oil loss

Is Nigeria losing battle against oil theft, environmental pollution?

oil lossShell Petroleum Development Company (SPDC) has raised an alarm over the increasing level of crude oil theft and the associated environmental devastation currently ravaging the Niger Delta region particularly around Brass creeks in Bayelsa state and the Otumara/Saghara area in Delta state. The company said Nigeria was currently losing about 60,000 barrels per day from the activities of criminals.

A team of Shell officials led by the General Manager, Communications, Mr. Philip Mshelbila and Asset Manager, Mr. Mesh Maichibi gave a graphic details of current activities of crude oil thieves just as they appealed that all stakeholders must confront the challenge to arrest the long term damage to the environment and social fabric of the society cause by these criminals.
Mr. Mshelbila reminded the journalists that the United Nation report had said it would take about 60 years to rectify the ecological damage to Ogoniland due to oil spill. He said currently due to the lucrative nature of oil bunkering, young boys were abandoning school for this criminal activity and that there was now large scale proliferation of arms in the region. “Traditional institutions have collapsed with young men now running the communities.”

He particularly expressed alarm at the growing trend of crude oil theft around the Saghara area of Delta state. According to him, the thefts have now graduated from using jerricans to GP tanks and now they were using bigger vessels and barges due to the huge money in the business.
On the statements from some quarters that illegal refineries should be recognized and assisted to grow by the government, Mr. Mshelbila reminded people with that idea that it cost a lost to produce crude oil and those interested in refining crude oil must follow due process. He explained that those engaged in this criminal activity refined only 20 per cent of the product due to their crude methods while the other 80 per cent end up polluting the environment. Furthermore, he said products from illegal refineries damage engines and reduce their lifespan.

He commended the security agencies for their efforts so far as well as the 600 security contract personnel and 9000 community helpers but said the growing incident of crude oil theft demanded more than what was currently being done by the federal government. Mr. Mshelbila said SPDC was now burying their pipes 3 metres below the ground level from the former 1.5 metres and sometimes concrete slabs were used to fortify problem areas as well as deploying helicopters to patrol the pipeline but regretted that the oil thefts were always finding various methods of going around these efforts as the company had about 6000 kilometer of pipelines.

In August, this year, the Nigeria Extractive Industries Transparency Initiative (NEITI) said the country lost over 136 million barrels of crude oil estimated at $10.9 billion through pilfering and sabotage from 2009 to 2011. According to the organisation, in addition to the total amount of products and revenue lost to crude oil theft by the country in the upstream sector, about 10 million barrels of products, valued at $894 million, were also lost to pipeline vandalism in the downstream sector within the period under consideration. It stated that the figure of losses in crude oil theft by the country represents about 7.7 per cent of the total revenue accrued to the federation within the period. NEITI reeled out the figures from its 2009 to 2011 audit report of operations in Nigeria’s oil and gas industry, which it presented in Abuja.

NEITI has for the first time in its audit of Nigeria’s oil and gas sector, delved into identifying the impacts of crude oil theft and pipeline vandalism on the country’s petroleum sector following a rise in the trend. It however explained that it considered the figures to be very significant with respect to its needs by the Nigerian economy. Chairman of the National Stakeholder Working Group (NSWG) of NEITI, Mr. Ledum Mitee, who presented the comprehensive report, stated that the document also made salient findings on reasons for the decline in government crude oil production, crude lifting and revenues accruable to the federation.

According to the report, over 136 million barrels of oil, which are estimated at $10.9 billion, were either stolen or sabotaged within the period under review. Meanwhile, the Nigeria Extractive Industries Transparency Initiative (NEITI) has asked communities, oil firms, government and security formations in the country to collectively move against the rising menace of crude oil theft in the Niger Delta region.

Lamenting on the development which has seen revenue accruable to the government dwindle in recent times, the Executive Secretary of NEITI, Mrs. Zainab Ahmed, called for urgent collaboration of stakeholders in the country’s oil and gas industry to provide adequate response to increasing oil theft and other related illegal activities in the Niger Delta. Ahmed in a statement in Abuja expressed concern that oil theft, proliferation of illegal refineries, pipe line vandalisation and environmental pollution in the region have risen to alarming proportions such that it has become a major threat to the growth of Nigeria’s economy. She stated this while on a courtesy visit of Shell Producing Development Company (SPDC) Bonny Oil Terminal in Rivers State.

Accordingly, Ahmed was shocked to discover on inspection that illegal refineries, stealing of crude through illegal bunkering and pipe line vandalisation have become open businesses in the Delta in spite of the efforts of the Joint Military Task Force (JTF) assigned to the region.
She also noted that the disclosure by SPDC that the nation’s economy lost a whopping sum of $4. 3 million to oil thieves in the last two years at an average rate of $2.3 million annually clearly underlined the fact that the problem had assumed the status of a national emergency and should be treated as such.

Ahmed asked companies in the extractive sector to participate fully in the on-going NEITI industry audits designed to improve efficiency and transparency in the sector. “The audits are geared towards rebuilding of citizens’ trust in the sector,” she said.
The General Manager (East and Western Operations) of Shell, Vince Holtam, commended NEITI for the initiative in visiting its Eastern operations especially the bonny oil and gas terminal, adding that the visit would have exposed NEITI to the grave challenges facing the oil and gas companies operating in the Niger Delta.

Holtam identified pipeline vandalisation, environmental pollution, illegal refineries, and crude oil theft as some of the major sources of loss of revenue to both the government and the companies.

Leave a Reply