It has come to our notice, the recent claim by the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, that crude oil theft through illegal bunkering and vandalisation of oil pipelines, was the major factor reducing the oil output of Africa’s largest producer. This indication was disclosed at the 38th Annual International Conference and Exhibition of the Society of Petroleum Engineers (SPE) in Lagos on Tuesday, August 5, 2014.
The Honourable Minister who was represented by Mr Emmanuel Bekee of the Department of Petroleum Resources (DPR), said that crude oil theft from pipeline vandalism was the most prominent challenge negatively impacting Nigeria’s Oil Industry, adding that, “theft-related vandalism has metamorphosed to the current trend and scale, from community agitation for resource control, pipeline sabotage to attract contracts for remediation, militant activism and theft of condensate and refined products”.
We wish to state emphatically, that although the ugly syndrome of oil bunkering through illegal pipeline vandalism poses a daunting challenge to the Nigerian economy, it constitutes a small proportion of the problem, when compared with the colossal level of crude oil theft and the theft of crude oil revenue perpetrated by some key players in the Petroleum Industry.
On very many occasions, the federal government of Nigeria has recurrently attributed the shortage in oil production to illegal oil bunkering through pipeline hacking. But no emphasis is placed on the
barrels of crude oil fraudulently converted by some stakeholders in the sector, as well as the huge sums of oil revenue stolen and unaccounted for. Available reports have shown that the massive looting of crude oil revenue through fraudulent subsidy payments and the unlawful conversion of the public-owned oil into the private hands of some influential operators in the oil sector, far outweigh the oil revenue lost to pipeline vandalism. Other forms of crude oil theft perpetrated by these key stakeholders in the Industry, include the illegal oil theft at export terminals under the guise of topping, the siphoning of oil from the wellhead and trade mispricing.
Statistics indicate that the failure of the federal, state and local governments to ensure transparency and accountability in the equitable utilisation of the substantial revenue from crude oil resources, has led to years of acute wastage in the Petroleum Sector. Till date, the Nigerian government has not been able to successfully stop all the leakages in the system, as a result of which the fraudulent stealing of oil and the revenue derived from it, still continue unabated. Some of these sharp practices were revealed in the investigations carried out in the sector, of which reference could be made to the Ribadu Report, KPMG Report, NEITI Report and the House of Representatives Report on the fuel subsidy scam. The recommendations made in these reports to combat the corruption in the sector, have not been fully implemented, but the Nigerian government would rather focus on pipeline vandalism, as though it were the most prominent form of oil theft, which is not true.
Besides, indications have emerged which suggest that oil theft-related pipeline vandalisation in the Niger Delta, may have declined significantly. Some Industry experts have in recent times, acknowledged
a general decrease in cases of pipeline vandalism. According to a THISDAY Newspaper report of August 6, 2014, Mr Austin Avuru, Chief Executive Officer of Platform Petroleum Ltd, was quoted to have said,
“Platform Petroleum with its 48 kilometres pipeline recorded only 0.5 percent theft between January and June this year, and has not recorded any single point of vandalism on its pipelines since July. So where are others getting the theft rate of 22 percent? Is it not the same Niger Delta?”
Undoubtedly, theft-related pipeline vandalism is inimical to the growth of the nation’s economy and so are the other forms of oil theft. The nagging threat of crude oil theft in Nigeria, underscores the problem of systemic corruption and weak governance, as well as the socio-economic deprivation in the oil-producing Niger Delta region.
Dr. Isaac Osuoka of the Social Development Integrated Centre (Social Action) explained that, “as a result of the weak and inadequate democratic institutions in Nigeria, there has been poor accountability
in the management of revenues accruing from the exploitation of natural resources in the country. The oil corporations and the government have jointly engaged in opaque transactions, devoid of transparency, and the bulk of the oil revenue has been stolen, while the poorly enforced regulations on crude oil exploitation have exposed host communities to very significant violations to their livelihoods and their environment, without access to ready remedies or redress. Indeed, the oil extractive sector, has largely tended to exacerbate poverty in the communities where the sites of extraction are located, hence an expression of the so-called ‘resource curse’.”
We therefore urge the Nigerian government to take drastic steps towards ending the scourge of crude oil theft in the country, by putting measures in place to holistically tackle the problem of theft-related
pipeline vandalism, coupled with the monumental oil theft occasioned by the sharp practices of the oil companies, the Nigerian National Petroleum Corporation (NNPC) and some government officials.
We recommend that the Nigerian government must as a matter of urgency, address the nagging corruption plaguing the Petroleum Sector and ensure the nation’s oil revenue is judiciously disbursed.
We also recommend the proactive application of the Extractive Industries Transparency Initiative (EITI) principles, as a panacea to combat oil revenue theft in the Nigerian Oil Sector and ensure transparency which is concomitant with an efficient democratic system of governance in the country. Of a truth, it would be much easier to overcome the menace of crude oil theft, including theft-related pipeline vandalism, if the Petroleum Industry is made to run transparently and the oil proceeds are properly expended in such a way that the local people in the host communities, enjoy tangible benefits from it.
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