Oil Theft and Nigeria's Oil Output

Nigerian Minister of Petroleum Resources Diezani Alison-Madueke is the subject of controversy resulting from a probe into the fuel subsidy crisis in the oil-producing West African state. Protests over the cancellation of subsidies erupted in 2012., a photo by Pan-African News Wire File Photos on Flickr.

Oil theft and Nigeria’s oil output

TUESDAY, 28 MAY 2013 00:00 EDITOR
Nigerian Guardian

THE quantity of Nigeria’s oil output per day or annually has been shrouded in mystery over the years. At the Offshore Technology Conference (OTC) held in Houston, Texas, USA, the other day, the matter came up and all Nigerian delegates could do was to lament the situation and attendant woes. According to the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, the problem of measurement could be blamed on the increasing sophistication of oil theft in the Niger Delta. Oil theft, according to her, accounted for an estimated total losses of over 300,000 barrels per day, or, about $1 billion (N160 billion) a month in revenue.

Oil theft has reached an alarming dimension in the Niger Delta. The recent disclosure by Shell Producing Development Company (SPDC), which manages the Bonny Oil and Gas Terminal, that the nation’s economy lost a whopping $4.3 billion to oil thieves in the last two years at an average rate of $2.3 billion annually, underscores the tragic nature of the problem.

Nevertheless, there are now standardised measures of oil production the world over, thanks to advancement in science and technology. Good enough, the available technology, usually deployed to measure oil production directly from the wellhead, is reportedly not so sophisticated or difficult to apply. According to experts on oil production meters and well-flow management, a meter can be installed in just 30 minutes. And it does not need routine maintenance. Such meters are also powered by solar energy.

Nigerian government officials do not appear interested in such technologies. Despite their lack of interest in benefits to the industry, the country keeps sending delegates to OTC annually. Why waste tax payers’ money attending the meeting, knowing that useful outcomes will never be appropriated?

The absence of any standardised measure of oil production not only deters transparency requirements in the oil sector, but is also antithetical to the promotion of accountability. Given the spate of recklessness and corruption in the oil sector, this is totally unacceptable.

If oil theft is a problem hindering Nigeria’s progress, the government must develop the political will to deal with the scourge. Ordinarily, such a battle cannot be prosecuted without adequate military involvement. However, as recent experiences of the Joint Task Force (JTF) in the Niger Delta have illustrated, the military approach has not worked. It has become another avenue for patronage, illustrated by the fact that the rank and file of the military lobby intensively for deployment into the zone.

While the JTF, despite its seeming ineffectiveness in combating the sabotage, will remain relevant to the war against oil theft, more attention must be devoted to the Petroleum Industry Bill (PIB). In doing this, adequate efforts should be made to ensure that the resultant Petroleum Industry Act, apart from dealing clearly with the issue of measurement of oil production, has transparency, accountability and control measures as its nucleus. This is the right path to follow, if this scandalous theft is to be curbed.