NIGERIA: CRUDE OIL THEFT OR INDUSTRY COLLAPSE?
Nigeria: Crude Oil Theft or Industry Collapse?
BY ISSA AREMU, 2 JULY 2012
Comment
OPINION
The latest buzzword in the dictionary of Nigeria's oil industry abysmal/deafening failure is crude oil theft. It is now an "oily" fashion (as it were) for visible government and corporate oil chieftains to impress on us all that crude oil theft is getting out of hand.
The Shell Petroleum Development Company (SPDC) has particularly increased the noise level of the "worsening state of crude oil theft in Nigeria". According to Shell, Nigeria had been losing about $5 billion annually to the activities of illegal oil bunkerers operating in the oil fields located in the coastal parts of the country. An estimated 150,000 barrels of crude oil valued at $13.5 million is said to be stolen daily by the oil thieves believed to have links with some individuals in the country and an international oil cartel backed by some foreign countries. The Managing Director of SPDC and Chairman of the Shell Group in Nigeria, Mr. Mutiu Sumonu, reportedly told the opening of a three-day public hearing on the frightening rise of illegal oil bunkering activities in the Niger Delta region at the 0public hearing organised by the Joint Committees on Petroleum Resources (Upstream) and Navy in the House of Representatives.
The incident of crude oil theft had degenerated from the occasional and haphazard operations of some local thieves to a well-coordinated syndicate of criminals who are prepared to do anything to obtain the ill-gotten crude oil he said. Witness him; "The scale of crude oil theft now is more than what the oil companies can handle. It is extremely pervasive now. If you over-fly the whole of our operational areas in the Niger Delta, you will see canoes, barges and illegal refineries all over the place".
Also recently in Lagos the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, said the rising incidence of bunkering bordered on the security of the nation and the economy. In terms of losses, she said, "the country is losing approximately 180,000 barrels of oil equivalent daily at this time. Of course, to the nation, if you look at the international cost for a barrel, it will be estimated at $7billion yearly." The Minister of Finance, Dr Ngozi Okonjo-Iweala, further disclosed that Nigeria lost $14 billion in 2011 to both oil theft and fraud in the allocation of a controversial fuel subsidy.
In an interview with Financial Times of London, the Finance Minister said the trade in stolen oil led to a 17 per cent fall in official oil sales in April, or about 400,000 barrels per day.
"We have to get very serious about the bunkering issue. If we can stop the amount that is stolen, we can beef up the excess crude account faster," she said. At the much discussed presidential media chat, President Goodluck Jonathan described Nigeria as the only country in the world where crude oil is stolen at an alarming rate. Pray with these serial identifications of the problem of the "cancer" of crude oil theft, whence the solutions to halt the criminality? The bane of Nigerian governance discourse in recent times is its paralysis by analyses. Our leaders are tall in academic identification of problems but miserably short in proffering doable solutions. Beyond saying the obvious that crude oil theft is mainly a Nigerian brand, perpetrated by "common criminals", the President has not proffered a "common" solution talk less of an uncommon radical presidential solution.
True to her management style by Task Force, the oil Minister has just inaugurated a new industry joint task force (JTF) (comprising of the Police and the Armed Forces, in collaboration with the Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation (NNPC) as well s multinationals and indigenous operators) ostensibly to stem the menace that is deepening by the day. Meanwhile the security agencies, namely (the Navy, Civil Defense Corps) are trading blames at the House public hearing while the oil thieves are united in closing the entire oil industry from the upstream. The danger of oil theft cannot be over emphasized. Nigeria became an oil producing nation in the 60s just with production of 5,000 barrels per day. A daily theft of 150,000 barrels not captured in our ever dubious national oil receipts means we have degenerated from being a promising oil producing nation to increasingly hopeless crude oil stealing nation! But the crude oil theft by those the President called "common criminals" is only a tip of the rot in the collapsing oil industry.
The entire petroleum industry has performed below expectations and not few hold that the sector is a failure. The industry is characterized by wastage, corruption, (recent $6Billion subsidy scam!) low productivity and unchecked dominance of foreign multinationals. Shell cries about crude oil theft but like all other oil companies, it is debatable if they all account properly for their own production also. Nigeria remains the weakest link within OPEC as her incessant pressures for oil export made her to exceed quota thus undermining world crude price. In terms of Nigerianization, know-how and upstream technology the initiative still remains with foreign multinationals while local content is abysmally low and in many areas the scandalous gas waste underscores the referred failure of upstream operation. Very little progress had been made in terms of technology for exploration and production activities remains valid today.
Nigeria government is yet to move from 'income generating' to 'industry control', as government still remains passive tax collector while the oil companies predominate. In 2000 there was a scandalous discovery of twenty (20) hidden oil wells by Engineer Hamman Tukur-led National Revenue Mobilisation Commission in which Nigeria reportedly lost as much as N280 billion to illegal operation by multinationals, underscoring a complete erosion of marginal government control of the upstream operation. May be we should be more worried about an uncommon total industry collapse (see Algeria, Saudi Arabia, Iran, Venezuela) than "common" oil theft by "common criminals."
