Conspiracy of the Elite

Fri, May 10, 2013

By publisher

11 MIN READ

–

Stopping crude oil theft in Nigeria seems a mission impossible because President Goodluck Jonathan and the country’s judiciary lack the will and commitment to deal with the elite involved in oil bunkering

|  By Maureen Chigbo  |  May 20, 2013 @ 01:00 GMT

GENERAL Mohammadu Buhari, former head of state and presidential candidate of the Congress for Progressive Change, CPC, said last week, that the economy of the country will continue to slide unless the security challenges are checked.  Buhari may not be an economic buff, but his statement paints a precarious picture of the ugly economic situation in the country, especially regarding the revenue accruing to the nation through the oil sector. In fact, the last one year has witnessed an increase in economic sabotage, majorly crude oil theft which has become intractable and the federal government seemed bemused on how to tackle the economic malaise. The confusion on the part of the government on how best to tackle the problem stems from the caliber of people involved in the unholy enterprise, and who are milking the country dry through billions of dollars they make for themselves through crude oil theft.

Security reports available to the federal government shows that the syndicates involved in the crude oil theft include politicians, high ranking government officials, members of the judiciary, international oil companies, foreigners, militants and other criminal elements. In fact, Julian Assange’s WikiLeaks in 2011, quoted a US diplomatic cable, in which a Nigerian official said politicians and military leaders — not militants — were responsible for the majority of oil thefts in Nigeria’s crude-rich Niger Delta. According to Wikileaks, a member of a government panel on troubles in the nation’s Niger Delta implicated Shehu Musa Yar’Adua, a general, whose brother became president, and former Vice President Atiku Abubakar as being the biggest forces behind the thefts, the cable claims.These thefts also fuel arms sales to the restive region while causing environmental damage and cutting production in a nation crucial to US oil supplies.“It is in the interests of these people to make it appear that the Niger Delta problem is intractable,” the January 2009 cable quoted a panel member Tony Uranta, a social commentator and activist, as saying.

“As a result, they prop up the militants, including some who have an ideological basis for their actions,” he said. Abubakar denied the allegations then, saying it was a recycled old tale told again and again by business rivals unable to match his business success.“Atiku claimed to be unaware of any links that the late Yar’Adua had with bunkering and he believed absolutely that this is false accusation.  Yar’Adua, who served as second-in-command of the country’s military government in the late 1970s, died in prison in 1997 after being arrested for criticising military dictator, Sani Abacha. His brother, late President Umaru Yar’Adua, died in May 2010. The diplomatic cable quoted Uranta as blaming “no more than 15 per cent” of oil thefts on militants operating in the delta.  This means that 85 percent of the crude oil theft is done by politicians, retired admirals and generals and others in the country’s elite who profit from the thefts.  “Uranta claimed that the late Shehu Musa Yar’Adua, the president’s brother, had been the ‘biggest’ bunkerer,” the cable read.

Now, the enormity of the problem came to the fore in April 2013, when the Nigerian National Petroleum Corporation, NNPC, alerted the nation that crude oil theft is wrecking the Nigerian economy. According to the NNPC, in the first quarter of 2013, crude oil production dropped due to incessant crude oil theft and vandalism along the major pipelines in the Niger Delta. Daily crude oil production during the period fluctuated between 2.1 and 2.3 million barrels per day, mbpd, compared to the projected estimate of 2.48mbpd. The  NNPC found 53 break points along the 97km Nembe Creek Trunkline, saying that this will further reduce the April and May monthly average to about 2.2mbpd and further decrease crude oil revenue by about $554.0 million (N83 billion) that should have accrued to the Federation Account.

“Expectedly, this fall between actual production and forecast in the first quarter of 2013 has resulted in a drop in crude oil revenue of about $1.23 billion (N191 billion) that should have accrued to the Federation Account,” Tumuni Green, acting group general manager, Group Public Affairs Division, NNPC, said Wednesday, April 17.

The NNPC is not the only one raising alarm over the spate of crude oil theft in the country. Mutiu Sunmonu, the country chair of Shell Petroleum Development Company, and other international oil companies have been in the wilderness of the oil and gas sector crying for the government to stop the worrisome trend. But the Petroleum and Natural Gas Senior Staff Association of Nigeria PENGASSAN, and the Nigeria Union of Petroleum and Natural Gas Workers, NUPENG, have threatened to shut the industry if the federal government did not stop the crude oil theft.

