Godwin Obaseki, the Governor of Edo State, who is also the Chairman of the Ad-hoc Committee of the National Economic Council on Crude Oil Theft, Prevention and Control, revisited the menace of crude oil theft in the country by painting a dire picture of the problem when he recently in Abuja stated that in the first six months of 2019, the nation lost about 22 million barrels of its produced crude oil to oil theft. He said “if nothing was done to curtail the ugly trend, the figure could double by the end of the year.”
Those who know would agree that the 22 million barrels loss in six months posited by NNPC and the Edo state governor was a very conservative estimate as the menace is far worse than that.
Nigeria’s current official production figure is somewhere between 1.7 and 1.85 million barrels per day while it has confirmed capacity to comfortably produce over 2.5 million bpd. This gap is one of the areas to keenly watch if we are serious about solving this problem of crude oil stealing. Are the multinationals producing more than what they tell us since the capacity to go beyond the figure they usually dangle at us exists in the various oilfields owned/operated by these companies?
Let nobody come with the trash of “does the Department of Petroleum Resources (DPR) not supervise production and loading activities of the foreign operators” because I have a working knowledge of how the supposed supervision is done.
With over 90 percent of the stolen oil exported and the balance of less than 10 percent allegedly processed locally at the artisanal refineries spread across the Niger Delta region, the federal government should know for certain where this problem lies. Whether anybody wants to hear this or not, the pockets of persons arrested from those “kpofire” locations in the Niger Delta have only token-effect in combating the scourge. Their own nuisance is more in causing environmental devastation some of which may be irreversible.
It has been established that less that 2 percent of the produced crude oil stolen from facilities in the Niger Delta are taken from flowlines between wellheads and the flowstations. Then between the flowstations and the export terminals, about 8 percent or less is sucked by thieves. So could this be where the problem lies?
It should actually bother our government that no two agencies in the management of the nation’s oil business have the same figures on our oil production. Should it be so? Various audit reports have shown that there are often conflicting data submitted by the different stakeholders involved in the core areas in the oil industry – like in the production, lifting and refinery deliveries. Some people would say we produce 1.8 million barrels per day, some other will say we do 1.9 while another set would give you 2.2 mbpd as our output. These are prime areas where a lot of manipulations take place to deliberately short-change Nigeria in the sharing of produced joint venture crude.
For whatever reasons by both the NNPC and its joint venture partners, produced crude oil is not measured at the wellheads or flowstations but only at the export terminals. And this is where the bigger problem lies.
There are footprints everywhere to show that the foreign multinational oil companies are defrauding Nigeria in their handling of crude oil produced within our oilfields. The cases filed against the Nigerian subsidiaries of U.S. multinational oil corporations including Chevron, the Anglo-Dutch concern, Shell, Italian ENI’s Nigerian Agip, France’s Total and Brasoil of Brazilian Petrobas are just sample prototypes of what these companies are doing to deny Nigeria of its supposed earnings from oil produced in the country.
As said in the documents tendered at the High Court in Lagos, “some shiploads registered less when they left Nigeria and more on reaching the United States, while some entire shiploads were undeclared in Nigeria.” The U.S.-based ImportGenius database was used by attorneys to confirm declarations made to U.S. customs by shippers and importers.
Now, following series of investigations undertaken by this consortium, it was established as suspected, that the crude oil declared to have been exported from Nigeria between January 2011 and December 2014, was less than what was declared to have been imported into the United States of America, a country that maintains detailed records and has stricter compliance measures.
Most times, what oil tankers declare they load at Nigerian ports is far lower than what the vessels discharge on arrival at ports in the USA. These were facts established by the Nigerian government-commissioned team of experts. And as explained by the federal government’s legal team in its deputations, the significant crude oil theft for which due payment is being sought by the nation, takes the form of accounting fraud, non-declaration or under-declaration of crude and gas cargoes.
Just imagine what this country would have lost over the years to these dubious business practices of the foreign multinational oil operators who come from countries that lecture us every day on integrity and transparency in business transactions?
Tragically, as has become the manner of our judges and their courts, the case was deliberately dismissed for want of evidence. What other evidence does the High want apart from the available ones that showed that some cargoes that landed in the USA were not even declared in Nigeria at all while some had far more volume discharged at the destination than was said to have been loaded at our export terminals?
On several posits on the menace of crude oil theft in the Niger Delta, this writer had insisted that if the magnitude of crude oil stealing as reported were to be true, then there couldn’t have been anyway such fleecing could occur without the collusion and/or participation of some major producers in the country and international oil tankers that lift Nigeria’s crude on behalf of the IOCs and the NNPC.
All these years, these same oil companies have blamed Niger Delta oil thieves for the spate of pipeline breaches and crude oil theft in the region when in actual fact the companies may have been covertly encouraging the “local thieves” to take some oil so that the companies can hide under that to siphon as much volume of crude as they can to their various countries/markets.
Most Nigerians particularly the government people may not be aware that the nation’s offshore arena is littered with tens of mega floating-production and storage platforms bleeding some of the nation’s most prolific wells and fields and yet these facilities are either poorly monitored or even unmonitored at all. Don’t ask me how I know because I worked in some of those facilities as a geologist and environmental auditor.
Let’s even look at recent pronouncements by Shell, Chevron, and Agip on magnitude of loss each suffers everyday: The problem of crude oil tapping by thieves, as we were told, is localised on facilities on land and swamp areas. It is a near impossibility to steal crude oil from either wellheads or flowlines in offshore arena without being spotted right on arrival.
Chevron in Delta is majorly an offshore producer (near shore and deep offshore). So majority of the company’s loses to thieves and vandals take place of the Chanoni Creek flowlines. Shell and Agip’s loses due to tapping from their facilities occur onshore- land and swamp terrains.
Question: what is the daily average of Shell and Agip’s combined onshore production that thieves can suck away over 300, 000 barrels every day as recently declared by the NNPC and some top officials of these foreign operating companies?
To say that NNPC as the outstretched arm of the federal government in the nation’s oil business is thus far a big disgrace is an understatement whether they want to hear it or not. The nation’s apex oil concern carries on its business as if they represent the interest of the foreign operators more than the interest of Nigeria.
The Department of Petroleum Resources, the handicapped police, is even worse than the NNPC though theirs seemed to be deliberately caused by people in government to ensure the department is permanently disabled.
My take is that whatever new effort against oil theft planned by the federal government will require the maximum co-operation of the international community, especially countries like the Netherlands, Italy, USA, China, Spain etc which are major stakeholders in the global oil industry and some of the destinations for oil stolen from Nigeria. Anything short of that is merely dancing around the problem. God bless Nigeria!