to oil theft.

“Of course, to the nation, if you look at the international cost for a barrel, it will be estimated at $7bn yearly,” she said.

The International Energy Agency also said Nigeria was losing about $7bn annually to oil theft.

“Oil bunkering, or theft, costs the government an estimated $7bn in lost revenue per year,” the agency said, adding that theft and sabotage often led to pipeline damage, causing oil firms to cut output.

Already, the Federal Government had lost N191bn ($1.23bn) to oil theft and vandalism in the first quarter of the year as crude theft continued to flourish.

The Acting Group General Manager, Public Affairs Division, Nigerian National Petroleum Corporation, Ms. Tumini Green, said there had been a significant drop in crude oil production for the first quarter of 2013 due to incessant crude oil theft and vandalism along the major pipelines within the Niger Delta.

She said daily crude oil production during the period fluctuated between 2.1 million and 2.3 million barrels per day compared with the projected estimate of 2.48mbpd.

“Expectedly, this fall between actual production and forecast in the first quarter 2013 has resulted in a drop in crude oil revenue of about $1.23bn (N191bn) that should have accrued to the Federation Account,” Green noted.

Despite the loss of N191bn to oil theft in the first quarter, experts lamented that oil theft had continued to increase while the government appeared unable to stop it.

The NNPC also said the country would have lost about $554m (equivalent to N83bn) in May and April, 2013 as a result of the shutting in of 150,000bpd following the vandalism of the 97-kilometre Nembe Creek Trunkline.

This made the NNPC/Shell Petroleum Development Company Joint Venture to declare a force majeure on Bonny Crude in April, citing the incessant crude oil theft as the reason.

The Shell Petroleum Development Company of Nigeria Limited last week shut the Trans Niger Pipeline, following an explosion and fire at a crude theft point on the 28” section of the facility at Bodo West in Ogoniland.

The implication of this development, according to SPDC, is that some 150,000 barrels of oil per day will be deferred from the closure of the TNP.

Prior to the incident, the Managing Director, SPDC, and Country Chair, Shell companies in Nigeria, Mr. Mutiu Sunmonu, had said that SPDC shut down the 28” TNP to remove crude oil theft connections.

“This is another sad reminder of the tragic consequences of crude oil theft,” Sunmonu said.

Similarly, an explosion at the Atlas Cove last Wednesday was caused by pipeline vandals who ruptured NNPC pipeline to siphon fuel.

The Federal Government had earlier said it would set up committees to look into how to tackle the rising oil theft in the country.

Already, there are fears that the Federal Government might not meet its N11.34tn revenue target for the 2013 fiscal year due to crude oil theft among other factors.

A former international relations advisor to former President Olusegun Obasanjo, Dr Patrick Cole, who spoke under the aegis of ‘Stop the Theft Foundation, an organisation registered in the United Kingdom, had called on the G8  country to help Nigeria to tackle the oil theft threat.

He said if G8 was to truly deliver on its objectives and improve transparency in the extractive industries sector, oil theft must be on its agenda.