Nigeria loses 138,400 barrels of crude per day (about 7% of its total production) to theft, oil spills or shortage in production, according to a report from the Nigerian Extractive Industries Transparency Initiative (NEITI).
The NEITI report further said that Nigeria has lost more than 505 million barrels of crude, and 4.2 billion litres from 2009 to 2018. The deficit to the country’s economy amounts to $40.06bn and $1.84bn equivalent to $11.47m per day for 10 years.
Oil is unarguably the lifeblood of modern economy and it has now become one of the most essential commodity in the world. Hence, no nation today can survive without oil that is why analysts describes it as the “lifeblood of modern world”, adding that, “without oil, there would be no globalization, no plastic, little transport, and a worldwide landscape that few would recognize”.
Analysts also calls it “the world’s most important resource”. In recognition of the significance of oil, it’s believed in some quarters that, “Oil is raw material as well as a convenient and effective source of energy. In the form of energy it increases man’s capacity to get work done. As a raw material it provides the feedback for the fasts expanding industry in the world-the petrochemical industry.
All over the world lives of people are affected and the destinies of nations are probably determined by the results of oil industry operations. Oil keeps the factories of the industrialized countries working and provides the revenues which enable oil exporters to execute ambitious national and economic development plans.
Those developing countries that have no oil are faced with a grim struggle for survival: if they lose they are relegated to the “fourth world” the march of progress would be retarded and life itself would become unbearable if the world was deprived of oil. That is why oil has become the concern of governments, a vital ingredient of their polices and a crucial factor in their political and diplomatic strategies”.
Nigeria, being a mono-economy nation largely depends on the oil sector for its economic survival. The Nigerian economy is dependent on the exploitation of crude oil and the nation’s future is very much tied to the commodity. Indeed, oil and gas resources from Niger Delta region accounts for over 90% of Nigerian export and foreign exchange earnings, and over 70% of total Nigerian revenue.
This informs why the increase or otherwise in crude oil production affects directly the revenue base and development programmes of Nigerian state. Oil is now the mainstay of Nigeria’s economy. It is the country’s major export, fetching millions of petrodollars to the country each day.
Sadly, that same resource is being savagely stolen in copious quantities on daily bases. The upsurge of oil theft in the Niger Delta region of Nigeria in recent times is alarming. Presently, Nigeria is losing over 300,000 barrels of
Despite the efforts of the Federal government to curtail the illegal diversion of oil in the Niger Delta by increasing its security spending in recent years and devoting millions of naira annually to hire private security firms as well as equipping men and officers of the Nigeria Security and Civil Defence Corps (NSCDC), incessant destruction of pipelines and other oil facilities across the country as well as trade in stolen oil by criminal cartels with international connections have continued unabated.
This shows that, the huge investments of public funds on the safety of oil facilities have not yielded the required results. Consequently, the Nigerian economy is in a precarious situation. She is facing an economic emergency unprecedented among the oil producers of the world and something urgent needs to be done to reverse the ugly trend.
For instance, Nigeria has been tagged the most country plagued by oil theft among her contemporaries of Indonesia, Russia, Iraq and Mexico. Statistics of oil theft among these major oil-producing countries shows that Nigeria is losing as much as 400,000 barrels of oil per day which equates to losses of US$1.7-billion a month.
This is huge loss compared to a total theft of138,400 barrels per day and just 2,000 to 3,000 barrels per day in Mexico and Indonesia respectively. Thus, oil theft and illegal bunkering activities in the Niger Delta pose a challenge that threatens the very foundation of the oil industry, and by extension, the Nigerian economy.
In Nigeria, national and regional security are regularly compromised or challenged through the act and proceeds of crude oil theft leading to the proliferation of illegal arms, illegal drugs trade, the kidnapping of oil sector workers (particularly expatriates) and syndicated international money laundering networks.
The proceeds of crude oil theft are used also to fund increasing waves of armed militancy, where civilians take up arms to fight ills arising from oil theft as it affects their communities. These ‘militant’ activities frequently result in crises that warrant government or corporate intervention that typically lead to armed conflicts with security agencies.
There are also skirmishes between rival militant gangs competing to secure their stake of illegal ‘businesses’ (centred on oil theft), with high fatalities. Furthermore, the militancy crisis and state responses have resulted in massive displacements and migration from the Niger Delta region to safer parts of Nigeria and the Diaspora. Such migration places pressure mainly on major urban areas in Nigeria and Western countries which are choice destinations, for better livelihoods and economic interests.
Massive spillages are often associated with crude oil theft, causing serious environmental pollution and degradation. This invariably affects the ecosystem and the economic mainstay of the local communities which is mainly fishing and farming. This further worsens the plight of these host communities, since those responsible for oil theft are basically not accountable to any government or regulatory statues. Also, improvised local ‘refineries’ are an environmental menace.
Economically, the revenue flow for petroleum producing companies operating in Nigeria, is adversely affected, which translates to reduced national income for developmental purposes. This problem has been recently exacerbated by the dwindling proceeds accruable from crude oil due to current low prices in the global market.
There are tangible opportunities for “ethical buying” by end users at the point of service to demand to know the sources of petroleum products are genuine. By individual and collective actions consumers can ensure the marketers of oil products do not sell them stuff that indirectly promotes ‘blood oil’ vis a vis oil theft.
This will put pressure on established oil marketers, shippers and crude oil refineries in foreign countries to enforce due diligence in their operations, thereby patronising crude oil products from certified petroleum marketing channels. Consumer awareness and mass enlightenment could develop into the needed political will for governments to act accordingly in stamping out crude oil theft.
