RipplesMetrics: Oil thieves steal over 7% of Nigeria’s crude, enough to pay 37% of country’s foreign debt

Nigeria continues to have serious revenue shortages as some unknown persons smile to the bank.

For years, crude oil theft and pipeline vandalism have been a recurrent theme in Nigeria’s oil and gas industry, despite billions of Naira spent monthly on security.

As in previous years, in 2021, the Nigerian National Petroleum Corporation committed N60 billion to Pipeline Security & Maintenance cost.

Despite this huge outlay, a new industry report from Nigeria Extractive Industries Transparency Initiative (NEITI) shows that some unscrupulous individuals cost the country over $41.1 billion in five years.

The figure is based on the over 270 million of Nigeria’s commercial crude oil production lost to theft and sabotage between 2016 and 2020.

NEITI in its report noted that a total of 39.162 million barrels of crude oil was lost in the year 2020. This is an average of 107, 293 barrels per day loss.

With crude oil averaging $41.68 per barrel in 2020, it would mean the country lost at least $1.6 billion to crude oil theft and sabotage.

Oil companies bear the pains

In 2020, Twenty-two companies suffered these losses with AITEO leading the pack with 2.8 million barrels lost, BelemaOil recorded a loss of 561,976 barrels while Waltersmt recorded the lowest loss with 442,084 barrels lost to theft and sabotage.

The recorded loss is a drop from the 2019 figure put at 42.25 million barrels, averaging 115,753 barrels daily loss. This would mean a loss of $2.7 billion with crude oil averaging $65.49 per barrel in 2019.

In 2018, Nigeria recorded a loss of 53.28 million barrels of crude oil, representing a daily average loss of 145,972 barrels per day. At an average crude oil price of $72.58 per barrel, it would mean that Nigeria lost $3.8 billion.

The losses recorded in 2017 was 36.46 million barrels of crude oil, meaning a daily average loss of 99,890 barrels. In 2017, crude oil averaged $54.32 dollars per barrel. By implication, Nigeria lost $1.9 billion to theft and sabotage.

The highest loss was recorded in 2016 with 101.6 million barrels of crude oil lost. This would mean every day in the year, the country lost 278, 356 barrels to theft and sabotage, and a potential revenue of $4.6 billion. Crude oil averaged $46.07 in 2016.

In all, Nigeria lost 272 million barrels to theft and sabotage between 2016 and 2020 and by implication, potential revenue of $14.6 billion was lost.

It was noted that the losses occur mostly during the transportation of crude oil through pipelines which are open to sabotage and attacks.

Read also: RipplesMetrics: CBN withdraws $1.9bn to settle World bank, IMF, China, other debts

The losses can cover 65% of Nigeria’s debt.
A look at the debt stock of Nigeria begs the question of what Nigeria is doing with the revenue leakages.

The Debt Management Office says Nigeria is saddled with a debt stock of N38 trillion as of September 2021, out of which $37.95bn is foreign debt.

The $14.1 billion lost to crude oil theft could have paid off 37.29 percent of the external debts owed to China, World Bank, IMF, among others.

Action

The amount of money lost to unknown persons is worrisome.

Instead of embarking on binge borrowing to finance government activities, crude theft ought to be eradicated with a combination of a creative strategy and effective law enforcement.

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