BY ISSA AREMU, 2 JULY 2012
Comment
OPINION
The latest buzzword in the dictionary of Nigeria's oil industry abysmal/deafening failure is crude oil theft. It is now an "oily" fashion (as it were) for visible government and corporate oil chieftains to impress on us all that crude oil theft is getting out of hand.
The Shell Petroleum Development Company (SPDC) has particularly increased the noise level of the "worsening state of crude oil theft in Nigeria". According to Shell, Nigeria had been losing about $5 billion annually to the activities of illegal oil bunkerers operating in the oil fields located in the coastal parts of the country. An estimated 150,000 barrels of crude oil valued at $13.5 million is said to be stolen daily by the oil thieves believed to have links with some individuals in the country and an international oil cartel backed by some foreign countries. The Managing Director of SPDC and Chairman of the Shell Group in Nigeria, Mr. Mutiu Sumonu, reportedly told the opening of a three-day public hearing on the frightening rise of illegal oil bunkering activities in the Niger Delta region at the 0public hearing organised by the Joint Committees on Petroleum Resources (Upstream) and Navy in the House of Representatives.
The incident of crude oil theft had degenerated from the occasional and haphazard operations of some local thieves to a well-coordinated syndicate of criminals who are prepared to do anything to obtain the ill-gotten crude oil he said. Witness him; "The scale of crude oil theft now is more than what the oil companies can handle. It is extremely pervasive now. If you over-fly the whole of our operational areas in the Niger Delta, you will see canoes, barges and illegal refineries all over the place".
Also recently in Lagos the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, said the rising incidence of bunkering bordered on the security of the nation and the economy. In terms of losses, she said, "the country is losing approximately 180,000 barrels of oil equivalent daily at this time. Of course, to the nation, if you look at the international cost for a barrel, it will be estimated at $7billion yearly." The Minister of Finance, Dr Ngozi Okonjo-Iweala, further disclosed that Nigeria lost $14 billion in 2011 to both oil theft and fraud in the allocation of a controversial fuel subsidy.
In an interview with Financial Times of London, the Finance Minister said the trade in stolen oil led to a 17 per cent fall in official oil sales in April, or about 400,000 barrels per day.
"We have to get very serious about the bunkering issue. If we can stop the amount that is stolen, we can beef up the excess crude account faster," she said. At the much discussed presidential media chat, President Goodluck Jonathan described Nigeria as the only country in the world where crude oil is stolen at an alarming rate. Pray with these serial identifications of the problem of the "cancer" of crude oil theft, whence the solutions to halt the criminality? The bane of Nigerian governance discourse in recent times is its paralysis by analyses. Our leaders are tall in academic identification of problems but miserably short in proffering doable solutions. Beyond saying the obvious that crude oil theft is mainly a Nigerian brand, perpetrated by "common criminals", the President has not proffered a "common" solution talk less of an uncommon radical presidential solution.
True to her management style by Task Force, the oil Minister has just inaugurated a new industry joint task force (JTF) (comprising of the Police and the Armed Forces, in collaboration with the Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation (NNPC) as well s multinationals and indigenous operators) ostensibly to stem the menace that is deepening by the day. Meanwhile the security agencies, namely (the Navy, Civil Defense Corps) are trading blames at the House public hearing while the oil thieves are united in closing the entire oil industry from the upstream. The danger of oil theft cannot be over emphasized. Nigeria became an oil producing nation in the 60s just with production of 5,000 barrels per day. A daily theft of 150,000 barrels not captured in our ever dubious national oil receipts means we have degenerated from being a promising oil producing nation to increasingly hopeless crude oil stealing nation! But the crude oil theft by those the President called "common criminals" is only a tip of the rot in the collapsing oil industry.
The entire petroleum industry has performed below expectations and not few hold that the sector is a failure. The industry is characterized by wastage, corruption, (recent $6Billion subsidy scam!) low productivity and unchecked dominance of foreign multinationals. Shell cries about crude oil theft but like all other oil companies, it is debatable if they all account properly for their own production also. Nigeria remains the weakest link within OPEC as her incessant pressures for oil export made her to exceed quota thus undermining world crude price. In terms of Nigerianization, know-how and upstream technology the initiative still remains with foreign multinationals while local content is abysmally low and in many areas the scandalous gas waste underscores the referred failure of upstream operation. Very little progress had been made in terms of technology for exploration and production activities remains valid today.
Nigeria government is yet to move from 'income generating' to 'industry control', as government still remains passive tax collector while the oil companies predominate. In 2000 there was a scandalous discovery of twenty (20) hidden oil wells by Engineer Hamman Tukur-led National Revenue Mobilisation Commission in which Nigeria reportedly lost as much as N280 billion to illegal operation by multinationals, underscoring a complete erosion of marginal government control of the upstream operation. May be we should be more worried about an uncommon total industry collapse (see Algeria, Saudi Arabia, Iran, Venezuela) than "common" oil theft by "common criminals."
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