By ETIM ETIM
When the nation’s chief budget officer, Ben Akabueze, appeared on TV the other night after the Public Consultative Forum on the FGN 2023 – 2025 Medium Term Fiscal Framework & Fiscal Strategy Paper for the 2023 Federal budget to explain the fiscal crisis the country is facing, it was apparent that he knew more than he was willing to let out. He said the country was managing to produce about 1.3 million barrels of crude oil per day whereas the 2022 budget provided for 1.8 million barrels per day (MBPD), which has since been downgraded to 1.6 MBPD. The significantly low daily crude oil production level, he said, was due to massive theft. ‘’This translates into a huge revenue loss to the country, and it is one major reason we are facing a serious fiscal crisis’, said Akabueze.
But when the interviewer pressed Akabueze to open up on the identity of these thieves, he quipped: ’’You are asking me a question that is beyond my paygrade’’. I laughed.
No senior government official would talk so openly about the biggest, industrial-scale robbery in the country, and yet does not have all the details and facts.
Crude oil theft has become the biggest organized crime in Nigeria’s history, leading to huge loss of revenue to the government, fiscal crisis, environmental pollution and a near crippling of the oil industry. The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe disclosed recently that the country lost over $1 billion in revenue in the first quarter of this year to crude oil theft. Shell Petroleum Development Company Limited, a one-time largest crude producer in the country, has been divesting completely from its onshore oil concessions in the Niger Delta and concentrating only on deep offshore production. But lately, the company has been thinking of leaving the country completely because of diminishing revenue. Shell’s CEO in Nigeria, Osagie Okunbor announced early this month at an oil conference in Abuja that two of its major crude oil pipelines have since been shut in due to massively vandalism.
Another oil Executive, Mike Sangster, said the CEO of TotalEnergies EP, estimates that about 100,000 barrels of crude oil are stolen daily. With a barrel selling for about $100, this is an income of $10 million a day for the thieves. ‘’That’s a huge loss for the country’’, says Sangster, who was also at the Abuja oil event.
Total’s OML 58 had been shut in since February due to vandalism. Nigerian investors are particularly squeezed by these criminal activities. Tony Elumelu of Heirs Holding Oil & Gas recently cried out that his company was losing 95 percent of its revenue to crude |oil theft. Recall that Heirs Holding had acquired 45 percent stake in OML 17 from Shell, Total and Agip to emerge one of Nigeria’s big indigenous operators in the country’s upstream petroleum industry. Many other Nigerian investors who made similar investments are crumbling under rising costs and dwindling revenue streams.
Although a small part of the stolen crude is being refined by artisanal refineries in the delta region and sold in the black market, a huge part is shipped away and sold outside the country. The cartel behind this massive theft of our oil resources is made up of Nigerian security officers and some politicians (governors, Senators and many others). Every important politician in the region and many others across the country are involved in this massive crime. They are adequately backed up and protected by the security forces who also share in the booty. The robbery is so massive that it has sent international oil companies scampering away, with some, like Shell, threatening to leave the country for good.
To fully understand the character of the oil thieves, it is important for Nigerians to learn more about this massive crime. As we all know, our country has many Oil & Gas wells in Oil Blocks located in land, swamp shallow offshore and deep offshore terrains. Land and swamp locations are generally referred to as Onshore locations, while oil blocks in Nigeria’s Atlantic Ocean Economic Exclusive Zone are said to be in offshore locations. The offshore location is broadly grouped into shallow water, with water depth generally below 500 meters, and near shore and Deepwater, with water depth between 500 meters and 3,000 meters and far into the Ocean from shore.
For Oil Blocks located in Nigeria’s onshore and shallow water locations, crude oil is transported through pipelines from point of extraction (the oil wells) to the point of storage for sale (the Terminals at Qua Iboe Terminal (QIT), for ExxonMobil; Bonny (for Shell), Forcados (for Shell), Brass (for Nigerian Agip Oil Company) and Escravos (for Chevron Nigeria Limited).
In countries with functioning refineries, crude oil from the oil wells is usually sent through pipelines straight to the refineries. But there is no functional refinery in Nigeria today, so all crude oil produced in the country is exported, after allocation of about 445,000 barrels that should have been reserved for local refining are allocated for a crude swap deal for refined products under the Direct Sale-Direct Purchase (DSDP) scheme.
Crude Oil in Deep water locations are stored in Floating Production, Storage and Offloading and Storage (FPSO) vessels in that location awaiting offloading tankers to come along for offtake. So, deep offshore production is not affected by pipeline tampering and oil theft.
Oil theft is therefore rampant onshore where crude oil pipelines criss-cross the landscape from the oil wells to the terminals passing through land, swamp and shallow near-shore part of Atlantic Ocean, making them so vulnerable and easily accessible to the thieves. Over time, many Nigerians have acquired the skills and tools needed to hot-tap into a pipeline carrying flowing crude oil, which is part of a normal international oil company (IOC)’s oilfield standard practice for operational purposes.
In addition, Nigerians also own large-sized oil barges capable of carrying thousands of barrels of crude oil. These barges have low enough draft to sail through the shallow and narrow Niger Delta creeks. These skills and equipment are now being deployed for illegal activities of oil theft. Note that these barges could just as well be used to execute legitimate contracts from oil companies.
Under security cover and with political protection, the syndicates move highly skilled personnel (perhaps former oil industry workers) and the hot-tap equipment into the forests on land or creeks in the swamp. A hole is safely introduced into the live pipeline and crude oil siphoned into a truck on land or a barge in the creek. As a side activity, a small portion of the siphoned crude oil is taken through a very primitive and highly inefficient refining (cooking) process to produce a very poor-quality petrol and diesel that damages engines.
The loaded trucks are driven to a jetty and offloaded into barges, which sail out to a waiting crude oil tanker in Atlantic Ocean or a land Terminal in nearby countries or even an island in Atlantic Ocean. It might take a week or two to fill a tanker with capacity for 250,000 to 500,000 barrels of oil petroleum.
Meanwhile, there are government agencies monitoring movements of vessels in Nigeria’s inland waterways and our portion of the Atlantic Ocean.
How come these barge movements get through Nigerian waters, for many years now, without at least one of them being caught and everyone associated with that vessel and its movement identified and brought to book? Where are officials of the Nigerian Maritime Safety Administration (NIMASA) 2021 paid to secure our maritime waters? Or where are members of the Marine Police, Nigerian Navy and Nigerian Inland Waterways when these highly visible and identifiable barges move along the Nigerian waters and out into the Atlantic Ocean? Why are they not apprehended? These movements occur daily on Nigerian waters and into Atlantic Ocean. Why are they not apprehended and arrested? It is because senior government officials are part of these illegal business and they offer protective cover to the criminals. Contrary to some insinuations, it is not the responsibility of oil companies to apprehend these barges. Meanwhile, the community leaders, whose environment has been completely devastated by illegal refineries, have been conditioned to look the other way while the police criminal raping of our oil industry is going on.
Clearly, the apparent involvement of senior politicians and security people are the reason the government appears unable to be unable to stop this enormous stealing. I do not know of any other country in which the government is part of this type of organized crime that survives. That is why the government has to do something drastic if we are to save the industry and the country’s economy from the evils of crude oil theft.
Etim, a public commentator and media consultant, lives in Abuja.