Nigeria’s oil production output fell to 1.322 million barrels per day in February 2024 from 1.427 barrels in January 2024 as the country struggles to meet its Organisation of Petroleum Exporting Countries (OPEC) quota. This problem is caused by years of underinvestment in the sector and the massive oil theft in the Niger Delta region. Within the first quarter of 2024, the Nigerian military recovered 21,573,310 litres of stolen crude worth over N20 billion and dismantled several illegal refining sites. The army also reportedly seized 2,723,430 litres of illegally refined diesel, 53,300 litres of kerosene and 52,730 litres of petrol. In addition to these discoveries were boats, storage facilities and cooking ovens used by vandals. These seizures provide a glimpse into the scale of the growing crisis and attempts by authorities to halt it.
The sabotage of oil pipelines by criminals and local groups, often in collusion with corrupt officials, varies in sophistication. It involves ferrying stolen crude using different forms of transportation, including barges, trucks and vessels. This targeting of oil pipelines has contributed to the challenges facing a substantial increase in the country's oil reserves. As of January 2024, Nigeria’s estimated reserve stood at 37.50 billion barrels, while the gas and non-associated gas reserves stood at 102. 59 trillion cubic feet (TCF) and 106.67 TCF, respectively, accounting for total gas reserves of 209.26 TCF.
Implications of Oil Theft
Oil theft in Nigeria has significant socioeconomic and environmental implications. The Nigerian National Petroleum Corporation (NNPC) declared that it is unable to fulfil the 2024 budget production benchmark of 1.78 million barrels per day. According to the Group Managing Director of NNPC, Mele KyariI, authorities recorded 9000 infractions on the pipeline network in one year. Likewise, he revealed that between 2022 and March 2024, 6,465 illegal refineries were deactivated, and 4,876 illegal connections to a pipeline out of 5,570 were discovered.
In March, oil production, excluding condensates, was reported to have witnessed a second consecutive monthly decline since the beginning of the year after dropping to 1.231 million barrels per day from 1.322 million barrels per day in February. This situation has led to a shortfall in foreign exchange income and government revenue and a bleeding in profit earnings by oil companies. In 2022, Shell Petroleum Development Company operations suffered a temporary lull due to the activities of oil thieves on the Trans Forcados pipeline.
According to the Nigeria Extractive Industries Initiative (NEITI), Nigeria is believed to have lost over 619.7 million barrels of oil valued at $46.16 billion to various forms of oil theft and pipeline vandalism between 2007 and 2020. Similarly, between 2009 and 2018, Nigeria reportedly also lost 4.2 billion litres of petroleum products from refineries valued at $1.84 billion.
Apart from economic losses, oil spills from pipeline sabotage and illegal refining of crude have aggravated the pollution and destruction of farmlands, mangrove forests, and surface and underground water sources. It also makes the polluted areas in affected communities unfit to support occupations reliant on farmlands and water, especially farming and fishing. The refining of stolen crude oil has also increased air pollution and the release of toxic soot, which has devastating health ramifications for local communities.
The artisanal refining process of crude oil involving intense fire heating in metallic containers has led to catastrophic consequences. In October 2023, at least 37 people were burned to death after a blast occurred at an artisanal oil refinery site in Rivers State in the south-south region. Another fatal incident in April 2022 killed over 100 people after a colossal flame engulfed a refinery in Imo State in the southeastern region of Nigeria.
Motivations for the Menace
The illegal siphoning of oil from pipeline networks is fueled by a complex web of social and economic factors working in unison or independently. A prominent factor is the grievances held by citizens against the government and oil companies due to underdevelopment and unemployment in oil-producing communities. Nigerians from other parts of the country also trade in stolen crude and by-products. Last year, five people were apprehended for oil bunkering in the northeastern state of Bauchi.
The financial gains also make it attractive for militant groups in the region, thereby fueling insecurity and violence. Organised criminals seeking profit exploit the lucrative trade by carrying out large-scale tapping of pipelines and movement of crude using vessels by Nigerian and non-Nigerian crews. Last year, the Nigerian Navy recovered five barges, 690 boats, and 116 speed boats filled with stolen crude oil. In 2022, there was a major scandal after authorities in Equatorial Guinea seized a 3-million-barrel-capacity oil tanker suspected of carrying stolen Nigerian crude. The ship, MV Heroic Idun, had evaded arrest after being sighted in an oil field.
The ship was returned to the country, and its 26-person crew was charged on three counts, including attempted oil theft. The apprehended crew members were released after entering a plea bargain agreement with the Nigerian government. The same year, authorities discovered an illegal oil connection line four kilometres from the Forcados terminal into the sea. The connection line, it was discovered, had been operating for nine years undetected.
The stolen oil is usually sold on the black markets in the country and abroad. In 2013, a report by London-based Chatham House disclosed that stolen Nigerian oil was sold in international markets such as China, and the proceeds were laundered in world financial hubs, including Britain, Dubai, and the United States. An earlier assessment in 2009 by the United Nations Office on Drugs and Crime (UNODC) found that stolen oil reached countries in Western Africa like Ghana, Cameroon, Cote d'Ivoire, and even South Africa.
The Government’s Reaction and Impact
The Nigerian government has tried to employ several approaches to address the menace, particularly after the country began to suffer a severe decline in production— with the country's output dropping in 2022 to a low of 937,766 and 1.14 million barrels per day with condensate included. In response to the crisis, the military has intensified ground, air and maritime operations through the different armed services. These efforts, including surveillance and raids, have led to the dismantling of illegal refineries and the discovery of infrastructure and equipment sustaining the siphoning of oil. Other law enforcement agencies such as the National Security and Civil Defence Corps (NSCDC), the police, the Customs Services and the Economic and Financial Crimes Commission (EFCC) all play diverse roles in the broader effort to stop the menace.
In 2022, the national oil company awarded a pipeline surveillance and protection contract worth N48 billion annually (N4b per month) to Tantita Security Services Limited, run by the former leader of the Movement for the Emancipation of Niger Delta, Government Ekpemupolo, popularly known as Tompolo. The company’s knowledge of the local environment has contributed to a surge in discoveries of assets and sites belonging to oil thieves.
The controversial deal followed previous contracts with companies belonging to former militants, including Mujaheedin Asari Dokubo and Tompolo, first awarded in 2011 and later renewed in 2015. However, the contract has also become a source of tension as other ex-militants, local leaders, and groups opposed it. They wanted changes in the contract to accommodate more players and the ethnopolitical dynamics of the region. However, the likely issue of contention is having a piece of the financial reward accompanying such contracts. The tension caused by the contract and activities of Tompolo and his company have led to security risks and threats. A feud with an illegal oil bunker, Endurance Okodeh, also known as Amangbein, played a role in the chain of events that caused the killing of 17 soldiers in Delta State.
The military’s clampdown on oil bunkering has also come with costs, significantly increasing oil pollution in the region. The military's practice of destroying facilities and equipment by setting them ablaze, using bulldozers, or conducting air strikes has resulted in the discharge of crude and refined byproducts into the surrounding environment, which has catastrophic implications for the ecosystem. As such, there is a need for more efficient methods to prevent environmental degradation.
The government must also address the underlying economic and social drivers of oil theft while improving law enforcement presence in rural areas. Preventing corruption among officials is fundamental to checking illegal activities. Similarly, using technologies and sensors has the potential to enhance pipeline monitoring and would be a force multiplier for security forces.
References
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