Contents

1.Introduction.. 2

2. effects/ impact on the economy. 2

3. government efforts to stop crude oil theft and looses. 3

4. additional measures the government  should adopt as solutions to crude oil theft . 4

5. additional solution and recommendations to curb crude looses and theft . 5

conclusion. 7

1.Introduction

Crude oil theft is the illegal siphoning or tapping of oil from pipelines, tankers, or wells, usually with the intent to sell it on the black market. This practice i where oil theft has become a major problem, causing significant financial losses for the government and oil companies, as well as environmental damage from oil spills and gas flaring in the host communities

NEITI in her report said Nigeria lost 620 million barrels of crude at the value at 46 billion dollars between 2009 to 2020 at 4.3 trillion naira It also shows a record 7143 pipelines vandalism cases were recorded in five years under review in the same vain 471 .49 billion naira  was spent in for repairs and maintenance  of pipelines . NEITI  2021 oil and gas industrial report said 68.47million barrels amounting to 1.96 trillion . In another reports the national security adviser said that well over  400,000 is been stolen daily. These figures represent a substantial part of our crude oil production. These are at a heavy cost to the companies, country and community Crude oil thieves use various methods to steal oil, including drilling into pipelines, sabotaging oil platforms, and even hijacking tankers at sea. The United Nations says about 5 to 7 % of crude oil market but Nigeria unfortunately accounts to a substantial part of the crude oil theft. In some quarters this criminal act can actually say to be a Nigerian problem. The act of crude oil theft should be treated as an economic cream similar to terrorism and should attract life in prison. In all we should look at the overall infrastructure and social benefits that the stolen crude is accruing to citizens over been taken by scrupulous members of the society in connivance with people in authority. It can be observed that the crude oil theft is going on in an industrial scale and will needs strong political will for the government to tackle it.

2. EFFECTS/ IMPACT ON THE ECONOMY

Crude oil theft has had a devastating effect on the Nigerian economy. Here are some of the key consequences: Revenue loss, environmental disaster, threat to regional ,peace and security , proliferation of arms and a poor investment climate. 

1. Financial Losses: Nigeria loses billions of dollars every year due to oil theft. This money could be used for critical infrastructure development, education, and health care and other public sector investment that would have help tackle the poverty and needs of the people. These looses affects virtually all the financial dealing of the government from planning , taxes, royalties ,income, currency , forex inflows etc
2. Reduced Oil Production: Theft and sabotage of oil infrastructure have caused a significant decline in oil production, which further undermines the country’s economy.
3. Environmental Damage: Oil spills and gas flaring from theft-related activities have polluted the air, water, and soil, leading to health problems and the destruction of biodiversity.
4.  Insecurity and Instability: The oil theft industry is often associated with organized crime and militia groups, which can lead to increased violence and instability in affected areas.
5.  Food Insecurity: Oil theft and sabotage have also damaged the environment, leading to the loss of arable land and reducing agricultural productivity, which can contribute to food insecurity.
6. Brain Drain: The volatile economic and political environment caused by oil theft has led to a brain drain, as skilled professionals leave the country for better opportunities elsewhere.
7.  Poverty: Despite Nigeria’s oil wealth, the country has a high level of poverty due in part to the widespread corruption and mismanagement associated with oil theft.
8. . Infrastructure Decay: The money lost to oil theft could have been invested in much-needed infrastructure improvements, such as roads, electricity, and water systems.
9. Foreign Investment Deterrence: The insecurity and instability caused by oil theft can deter foreign investment, further damaging the economy.

3. GOVERNMENT EFFORTS TO STOP CRUDE OIL THEFT AND LOOSES

Overall, while the problem of crude oil theft remains a persistent challenge in Nigeria, there are some measures taken by the government towards addressing the issue through a combination of legislation, technology, and international cooperation, private sector engagement and  Community Engagement: The Nigerian government has started working more closely with local communities in the Niger Delta to address the root causes of oil theft, such as poverty and unemployment but have also not shown the required political will towards addressing the issue. Some measures taken by the government includes

1. Transparency: In an effort to improve transparency and accountability, the Nigerian National Petroleum Corporation (NNPC) has begun publishing monthly reports on its oil production, refining, and sales, allowing for greater public scrutiny.
2. – Nigerian Petroleum Industry Act (PIA): In August 2022, the Nigerian government passed the PIA, which establishes new regulations for the oil and gas sector, including stronger penalties for oil theft.
3. NUPREC guidelines in support for the implementation of the 2021 PIA acts measurement guidelines and advance cargo declaration guidelines are some of the guidelines to stop the crude oil theft BY NUPREC towards curbing crude oil theft.
4. Engaged Private security services that help in guiding the pipeline. Nigeria awarded a pipeline surveillance contract to militant government Tompolo
5. Special joint security forces like police, navy, military, DSS, NSCDC.
6. The establishment of electronic tracking system.
7. Private Sector Involvement: In recent months, there has been a growing trend of private sector involvement in the fight against crude oil theft. Oil companies are collaborating with the government and deploying their own security measures to protect their pipelines and assets.

