A man works at an illegal oil refinery site near river Nun in Nigeria's oil state of Bayelsa November 27, 2012. Thousands of people in Nigeria engage in a practice known locally as 'oil bunkering' - hacking into pipelines to steal crude then refining it or selling it abroad. The practice, which leaves oil spewing from pipelines for miles around, managed to lift around a fifth of Nigeria's two million barrel a day production last year according to the finance ministry. Picture taken November 27, 2012. REUTERS/Akintunde Akinleye (NIGERIA - Tags: BUSINESS ENVIRONMENT SOCIETY INDUSTRIAL ENERGY) ATTENTION EDITORS - PICTURE 23OF 28 FOR PACKAGE 'NIGERIA'S ILLEGAL OIL BUNKERERS'. SEARCH 'OIL BUNKERING' FOR ALL IMAGES - RTR3CGYO
Nigeria loses 138,400 barrels of crude oil 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 oil, and 4.2 billion litres from 2009 to 2018. The deficit to the country’s economy amounts to $40.06bn and $1.84bn, the equivalent of $11.47m per day for 10 years.
Oil is unarguably the lifeblood of the modern economy and it has now become one of the most essential commodities in the world. Hence, no nation today can survive without oil.
Analysts describe 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”. It is also called “the world’s most important resource.”
In recognition of the significance of oil, it is believedàaa 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 people’s capacity to get work done. As a raw material, it provides feedback for the fast-expanding industry world of the petrochemical industry.
All over the world, the lives of people are affected and the destinies of nations are determined by the operations of the oil industry.
Oil keeps the factories of the industrialised 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. That is why oil has become the concern of governments, a vital ingredient of their policies, and a crucial factor in their political and diplomatic strategies.
Nigeria, being a mono-economy, largely depends on the oil sector for its 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 the Niger Delta region account for over 90% of Nigerian export and foreign exchange earnings, and over 70% of total Nigerian revenue.
The increase or decrease in crude oil production or price affects the revenue base and economic strength of the Nigerian state. Oil is the mainstay of the Nigerian economy. It is the country’s major export, fetching millions of revenue to the country’s purse each day.
Sadly, that same resource is being savagely stolen in copious quantities daily. The upsurge of oil theft in the Niger Delta region in recent times is alarming. Presently, Nigeria is losing over 300,000 barrels of crude oil to theft.
This is despite the efforts of the Federal Government (FG) to curtail the illegal diversion of oil in the Niger Delta. The FG has increased her security spending in recent years and devoted millions of naira annually to the hiring of private security firms to stop the menace of oil theft. The FG has also equipped men and officers of the Nigeria Security and Civil Defence Corps for this purpose.
As a result of the persistent destruction of pipelines and other oil facilities across the country, and the trade in stolen oil by criminal cartels with vast international connections, the FG has continued to support security agencies to stop the threat.
However, investments of public funds in 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 country most plagued by oil theft among oil-producing nations such as Indonesia, Russia, Iraq, and Mexico. Statistics of oil theft among these major oil-producing countries show 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 a huge loss compared to a total theft of 138,400 barrels per day and just 2,000 to 3,000 barrels per day in Mexico and Indonesia.
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 acts and proceeds of crude oil theft. This has led to the proliferation of illegal arms, illegal drugs trade, the kidnapping of oil sector workers (particularly expatriates), and syndicated international money laundering.
The proceeds of crude oil theft have been used to fund waves of armed militancy in the region. There have also been skirmishes among rival gangs competing to secure their stake of the illegal ‘businesses’.
Furthermore, remnants of militants’ unrest and state responses have resulted in massive displacements and migration from the Niger Delta region to safer parts of Nigeria.
Such migration places pressure mainly on major urban areas in Nigeria and Western countries, which are choice destinations, for better livelihoods and economic prosperity.
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 not accountable to any government or regulatory statutes.
Economically, the revenue flow for petroleum-producing companies operating in Nigeria is adversely affected. But the story is worse for Nigeria’s economy. The problem had been exacerbated by the dwindling proceeds accruing from crude oil due to current low prices in the global market, which is just being reversed.
