‘The menace of Oil theft and the threat to Nigerian economy’


    Crude oil theft has grown into a huge monster threatening the Nigerian economy.

    This has grown to an alarming proportion and dimension as this goes on in almost all the Oil producing states and the states that have Oil pipelines in their geographical areas. Nigerians all called to rise against this menace as it is capable of shutting down the nation’s economy.

    The recent clampdown on illegal refineries by Rivers State government is commendable but more needs to be done by the State governments of other Oil producing states.

    This is not Nigerian National Petroleum Company, NNPC, or Federal Government’s problem but Nigerians Problem as the shortfall on government’s revenue affect her ability to provide infrastructural facilities that should be provided for the masses, Nigerians, so it is Nigerians problem.


    The GMD/CEO of NNPC, Mallam Mele Kyari, has described it as a national emergency on account of the proportion, dimension and sophistication it has taken in recent times.


    “Nigeria, as an oil producing country, ought to be enjoying a windfall now with the sudden rise in the price of crude oil in the international market due to the Russia-Ukraine situation. Before the Russia-Ukraine crisis, crude was selling between $96 and $97 per barrel. It shot up to $105 per barrel the following day after the conflict began. It has since then been hovering between $110 and $125 per barrel since then. Nigeria is not reaping as much as it should from this because it is not able to meet its OPEC production quota”, he said.


    “In fact, crude oil production has dropped to an all-time low of 1.29million barrels per day (without condensate). The addition of condensate brings Nigeria’s current production to 1.49mbpd”, he added.


    A look at production figures from 2020 till date him shows in stark relief the how much of a monster the menace of crude oil theft has become. The average production in 2020 was at 1.77mbpd.


    It would be recalled that 2020 was the year Covid-19 almost brought the world to a halt with virtually every country on lockdown. This saw the price of crude oil crashing to sub-zero levels with unprecedented demand dip. This development resulted in zero crude oil theft in Nigeria, obviously because the there was no market for the thieves to sell their stolen crude. This saw the country recording its highest production level of 2.49mbpd on 17th April, 2020.

    What that development showed according to Kyari was that Nigeria has the capacity to produce that figure (2.49mbpd) on any normal day because there was not special intervention of any kind that led to that peak production on that day.


    “However, as normalcy began to return and the price of oil began to experience a steady rise, the oil thieves began to step up their game and upstream operators began to experience production losses which have been growing since in almost direct proportion to the rise in crude oil price in the international market”, he noted.

    Challenges and areas of concentration

    Explaining the situation recently, the GMD said it got to a point where, if you inject 239,000 barrels of crude oil into either of the Trans-Niger Pipeline or the Nembe Creek Trunk Line (these are some of the major pipelines that convey crude oil to the terminals for export), you will only receive 3,000 barrels. It got to a point where it was no longer economically sustainable to pump crude into the lines and a force majeure was declared.


    In 2021, a similar trend was observed. In January of that year, out of about 239,000bpd pumped into the line, only 190,000bpd was recovered putting the loss at 19,000bpd.


    The rate of oil theft kept increasing with as the price of crude oil was rising in the market until March 2022 when there was zero recovery from all the volumes that was pumped into the line.


    “Another noticeable pattern in the trend of oil theft is that it is more endemic with Joint Ventures assets and those that belong to the Independents than with Production Sharing Contracts assets. This is likely because of the nature of the JV assets which are mainly onshore or in swamp/shallow waters. This makes the evacuation pipelines more accessible than those of the PSCs which are offshore and in deepwaters”.


    There is also a pattern in the way the theft is carried out. This can be discerned from the size of pipes inserted on the lines and the technology deployed in carrying out the insertion.


    “In some cases, the pipes inserted to steal crude oil from the lines are small and fitted in an amateurish way. This is an indication that those involved are small time criminals, more likely artisanal refiners who operate the slew of illegal refineries that dot the creeks of the Niger Delta from Akwa Ibom to Rivers, and from Delta to Bayelsa”, NNPC explained further.


    “Some of the pipes fitted into the lines to siphon crude oil are big. In some cases, they are of same size with the pipeline or of the size that is used at the terminal to pump crude into vessels. A close look at them would reveal that they are professionally fitted with the use of cutting-edge technology. There have been cases where there are riser pipes were used indicating that the criminal deployed cranes. These cases indicate that the persons involved are not the regular illegal refinery operators but sophisticated and very knowledgeable criminals with access to vessels through which they ship the stolen crude oil out of the country”, stated NNPC Limited.


    “The involvement of this last group is what accounts for the high volumes involved in the theft which has become an existential economic threat to the oil and gas industry and even Nigeria as a nation.


    “On the other hand, artisanal refiners and their illegal refineries have constituted a very grave danger to the environment and people of the host communities through the heavy pollution caused by their activities. This is beginning to cause soot in the atmosphere health challenges in some of those communities”, stressed the NNPC Limited.


    In terms of the financial loss to the nation, in 2021 according to NNPC Limited, the total volume of crude oil stolen is put at 200,000 per day. At an average price of $55 per barrel, the total loss came to about $4bn (from January to December 2021).


    “In 2022, between January and April alone, the volume of crude stolen has risen to about 250,000 barrels per day putting the total loss at about $1,5bn (at the rate of $100 per barrel).

    “Another way to look at the virulent nature of the crime is to look at the rate at which the crude pipelines are breached with insertions. On a stretch of 20 kilometers pipeline, there were 85 insertion points in three weeks!

    The Trans-Forcados Pipeline, which is about the most reliable of all the land lines, is not spared. It records about 19,000bpd loss day.

    There are also case of sheer vandalism where the lines are just blown out with explosives resulting in spillages and environmental hazard, causing losses of lives and properties and degradation of the vegetation which may not be productive in the next 100 to 150 years. Most recent is the Ohaji/Egbema Local Government Area of Imo State where illegal refinery exploded and killed over 110 people.

    “Yet another area where oil theft is affecting the economy is the area of investment. It has slowed down the gains the PIA is supposed to bring about in the area of investment. Potential investors now ask how they can recoup their investment when crude oil is stolen”.

    Measures taken to curb this menace



    With the twin menace of oil theft and pipeline vandalism assuming epidemic proportion, the President of the Federal Republic of Nigeria, Muhammadu Buhari has given marching orders to the Chief of Defense Staff to lead a war against the criminals

    All the security agencies have been mobilized to flush out the criminal element and restore normalcy.  In fact, the DSS and the Navy have already made some arrests.

    NNPC has also deployed community-based security to monitor the pipelines while it is working on deploying technological tools for more effective surveillance and monitoring of the lines and facilities.

    EFCC and NFIU are also tracking movement of funds relating to the criminality

    The Way Forward

    While there is hope that all the measures that have been deployed so far will begin to yield results within the next two months, it must be pointed out that oil theft and pipeline vandalism are problems for everyone. Apart from the host communities that are directly affected by the environmental degradation, every citizen suffers the loss of national revenue when government does not have enough to provide social amenities and infrastructure to improve the quality of life in the country. It is alleged that the cartel involved in Oil theft employ the services of security agents, “but if see Oil theft going on anywhere, report it to the Media, the media will call the attention of the government by publishing the story, the government will investigate and arrest the culprits, so if you see something say, something.”


    It is, therefore, imperative for all Nigerians to rise up against those behind crude oil theft and pipeline vandalism with a view to stamping them out so that the oil and gas industry can yield the fullness of its benefit to the nation and the citizenry.




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