TheCable

Waziri Adio, former executive secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), says oil theft is not the only reason for the underperformance of the petroleum sector.  

Nigeria has been recording low production and dwindling revenue in recent times and is unable to take advantage of the rising oil prices resulting from the Russian invasion of Ukraine.

On Wednesday, a federal government team visited a site in Rivers state where they said oil theft was going on.

Timipre Sylva, minister of state for petroleum, led the team that included Lucky Irabor, lt general and chief of defence, Mele Kyari, managing director of the Nigeria National Petroleum Company (NNPC), and Gbenga Komolafe, CEO of Nigeria Upstream Petroleum Regulatory Commission (NUPRC).

Writing in his weekly column in THISDAY on Sunday, Adio commended government for “seeming” to finally take the issue more seriously, noting that “the increasingly audacious and humongous theft of crude oil and refined products poses a multiplicity of threats to oil companies and all tiers of governments, to the environment, to the livelihoods of citizens and communities, and, mostly importantly, to national security”.

However, he said “it is important to go beyond clever soundbites and photo-ops. It will also be necessary not to return to the same measures that have proven grossly ineffective over the time, and not to succumb to schemes designed merely to take advantage of the situation”.

Adio, who presided over NIETI between 2016 and 2021, said it is critical to get the accurate figures of the theft as a starting point.

“There have been screaming headlines and viral tweets that between 80% and 95% of Nigeria’s crude oil is lost to oil thieves. This cannot be true. Anyone with little familiarity with the sector, and this should include most Nigerians, should question the figures being touted,” he wrote.

“Nigeria’s oil production figures can easily be accessed locally and internationally. Our oil production, minus condensates, has hovered between 1.2 million and 1.4 million barrels per day for some time now, due to reduced OPEC quota and other factors.

“As low as they are, these figures do not represent 20% or 5% of our daily production. Even if we put Nigeria’s daily oil production at one million barrels, saying the country is losing between 80% to 95% of its oil production will suggest that Nigeria is producing between five million and 20 million barrels of crude oil per day. That would be nice but it is simply not true. Our record daily production till date remains 2.7 million barrels, and that record was set in 2005.

“Another way of looking at the figures being bandied will be to say we are actually producing between 1.2 million and 1.4 million barrels per day but losing between 80% to 95% of these to oil thieves. This would mean that the thieves leave between 60, 000 barrels and 280, 000 barrels per day for the oil companies and the Federation to share after carting away between 80% and 95% of oil production. This is simply implausible. Given that the Federation gets about 30% of oil produced, are they suggesting that the Federation now gets only between 18, 000 barrels and 84, 000 barrels of crude oil per day?”

He said as serious as the issue of oil theft is, “we don’t need to sex up the numbers or encourage misrepresentation”.

“My sense is that some misreporting or misrepresentation is going on here, and those with the responsibility to provide clarity are looking away for less than noble reasons,” he added.

“Surely, issues have different gestation periods. Now that oil theft has finally got our attention, it is important we go beyond just putting up appearances, making a grand show of destroying illegal refineries as if that is all there is to oil theft, devising schemes to further milk the state, and presenting oil theft as the sole reason for the decline in oil production and revenue.

“We have no option but to tackle oil theft. It has become an existential challenge. But we need to address this in a comprehensive and strategic way, not in the usual impulsive and episodic manner. And in the little time left for oil, we need to pay serious attention to the many issues, including suboptimal decisions and choices, that have led to the underperformance of our hydrocarbon sector.”

You can read the full article here.