Trackers on oil tankers to stop daily smuggling of 42m litres

Petrol tankers

By Jeph Ajobaju, Chief Copy Editor

Abuja has fixed oil tankers with tracking devices to trace their movements from depot loading, onward journey, to point of discharge, in order to stop the smuggling of 42 million litres of refined fuel to neighbouring countries daily.

A report by the Nigeria Extractive Industries Transparency Initiative (NEITI) in 2019 showed that Nigeria lost 138,000 barrels per day (bpd) of crude oil to theft over the past 10 years valued at $40.06 billion.

Another 200,000 bpd of crude oil are stolen in the Niger Delta where militants now refine crude stolen from pipelines to make money instead of risking their lives by blowing up facilities.

The current price of Brent crude is $76 pb. Which means Nigeria loses $15.2 million to crude oil theft alone per day. This sum does not include loss to smuggling.

Oil theft is a cottage industry that employs over 500,000 youths in the Deep South, where all is now quiet except for occasional agitation by some of the 65 ethnic nationalities there for Nigeria’s restructuring.

The Nigerian National Petroleum Corporation (NNPC), which provided the data on crude oil theft, has expressed concerned about the impact on the economy of petroleum products smuggling and theft.

Minister of State for Petroleum Resources, Timipre Sylva, disclosed the tracking devices at a forum organised by the News Agency of Nigeria (NAN) in Abuja to gauge achievements in the oil and gas sector in the past two years.

Sylva, as the NAN story is reported by Premium Times, said a lot has been achieved in the industry but smuggling overshadows the successes, especially fuel subsidy and the quantity of petroleum products consumed in the country.

“This is one big question that we try to answer ourselves because when we look at the number of load-outs from our depots every day, we know that we don’t have that level of consumption of petroleum products in Nigeria,” he said.

Sylva stressed that the government has to track products that go out from depots to ensure they get delivered straight to designated filling stations.

He insisted that smuggling products across the borders has to stop as it contributes to the high number of litres said to be consumed daily.

Said he: “We have been able to put a tracking system to track the trucks that load from the depots, so that we are sure that when they load products from the depots, they take it straight to the filling stations.

“When you say that Nigerians are consuming 60 million litres, and you look at the number of cars on Nigerian roads, you will know that those 60 million litres cannot be possibly consumed in Nigeria.

“But we have a situation where our price for products here are cheaper than the price across the border; sometimes the price across the border is double or even more than double our own price here.

“So, it’s an opportunity for profit, and some people will want to take our product and sell it across the border to make extra money.

“That is what has been happening and it’s really distorting our own system here, because if you say you are going to be subsidising the product, the subsidy is meant to be subsidising for Nigerians, not those outside Nigeria.

“But the way it is now, we seem to be subsidising the whole of Africa, and how can we sustain such a move; that is why the subsidy amount is going up every day.”

Sylva added that security agencies, the Economic and Financial Crimes Commission (EFCC) and Nigerian Customs Service (NCS) would ensure smugglers are apprehended and brought to justice.

“We know that our consumption data is inflated, not by us but because of the leakages which we are trying to control.

“If you have a structure as it is today, and the incentive the smugglers get is too high, it makes them not to stop unless the government is ruthless, and that is why we are involving security agencies.

“This month maybe they will smuggle to Niger Republic and next month somebody will discover a route to Chad and another person is smuggling to Cameroon and Benin Republic, while some could go as far as Togo or Ghana.

“And this is why our perceived consumption figure is going up every day and if we continue to do that and keep our petrol price low, it will be difficult for us to progress.

“In some communities, we have a situation where someone’s farmland is in Cameroon and their home is in Nigeria, so how do you stop that person from not crossing the border?”

Apart from tracking device, other technological solutions would be applied to solve in the shortest time possible, Sylva added.

NNPC seeks stakeholders’ help to stop oil theft

The NNPC is seeking help to stop both crude oil theft and smuggling of refined products.

It is collaborating with the Economic and Financial Crimes Commission (EFCC), Department of State Services (DSS), Nigeria Police Force (NPF), Nigeria Customs Service (NCS), Nigeria Security and Civil Defence Corps (NSCDC), and oil industry stakeholders.

NNPC Group Managing Director, Mele Kyari, told a stakeholders’ meeting in Abuja last week that President Muhammadu Buhari has mandated the Ministry of Petroleum Resources, the NNPC, EFCC, and other security agencies to stop oil theft and illicit truck-out of petroleum products.

Loss of benefit of subsidy

Kyari said oil smuggling and theft are major economic crimes that prevent Nigerians from enjoying the benefit of subsidised petroleum products.

He urged all industry players to collaborate with the NNPC to ensure that the 102 million litres of oil consumed daily is reduced to the realistic level of 60 million litres because the excess 42 million litres are smuggled to other countries each day. 

His words: “We all agree that smuggling is not a business that should be condoned because even for deregulated petroleum products it brings extra cost burden on this country both in terms of safety and security of supply and in securing of foreign exchange.

“It even constitutes more burden to this country when the product involved is a regulated product like Premium Motor Spirit (PMS).”

With the increasing price of crude oil at the global market and the OPEC+ production cuts, he explained, Nigeria cannot afford to shoulder the cost of smuggling.

“We all know that our daily consumption is not up to 60 million litres. We all know that, and that is why we have to pull it down. We will pull it down by every means necessary.”

Kyari announced that the NNPC will emplace Advanced Cargo Declaration in line with global best practices to stop crude oil theft.

EFCC Chairman Abdulrasheed Bawa said the Commission will work with the NNPC to ensure that saboteurs are prosecuted and deterred.

Other who signed up to the initiative include the Major Marketers Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association of Nigeria (DAPPMA), Independent Petroleum Marketers Association of Nigeria (IPMAN), Nigerian Association of Road Transport Owners (NARTO), and Petroleum Tanker Drivers (PTD)

Quantum leap in oil theft

The NNPC announced in February that Nigeria loses an average 200,000 bpd as a surge in pipeline sabotage led to a quantum leap compared to an average 70,000 bpd stolen as of August 2020.

“We have two sets of losses, one coming from our products and the other coming from crude oil. In terms of crude losses, it is still going on. On average, we are losing 200,000 b/d,” Kyari said in a statement.

Obsolete infrastructure

S&P Global recalled that in 2019, a report by oil industry auditor, the Nigeria Extractive Industries Transparency Initiative (NEITI), showed that Nigeria lost about 138,000 bpd of crude oil to theft over the past 10 years valued at $40.06 billion.

Producers have said costs continue to escalate due in part to attacks on facilities in the Niger Delta.

Foreign oil companies, including Shell, ExxonMobil, Chevron, and Total have linked their divestment in many onshore assets to oil theft.

Oil facilities face incessant sabotage attacks, others have aged, giving rise to frequent failures resulting in operational disruptions, high maintenance costs and revenue losses, according to S&P Global.

The NNPC has also blamed the erratic performance of its four refineries, with a combined nameplate capacity of 445,000 bpd, largely on pipeline outages which cut crude supplies.

It runs a network of over 5,000km of pipelines across the country that transport both crude produced by foreign partners and imported refined oil products.

Lowest output in four years

Nigeria has the capacity to produce around 2.2 million bpd of crude and condensate, but it pumped around 1.72 million bpd in 2020, according to S&P Global Platts estimates.

That is the lowest output since 2016 when Niger Delta militants repeatedly attacked key oil infrastructure pushing production to as low as between 1.4 million and 1.5 million bpd that year.

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