Oil theft
Business

Oil Theft: Deaths, degradation amid bleeding economy

The activities of illegal oil refiners have resulted in monumental human and economic losses, as well as environmental degradation. SUCCESS NWOGU reports

 

Imo disaster

 

Another disaster from illegal oil refining resonated recently as no fewer than 100 people were burnt to death on Sunday, April 24, 2022, when fire razed an illegal crude oil refining site at a forest between Abacheke and Abaezi communities, in Ohaji-Egbema Local Council Area of Imo State.

Also, about 150 other victims reportedly sustained varying and serious degrees of burns as a result of the inferno.

Prior to the latest event, precisely last October, no fewer than 25 people reportedly died at an illegal oil refining site in Rivers State.

The Imo State Commissioner for Petroleum Resources, Goodluck Opiah, during his visit to the site at Abaezi, captured the pains and losses caused by illegal crude refining.

Environmental degradation

According to him, apart from the calamity, the act caused environmental degradation and destroyed the aquatic life of the community predominantly made up of farmers and fishermen.

 

He said: “I wish to appeal to our youths to desist from making themselves available for this illegal act. This is a suicidal business they got themselves into. This is wickedness; this is economic sabotage. It is also destroying our youths.”

 

Government sources estimated that no less than $3 billion worth of crude was stolen in a year, siphoned from pipelines, refined in the bush and sold in the black market or sometimes exported.

Financial losses

Decrying the economic losses of illegal crude refining or illegal modular oil refineries, the Executive Secretary, Nigerian Extractive Industries Transparency Initiative, Dr. Orji Ogbonnaya Orji, revealed that Nigeria lost about $2 billion worth of crude oil in the recent past as a result of the activities of informal modular refinery operators.

Orji spoke during the second edition of the stakeholders’ engagement on the integration of modular/artisanal refinery operations in the oil and gas sector, in Abuja.

The summit was organised by the Office of the Senior Special Assistant to the President on Niger-Delta Affairs.

The theme of the event was “Current challenges of   revenue loss, petroleum product scarcity, environmental pollution and negotiated way-out.”
He said: “Harmonising and backing modular refineries with policy will reduce or eliminate pipeline vandalism, check oil theft and save the nation from revenue loss.

 

“From our recent independent report in the oil and gas sector, Nigeria lost 53 million barrels worth over $2 billion in revenue losses and this is about 674 million barrels that were produced in that year.

“During the same period over three million litres were spilled in over 370 locations within the host communities with attendant complex consequences for the economy.”

The National Coordinator of The Presidential Amnesty Programme, Colonel Millard Dikio (rtd), at the event, also decried that Nigeria had lost 53 million barrels of oil worth over $2 billion in the past due to informal crude oil refineries.

 

While warning that the domestic refining of crude oil by artisans in host communities had grave health and environmental implications for Nigeria, he lamented that illegal crude oil refining in the Niger-Delta region had assumed a dangerous trend.

According to him, things can get worse in Nigeria if urgent and systematic steps were not taken to contain the menace.

He said: “There are problems with artisanal refining. These activities have serious health and environmental implications.”

Checking the menace

Rising to curb this menace and other organised crimes in his state, the Rivers State Governor, Nyesom Wike, donated 14 ballistic  gunboats to the Navy, Army, Police and the Nigeria Security and Civil Defence Corps (NSCDC) at the NNS Pathfinder, Naval Base, Rumuolumeni in Obio/Akpor Local Government Area.

 

He explained that the donation, including the provisions of other equipment and logistics, was a demonstration of how governors deployed their security votes to strengthen the capacity of security agencies to fight crimes.

 

According to him, the frustration in the fight against refining crude oil illegally was caused by security personnel providing cover for the perpetrators.

 

The governor warned that the nation’s economy will continue to be in distress if security agencies and other government authorities failed to sincerely tackle the menace of crude oil theft, which remains the greatest contributor to the country’s Gross Domestic Product (GDP).

 

He said: “The oil and gas sector remained the mainstay of the nation’s economy and that the people owed it as a duty to protect the sector.

