Nigeria, Africa’s leading oil producer, is facing a significant and persistent issue that is taking a toll on its economy: crude oil theft. The Nigeria Extractive Industries Transparency Initiative (NEITI) has revealed that the country lost an estimated 620 million barrels of crude oil valued at $46 billion between 2009 and 2020. This revelation highlights the profound impact of this problem, both domestically and globally.
This illicit trade in stolen oil is a multifaceted challenge. While some incidents involve local criminal groups stealing crude from pipelines for makeshift refineries, a more substantial portion of stolen oil is smuggled out of the country through large tankers, finding its way into international markets.
The impact of this theft extends beyond crude oil alone. NEITI’s data also points to significant losses of 4.2 billion liters of petroleum products, valued at around $1.84 billion, from 2009 to 2018, stemming from internal refinery pilferage.
Ogbonnaya Orji, the Executive Secretary of NEITI, revealed that oil theft is primarily carried out through a method known as “pipeline clamping.” Criminals tap into pipelines to extract crude oil, leading to damage to vital infrastructure and substantial resource depletion.
The consequences of these losses are substantial. Despite the challenges posed by oil theft, pipeline vandalism, sabotage, and insecurity, the oil and gas sector remains the linchpin of Nigeria’s economy. It accounts for an impressive 72% of the country’s total exports and foreign exchange earnings, contributing a substantial 40% to the government’s revenue.
In his address at the 2023 International Pipeline Technology and Security Conference in Abuja, Mr. Orji emphasized that Nigeria’s inability to mitigate these challenges has prevented it from fully capitalizing on its abundant oil and gas resources.
NEITI plays a crucial role in this landscape. It operates within the global Extractive Industries Transparency Initiative (EITI) scheme, aiming to improve transparency and accountability within the extractive sector, crucial in addressing the challenges of oil theft and revenue losses.
As Nigeria grapples with this ongoing issue, it underscores the urgency for the government to enact robust measures to combat oil theft and protect its valuable oil and gas resources. These actions are not only vital for Nigeria’s prosperity but are also critical for maintaining global economic stability.
Photo ( CHINEDU OKAFOR)
By: Montel Kamau
Serrari Financial Analyst
9th November, 2023
