With a loss of 619.7m barrels of crude oil valued at $46.16b, or N16.25 trn. between 2009 and 2020, curbing the twin menace of crude oil theft and pipeline vandalism has become a national emergency challenge, the Nigerian Extractive Industries Transparency Initiative (NEITI) has said.
The Executive Secretary of NEITI, Orji Ogbonnaya Orji, who stated this on Monday in a keynote address he presented at the Nigeria International Pipeline & Security Conference in Abuja, said solutions must be found for the challenge if investors’ confidence in the country’s oil and gas industry is to be restored and trust rebuilt, towards boosting national economic growth.
Orji, who spoke on the topic: “Pipeline Security, Oil Theft And the Implications for Economic Growth”, said strengthening security around the country’s oil and gas pipelines system was key to the ongoing search for solutions to the intractable scourge of crude oil theft and pipeline vandalism.
Organized by the Pipeline Professionals Association of Nigeria, in partnership with Energy & Corporate Affairs Africa, the conference theme was “Bolstering Security, Protecting Petroleum Industry Assets for Improved Economy.”
Relying on information and data contained in the recently published NEITI 2021 Oil and Gas Industry Report, Orji said crude oil theft and losses through pipeline vandalism pose serious threats not only to oil and gas exploration and exploitation in the country but also have huge negative consequences on the country’s economic growth, business prospects, and profit earnings by oil companies.
“From NEITI’s 2021 Oil and Gas Industry Report released last month, the sector accounted for 72.26% of Nigeria’s total export, and government’s foreign exchange, 40.55% of government revenue, and provided 19,171 jobs.
“However, it is not a matter for debate that despite the strategic contributions, the country is yet to derive optimal benefits from its oil and gas resources, due to oil theft and losses through pipeline vandalism, pipeline integrity compromise, outright sabotage, and general insecurity in the oil-producing region,” Orji said.
Apart from findings in NEITI’s Reports over the years, Dr Orji said recent insights from the agency’s membership of the Special Investigative Panel on Oil Theft and Losses revealed how crude oil theft was being carried out.
He said the crime was perpetrated mainly through pipeline clamping, illegal connections (ICs) on major pipeline systems, exploitation of abandoned oil well-heads, pipeline breakages, and vandalism of key national assets to illegally siphon crude oil into waiting vessels stationed in strategic terminals.
These criminal exploits, the NEITI Chief noted, take place, most times, in an atmosphere of communities’ complicity and conspiracy of silence by officials of government agencies that have the responsibility to curb illegal activities.
Orji did not spare members of the Pipeline Professionals Association of Nigeria, whom he said some of their member were often accused of being complicit in the crimes, by lending their professional expertise to the perpetrators of the pipeline vandalism and crude oil theft.
Considering that vandalizing a pipeline to steal crude oil required a certain level of expertise and knowledge of the business, Orji said it would difficult not to believe some greedy members of the Association were not involved.
He challenged the Association to come up with stiffer sanctions and penalties against their members found to have aided and abetted the crime, to deter others.
Highlighting the level of losses the country was suffering as a result of the crime, Dr. Orji said in addition to the empirical data of oil theft and losses above, Nigeria also lost about 4.2 billion litres of refined petroleum products from refineries, valued at over $1.84 billion at an average rate of 140,000 barrels per day between 2009 and 2018.
A rough computation of available data, Orji said, showed the total value of crude oil losses between 2009 and 2020 was not only higher than the size of the country’s foreign reserves but also almost ten times Nigeria’s oil savings in the Excess Crude Account over the period.
Besides, he said NEITI Report also disclosed that in the last five years (2017 -2021), Nigeria recorded about 7,143 cases of pipeline breakages and deliberate vandalism, resulting in crude oil theft and petroleum product losses of 208.639 mn barrels valued at $12.74 mn or N4.325 trn.
Again, he said NEITI Reports also disclosed that during the same period, Nigeria spent N471.49 bn, either to repair or maintain the sabotaged or vandalized pipelines.
Putting the statistics in the context of the conference deliberations, Orji pointed out that NEITI’s concern centred on the country’s economy not being able to grow as a result of massive crude oil theft, pipeline vandalism, and general insecurity in the oil-producing communities.
Based on the extensive data published in various NEITI Industry Reports, Orji said critical policy interventions were made to the government on how to solve the problem.
The interventions, he said, included, a recent policy advisory highlighting the issues in the key areas of the sector’s reforms, to help the Renewed Hope Agenda of President Tinubu administration to make decisions on immediate steps needed to increase revenue generation and boost the sectors’ contribution to economic growth.
In the policy advisory, Orji said NEITI recommended for immediate reconstitution of the Presidential Steering Committee on Implementation of the Petrol Industry Act (PIA) with industry experts and key relevant agencies as members, and tackling crude oil theft, crude losses, and pipeline vandalism.
Other recommendations included developing a gas utilization policy with linkages to Nigeria’s Energy Transition Plan; fast-tracking the repairs of government-owned refineries with adequate measures to secure the pipelines and the business environs for easy access, product delivery and evacuation, and strengthening Nigeria’s membership of the 57 member countries of the global EITI and NEITI, to support the reforms with knowledge, independent information, and data.
The NEITI Executive Secretary reminded the government about the issue of gas infrastructure, especially gas pipelines, saying at over 200 trillion cubic feet of gas, Nigeria is reputed to be endowed with the largest gas reserve in Africa and the 9th largest in the world.
“We recommended that the government urgently put in place a revised national policy on gas utilisation. Such a policy needs to be clear on the specific roles of the industry, government, and investors in the implementation of the plan,” he said.
Similarly, he said the gas utilisation plan should show the market-driven opportunities that would successfully translate the gas plans into sustainable economic growth.
For the gas utilisation policy to work, Orji pointed out that there was a compelling need for deliberate, ambitious investment in gas infrastructure, especially gas pipelines to provide connectivity across upstream facilities to processing and power plants and access the potentially huge market.
To achieve this agenda, he said an estimated investment capital of about $20bn would needed annually to bridge the nation’s gas pipeline/infrastructure gap.
Orji urged the conference and the professionals to come up with specific recommendations to bridge the existing knowledge, information, and skills gap to improve pipeline management, expansion, utilization, and to highlight pipeline security as an important factor in building investors’ confidence and interest required for economic growth in the sector.