The recent disclosure that the country loses about $1.9billion monthly on account of oil theft should serve as a clarion call on the government to come up with deterring measures to tackle the menace. The startling revelation was made when the Minister of Petroleum Resources, Chief Timipre Sylva, and the Group CEO of the Nigerian National Petroleum Company Limited, Malam Mele Kyari, visited the governors of Delta State, Ifeanyi Okowa, and Hope Uzodinma of Imo state. At the event, the Chief of Defence Staff, Lt. Gen. Lucky Irabor, called for a collaborative effort to curb the rising cases of oil theft in the Niger Delta region.
According to Sylva and Kyari, the activities of oil thieves have assumed a new dimension that threatens the economy of the country and the health of the people of the oil-producing communities. Unfortunately, Nigeria rarely meets her OPEC production quota of 1.99 million barrels per day as a result of oil theft and illegal refineries. In 2021, Nigeria’s oil production averaged 1.6 mbpd, but was reduced to 1.2 mbpd. This means that Nigeria has a shortage of about 500,000 barrels per day. In spite of the soaring oil prices in the international market, Nigeria has not been able to meet the projected revenue target.
The revenue loss is detrimental to the economy, especially at this time that government is facing acute financial crisis exacerbated by global economic turbulence. In the same vein, the Shell Petroleum Development Company (SPDC) has expressed concerns about the adverse effect of illegal oil bunkering on the economy. It is the contention of Shell that oil theft could cripple the economy if nothing is done now to curb it.
It describes oil theft as “organised crime” that involves high and experienced individuals in the society. The oil giant lamented that illegal arms and oil theft in the Niger Delta had taken a dangerous dimension and must be checked forthwith. According to Shell, failure to address the oil theft challenge will affect government’s budgets for education, health, security and other sectors.
There is no doubt that the activities of oil thieves pose a present danger to the economy. It also causes environmental pollution in the oil-bearing communities. According to the Nigeria Extractive Industries Initiative (NEITI), the economy lost $3.5billion in revenue, accounting for 10 per cent of the nation’s foreign reserves. In 2019, the NNPC announced a loss of $159billion to oil theft and pipeline vandalism. Overtime, oil theft has led to frosty relations between the oil-bearing communities and oil companies. The Federal Government has the capacity to stop the recurring incidents of oil theft. What is lacking is the political will to do so. With adequate supervision and monitoring, security agencies, oil companies and the host communities can work in concert to curb the menace. Without mincing words, oil theft is a lucrative business that involves powerful individuals, including foreigners and their local collaborators in government circles and others. However, it is comforting that government is taking a new offensive against oil theft.
If oil theft is drastically reduced, more investors will be attracted to the sector. Despite the recent rise in oil prices in the international market, there is still fear that the oil industry in Nigeria will face serious infrastructure challenges and divestment. This development can be traced to oil theft in the Niger Delta region and the general insecurity in the country. Some international oil companies are divesting from the country, a development that will not augur well for the sector.
Since oil theft will destroy the sector, government should come up with stiffer sanctions to deal with the menace. At present, Nigerians believe that the government has not demonstrated enough will to tackle oil theft. In addition, the government should address the factors that drive oil theft. They include the neglect of the oil-producing communities, the saboteurs in the sector and their foreign collaborators. Some people engage in oil theft to amass wealth. Government should review the oil and surveillance contracts based on performance of contractors. The engagement of the host communities will ensure effectiveness in securing the nation’s oil and gas assets.
The government should be thinking about Nigeria beyond oil. Nigeria needs to diversify the economy by robustly growing the non-oil sectors. The reality is that non-oil exports have faster growth rate that can build a more resilient economy. The state of global economy today is such that Nigeria can no longer afford to depend on oil and hope to become a major economic hub in Africa.