Crude oil theft in Nigeria is organized crime and should be differentiated completely from host community issues.
This is according to the Managing Director of Chevron Nigeria/Mid Africa Business Unit, Richard Kennedy who said this in a panel session held at the recently concluded NOG Conference in Abuja.
Mr. Kennedy made this remark when he was asked to comment on the host community provisions of the Petroleum Industry Act.
Mr. Kennedy emphasized the need not to confuse the agitations of host communities of oil-producing areas with the spate of crude oil theft being carried out in the area.
“From my experience, the issue with crude oil theft should not be confused with host community issues. It is much much much bigger than that. It is completely different from host community issues. Quite frankly it is organized crime.”
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He also revealed that the level of theft is costing Nigeria millions of dollars daily in lost revenue which could have helped solve our fiscal challenges.
“The volume of crude that is being stolen is well beyond comprehension. You can see some of the figures in the press, maybe it’s about 100,000 barrels per day at $100 per barrel and that’s $10 million per day that is being stolen. And NNPC owns 60% while taxes of 85% are paid so it’s a huge loss for the country.”
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The Group CEO of Oanda, Wale Tinubu also weighed in on the issue at the oil and has summit revealing about 20% of Nigeria’s daily crude production is lost to oil theft.
“There has been a 43% reduction in our production from March 2020 to May 2022. We lose almost 20% of our daily crude production to oil thieves and pipeline vandals and 20,000 barrels a day of oil is lost to oil theft. Basically some three million barrels on average yearly is lost to oil theft and pipeline vandalism.”
Nigeria has been experiencing some of the worst crude oil theft in its history with millions of dollars lost daily. Several allegations have been made against the ability of security agencies to guard the pipelines. Some have even alleged the complicity of security agencies in the spate of pip theft being experienced.
Recently the Chairman of Nigerian Upstream Petroleum Regulatory Commission (NUPRC) Gbenga Komolafe, revealed that only about 132 million barrels of the 141 million barrels of oil produced in the first quarter of 2022 were received at export terminals.
Komolafe said, “This indicates that over nine million barrels of oil have been lost to crude theft…this equates to a loss of government revenue of approximately $1 billion…in just one quarter,”
He added, “This trend poses an existential threat to the oil and gas sector and, by extension, to the Nigerian economy if left unchecked.”
Theft of crude oil grew from 103,000 barrels per day in 2021 to 108,000 barrels per day on average in the first quarter of 2022, according to Komolafe.
I agree with the position of this expatriate on crude oil theft. It is unfortunate that the country’s leadership has lost control of the economy and security completely and shamelessly resort to giving excuses all the time for their inactions and incompetence.
In developed countries, this would be highly intolerable, for what is the essence of a government then ? In fact, from my experience in Nigeria, it’s only law abiding citizens that bear the brunt of federal and state government economies through excessive and multiple taxations and levies, making it so difficult for people to earn a decent and honest living in this country. It is no wonder then, that many have resorted to sharp practices to make quick bucks including crude oil theft and smuggling with huge and generous bribing of security forces to avoid disruption of their illicit business. And since a large chunk of the earnings from legitimate government crude oil sales seem to be eventually embezzled by politicians and their cronies, these crude oil thieves and their abettors erroneously believe that there’re justified in stealing their own share of the national cake from source – this cake which has eluded the lot of the common Nigerian for decades.
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