Nigeria loses $4.2bn annually to crude and product losses – NEITI

Nigeria loses $4.2bn annually to crude and product losses – NEITI

Wednesday, November 6, 2019 10:25 pm

File photo: Naval personnel at the scene of an illegal refinery being operated with stolen crude oil

The Nigeria Extractive Industries Transparency Initiative (NEITI) says the country lost an average of 11 million dollars daily, which translates to 349 million dollars in a month and about 4.2 billion dollars annually to crude and product losses arising from stealing, process lapses and pipeline vandalism.

The organisation, in its policy brief titled, “Stemming the Increasing Cost of Oil Theft to Nigeria” released in Abuja on Wednesday noted that while figures from government put the loss at between 150,000 to 250,000 barrels per day (BPD), data from private studies estimate the figure to be between 200,000 to 400,000 BPD.

NEITI said the figures implies that Nigeria may be losing up to a fifth of its daily crude oil production to oil thieves and pipeline vandals.

On comparative analysis of the size and implication of the losses to the country’s current revenue profile, NEITI in the policy document renewed its appeal to the government to curb oil theft to reduce budget deficits and external borrowing.

It added that the value of crude oil and allied products so far lost were equal to the size of Nigeria’s entire foreign reserves.

“Stemming this hemorrhage and leakages should be an urgent priority for Nigeria at a time of dwindling revenues and increasing needs,” the report stressed.

It further disclosed that what the country lost in 20 months in fiscal terms was enough to finance the proposed budget deficit for 2020; in 15 months to cover total proposed borrowing or increase capital budget by 100 per cent

It added also that it could in five months cover pensions, gratuities and retirees’ benefits for 2020.

“In terms of volume, 138.000 barrels of crude oil were lost every day for the past 10 years, representing seven per cent of average production of two million BPD.

” Nigeria lost more than 505 million barrels of crude oil and 4.2 billion litres of petroleum products between 2009 to 2018.

NEITI said this amount to 41.9 billion dollars loss to stolen and refined crude oil products in ten years.

A breakdown shows that the nation lost 38.5 billion dollars on crude theft alone, 1.56 billion dollars on domestic crude and another 1.8 billion dollars on refined petroleum products between 2009 and 2018.

The agency in the document further expressed concern that in the face of current dwindling revenues, paying priority attention to curb oil theft in the country’s oil and gas industry was imperative.

This, it said, had become both necessary and urgent to expand the nations revenue generation capacity.

What is stolen, spilled or shut-in represents lost revenue, which ultimately translates to services that government cannot provide for citizens already in dire need of critical public goods,”it added.

The report further identified other effects of oil theft to the nation to include pipeline vandalism, criminal sabotage, illegal refineries in oil producing communities, which threaten the safety and livelihoods of the environment where these illegal refineries operate.

On the environment, the NEITI policy brief said that the impact and implication of oil spills was monumental, degrades the environment and negatively affects the livelihoods of host communities.

The report examined the reasons for increase in incidences of crude and product theft and reviewed current containment strategies.

These include, inadequate legal sanctions to serve as deterrent, stringent laws, deployment of technology designed to swiftly detect, localise and cut off flows to specific pipelines as soon as leakages occur.

It recommended operational, security, legal and global governance instruments to combat crude theft.

Among them is efficient response and containment time in checking oil theft and pipeline vandalism, urgent review of the status of various security organisations currently involved in crude pipeline and product surveillance.

The report also called for forensic investigations into the activities of syndicates operating in the oil and gas industry, given the increasing rate of stealing and sophistication of the illicit trade.

“Curiously, the volume of losses does not particularly reflect the rate of pipeline breaks for the corresponding years, suggesting either that the criminals are becoming more efficient, or crude theft is occurring increasingly elsewhere. This may require further probing,” the report observed.

It also suggested that Government should reconstitute a special security task team for Nigeria’s oil and gas assets, with a specific mandate to minimise crude theft and vandalism.

“This task team should include the oil companies and technical expertise in relevant fields. Command and control responsibility should be manned by professional intelligence personnel.

”The key mode of operation should be based on seamless communication to improve response time.

“The command and control should have direct real time access to information produced by the leak detection and localisation systems installed and operated by the oil companies,” it added.

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One Comment

  • Joseph folarin says:

    So u can show pictures and complain about illegal refinery, this government should be ashamed of itself . U can’t build one single functional refinery with all the money, common criminals with far less resources at least have refineries. Kuku give them licences to refine petroleum products and tax them sell to us at cheaper prices. Useless and clueless pack of people.

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