4. ADDITIONAL MEASURES THE GOVERNMENT  SHOULD ADOPT AS SOLUTIONS TO CRUDE OIL THEFT .

1.  Strengthening Law Enforcement: Ensuring that law enforcement agencies have the necessary resources and support to effectively combat oil theft and judiciary officers are well trained to handle such economic sabotage. : Ensuring that the judiciary is independent and not influenced by political or economic interests, so that oil thieves can be brought to justice. Reviewing and updating relevant laws to provide stronger deterrents and harsher penalties for oil theft and related activities.
2. Tackling Corruption: Addressing the corruption that enables and perpetuates the oil theft industry. These can be regulators, bureaucrats  and other agencies that have one or two bearing on the crude oil distribution and production. Strengthening anti-corruption measures, such as whistle-blower protection and asset seizure, to discourage and punish corrupt officials and oil thieves
3.   Public Awareness: Raising awareness of the negative effects of oil theft, and the importance of reporting suspicious activity. These should be made a priority so that the different stakeholders will understand the dangers of this practice.
4. Using Technology: Technologies like satellite monitoring, aerial surveillance, and blockchain-based tracking can be used to detect and deter oil theft.
5. Community Engagement: Empowering local communities to take ownership of the problem by involving them in the design and implementation of anti-theft initiatives.
6.  Alternative Livelihoods: Providing training and support for alternative livelihoods for those who may be involved in oil theft out of desperation or lack of opportunities.:

 

5. ADDITIONAL SOLUTION AND RECOMMENDATIONS TO CURB CRUDE LOOSES AND THEFT .

1. The government should set up a Maritime security support that will help intercept vessels carrying stolen crudes
2. All the cargo ships and oil tanker ships should be tracked  with specially security gadgets to and from Nigeria to monitor the discharging.
3. Oil pipelines protection via technology and detection infrastructure so that any tampering of pipelines will be addressed immediately
4. There should be a Collaboration between local and international navies to ensure adequate security within the Nigeria and her neighbors territorial waters
5.  The government need to enhance  the Anti money laundering policies , laws and activities to control the tray of illicit finances from the illegal crude business
6. As a huge economic crime there should be decisive oil theft sanctions
7. The government needs to intensify the International court cooperation’s to extend the capture and trial of perpetuators of this dangerous act
8. There are also suggestions about Using trucking and barges to reduce theft
9. There should be measures at Tackling corruption among the stakeholders and the oil business eco system.
10.  The government  should ban Stopping illegal refineries within the country
11. Drones and Satellite Monitoring: The Nigerian military has started using drones and satellite technology to monitor and protect oil pipelines, making it more difficult for thieves to operate undetected

fiscalised production and unilaterally disclosed crude oil losses suffered by some companies in 2020.

Table 30 – Crude Oil Losses

	Company	Fiscalized Production	Metering Error	% Of Metering To Fiscalized Production	Crude Loss (Theft & Sabotage)	% Of Crude Loss (Theft & Sabotage) To Fiscalized Production
S/N		bbls	bbls	%	bbls	%
1	AITEO	9,637,534	1,852,100	19.22%	2,804,450	29.10%
2	BELEMAOIL	1,913,287	68,297	3.57%	561,976	29.37%
3	CNL	55,816,143	–	0.00%	2,441,651	4.37%
4	EROTON	7,624,210	599,390	7.86%	2,477,375	32.49%
5	NAOC JV	5,328,852	–	0.00%	1,308,707	24.56%
6	NEWCROSS E&P	6,330,100	962,449	15.20%	2,035,483	32.16%
7	SEPLAT	2,066,593	26,511	1.28%	310,219	15.01%
8	SPDC	77,321,309	8,595,145	11.12%	20,889,461	27.02%
9	TEPNG	34,868,878	104,529	0.30%	1,118,791	3.21%
10	APDNL	3,052,295		0.00%	81,264	2.66%
11	NPDC ELCREST	5,884,884	55,381	0.94%	438,138	7.45%
12	NPDC FHN	3,706,795	–	0.00%	381,333	10.29%
13	NPDC WESTERN	4,918,618	206,143	4.19%	501,691	10.20%
14	NPDC NECONDE	9,953,417	1,206,242	12.12%	35,365	0.36%
15	NPDC OML 65	1,817,956	96,962	5.33%	189,044	10.40%
16	NPDC OML 98	833,494	–	0.00%	82,721	9.92%
17	NPDC SEPLAT	15,746,087	–	0.00%	1,654,538	10.51%
18	NPDC SHORELINE	11,306,773	120,787	1.07%	1,214,241	10.74%
19	PANOCEAN	915,899	–	0.00%	95,015	10.37%
20	EXCEL	293,379	–	0.00%	19,777	6.74%
21	PLATFORM	287,915	–	0.00%	79,512	27.62%
22	WALTERSMT	2,433,261	–	0.00%	442,084	18.17%
	Total	259,005,384	13,893,936	5.36%	39,162,836	15.12%

Source: NEITI 2020 Audit Template

The table above implies that total production in 2020 could have been higher by 39.16 mmbbl without the theft and sabotage. However, not all companies suffer crude losses. Usually, crude losses are suffered by companies who transport their products through pipelines where it is susceptible to sabotage. For the companies that suffer crude losses, it means their total fiscalised crude oil production for the year could have been higher by the volume of crude loss. Twenty-two (22) companies reported crude losses from theft and sabotage amounting to 39.16 mmbbls and this translates to US$ 1.63Billion at the average price of Federation equity crude of US$41.65/barrel in 2020. This is 15.12 % of total fiscalised production of the 22 companies and 6.10% of total fiscalised production for the year

CONCLUSION

From the forgoing and data available, It could be deducted that the main bane of our current economic crisis can be traced to the menace of crude oil theft as the government is not generating enough revenue to fund the budget, enough foreign exchange to support the forex and balance of payment and also enabling some state and non-state actors to be engaging in acts that is destabilizing the country , the companies and local communities . As I pointed out earlier, this should be treated as a serious economic crime that the government can only tackle with a serious political will. For Nigeria to survive the numerous economic impediment it needs to reduce  or eliminate to the barest minimum  crude oil theft and increase the countries oil production and crude reserve.

Ogwu Paul Okwuchukwu

Isdfoundation