A Review of the Nigerian Energy Industry

Report implores Nigerian govt to curb oil theft

04 October 2014, Port Harcourt — THE Federal Government has been urged to initiate an international campaign that would treat crude oil stolen from Nigeria as transnational organised crime in order to stem the $6 billion lost yearly due to oil theft.

In addition, the Federal Government has also been advised to without further delay establish special judicial mechanism that would pave way for special court for the prosecution of oil theft cases.

Oil theft

This advice is contained in a research report titled: Private gain, public disaster, social context of illegal oil bunkering and artisanal refining in the Niger Delta by Prof. Ben Naanen of the University of Port Harcourt and Mr. Patrick Tolani, the chief executive of Redeemers Relief Agency International based in Oxford, United Kingdom (UK).

The report, which was made available to The Guardian in Port Harcourt, noted that while Nigeria’s economy is dangerously dependent oil crude oil export, which contributes about 96 per cent export earnings, the country pathetically is losing well over $6 billion worth of her oil production to crude oil theft.

It stated: “Nigeria has been losing about $6 billion worth of oil to theft in recent years which is about 6.25 per cent of the country’s total export value. About 80 per cent of the stolen oil is exported while 20 per cent is crudely processed into low quality petroleum products for the internal market. This scale of loss is close to a national economic emergency. Nigeria has the highest rate of oil theft in the world – about 145,000 bpd or 7.25 per cent of total production. Closest rival is Russia, which loses about 150,000 bpd or 1.5 per cent of total production.

“Unfortunately, theft of Nigerian oil is seen abroad as a uniquely Nigerian problem that does not represent credible threat to the international economy or world peace and security, hence it is difficult to get the support of int’l community to combat it. So, Nigeria has to find an internal solution to its self-inflicted crisis.”

The duo in the report regretted that despite this monumental lost, the Nigerian government has not achieved much in its struggle against illegal oil bunkering.

The report observed that crude oil theft is largely regarded abroad as a peculiar Nigerian problem, which does not threaten the world economy and international security. It said that suggested measures such as genetic finger printing and certification of Nigerian oil are not feasible because of the complicated nature of oil shipping which ensures that oil from a particular source hardly arrives at its destination without blending.

The report then recommended that the Federal Government needs to build a robust advocacy strategy that would target refineries abroad, especially those in the regions where much of the stolen oil is taken to, and sensitising them about the adverse consequences of oil theft on the international oil companies and oil production in the country which would in turn affect global oil prices.

“We have proposed to enlist the support of these refineries in an international campaign Nigerian oil theft. This campaign can be designed to include international non-governmental organisations such as Oxfam, Transparency International. They might support the campaign once it is demonstrated that the theft is affecting poor people in Nigeria. A vigorous campaign to the National Assembly and local and international non governmental organisations in Nigeria which could help to raise awareness about the problem” the report further said.

Also to create deterrence, the government has been advised to set up special courts or other mechanisms for the speedy prosecution of cases of oil theft and criminal interference with oil facilities and also a rapid intervention force made up of credible and untainted officers to combat illegal oil bunkering.

Naanen and Tolani said that the passage of the Petroleum Industry Bill (PIB) with the 10 per cent host equity together would go a long way in creating a sense of equity and ownership in the Niger Delta, adding that Federal Government has to tackle poverty and unemployment in the Niger Delta, even though not all those involved in oil theft are driven by poverty because those who steal crude oil for export are mainly motivated by the imperatives of capital accumulation.


– The Guardian

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