 

Wike further issued an ultimatum to the chairmen of the 23 local government areas of the state to provide a list of illegal refineries and their operators.

 

According to his directive, for every illegal refinery the officials report, they will receive a bounty of N2 million ($4,820) and must show they are not complicit in the business of illegal refining.

 

Wike said: “Our people are dying and we owe our people the responsibility to protect them, to save them from death they never caused. So, you must, and you’re given 48 hours to go and identify all illegal refineries sites, and those who are in charge of them. Rivers State has declared ‘total   war.”

 

He urged the chairmen to destroy the illegal refinery sites and encouraged them to hire bulldozers and carry out “mass destruction.”

 

Industry analyst observed that a crackdown on illegal refining in the state started in January 2022, resulting in the destruction of 128 out of 142 illegal refining sites in Rivers State.

Stakeholders’ views

A former Chief of Naval Staff, Air Vice Marshal Samuel Afolayan (rtd), also said Nigeria had lost a lot as a result of illegal oil refining.

He called for the political will to address the menace and warned against castigating or blackmailing security operatives for the continued presence of illegal crude refining operators.

 

A retired Deputy Director of the now defunct Department of Petroleum Resources, Sunday Adebayo Babalola, said illegal refining of petroleum products was inimical to Nigeria’s economy, environment and the health of the residents.

While lauding Governor Wike for his anti-illegal crude refining war in his state, Babalola, who is currently Director of All Grace Energy, called on other governors of oil-bearing/producing states to join in the anti-illegal crude refining campaign.
Babalola said: “I must commend Governor Wike for his efforts. Illegal refining is cheating us of our revenue. The companies are frustrated. They spend a lot of money producing operating costs, capital costs, and exploration.

 

“After they have found the oil, somebody goes to steal it and refine it illegally. The effect on the company is not good and also with respect to financiers is not good. Nobody will want to bring their money into a country where they are not sure what their investment is going to yield good returns.

 

“Moreover, environmental degradation is enormous. If you go to Port Harcourt today, by evening, you manage to put your hand in your nose, what it will bring out is bad soot.

 

“The effect of illegal refining is huge. It affects the health of the people living around the South-South. It affects the hospitals too; when people are sick, they rush to hospitals and hospitals will be overpopulated. It also affects the revenue of the states and the federal government. It also affects companies from being able to raise money to further develop crude oil.”

 

He added: “All the South-South governors should join him in that. If Governor Wike succeeds in his area, the perpetrators will move to other areas. So, it is better for all of the governors to start fighting from their own ends so that the perpetrators will not have anywhere to run to and continue this illegal refining.

 

“People who are involved in   illegal refining are endangering their lives and that of other residents. They are also sabotaging the economy of Nigeria and their states; inhibiting the revenue and growth of oil companies and preventing them from more exploration.

 

“They, in addition, deter investors from investing in the industry and so prevent growth and development in their communities.”

 

Senior Special Assistant to the President on Niger-Delta Affairs, Senator Ita Enang, said it was high time Nigeria regularised modular refinery operators.
FG’s position

According to Minister of State for Budget and National Planning, Clem Agba, the on-going efforts to ensure that artisanal crude oil refiners are absorbed into the formal sector will get the backing of the Federal Government because of the multiplier effects on the nation’s revenue base.

Agba said: “Any attempt at formalising the informal sector would be supported. Why? It would enhance revenue for the government. A lot of studies have shown that the informal sector ranges between 60-70 per cent of the Nigerian economy. That’s very significant, but they are not registered, regulated, or paying taxes.
“So, government and even the citizens are losing, because there’s no standard procedure for operation. That’s why we consider it very imperative.

“We will continue to support any programme, action, or structure that would help the transition from informal to formal organisations, because we will all benefit from it.”

Last line

Recent developments have revealed that putting an end to the menace of oil theft, environmental degradation and attendant loss of life and money must be handled with the federal and oil producing state governors coming together and joining forces with genuine stakeholders.

 

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