Even though the unions threatened the federal government to stop crude oil theft because it’s ruining their business and moreso their members are suffering because of it, it is not clear whether they will go all out to close the entire industry just to make a point to the government. If that happens, the economic loss to the country will be unimaginable and the federal government may not realise its expected revenue as forecast in the 2013 budget.

Babatunde Ogun, PENGASSAN president, was vehement on the action the union will take if the situation does not improve. Ogun told Realnews on telephone, that the federal government had responded to their threat with some actions but that the unions were keenly watching the system to see if there would be improvement. But he said that “if any of the oil companies shuts down operations again, we will shut down everything until the situation improves.”

Peter Esele, president of the Trade Union Congress, TUC, also believes that NUPENG and PENGASSAN will carry out their threat. “It is possible because of the adverse effect crude oil theft is having our members. They are already losing their members because the multinationals are closing down their operations,” Esele told Realnews.

Nigeria loses about $7 billion annually to crude oil theft. It became so worrisome that Shell Nigeria and Agip-Eni had to shut down some of their terminals and declare a force majeure recently. At the Nigeria oil and gas, NOG, conference in February, Sumonu decried the incessant crude oil theft declaring that powers and principalities were behind the crime. He enjoined the government to fish out those involved at home and stop their nefarious activities first.

His statement came after Diezani Alison-Madueke, minister of petroleum resources, had said that the federal government was reaching out to European and African countries where the stolen crude is sold to elicit their support to stop the crude oil theft. Alison-Madueke has also taken the campaign against crude oil theft to the Offshore Technology Conference, OTC, in Houston, Texas, United States, which ended last week Thursday. She urged the global community and international oil traders to drop their appetite for stolen crude oil from Nigeria and join in the fight against the nefarious activities of oil thieves and pipeline vandals. The appeal signaled a major focus in tackling the demand side of the global oil theft matrix which is a growing menace to the smooth operation of the oil and gas industry in Nigeria.

Alison-Madueke, who was represented by Andrew Yakubu, group managing director of the NNPC, said it was imperative to halt the appetite for stolen crude oil from Nigeria if the country must make appreciable progress in this regard. “The President is taking this matter seriously and the honourable minister is working at it aggressively. It takes two to tango; if those stealing our crude do not find a market for it, there would be no incentive to steal. That is why we are appealing to the international community to take action. The tracing of our crude by DNA to the destination is being looked into to ensure that the finger prints of our crude are traceable to the various destinations. I can tell you that as an industry, we are happy to work with government in this regard,’’ Yakubu said.

The extent of crude oil theft was captured in the report of the Nuhu Ribadu-led Petroleum Revenue Special Taskforce which said that the theft of crude oil and petroleum products might be reaching emergency levels in the country. The report had said that volumes of stolen crude had risen dramatically in the past 12 – 18 months. The Royal Dutch Shell Company, Shell, in its presentation to the task force, said that an estimated 150,000 barrels of crude oil are stolen per day (about six percent of Nigeria’s total annual production) causing a revenue loss of $13.5 million per day (at $100 per barrel) which amounts to $5 billion per year of lost revenue.

It is not that the government and its security agencies are not fighting the crime. But its successes pale when compared to the damage being done in the industry and because of weak institutions especially that of the Department of Petroleum Resources which does not have the capacity to do its job and the judiciary which is corrupt and has been unable to convict those involved in the crude oil theft when they are arrested by men of the joint taskforce, JTF.

In 2012, the joint taskforce in the Niger Delta region made 7,585 illegal bunkering patrols in the region, resulting in the arrest of 1, 945 suspects, and the destruction of 4, 349 crude oil cooking ovens, commonly referred to as illegal refineries. Also seized were about 133 barges, 1, 215 cotonu boats, 185 tanker trucks, 178 illegal fuel dumps, 5, 574 surface tanks and 638 pumping machines used for siphoning illegal crude oil. Eighteen vessels were arrested engaging in illegal oil bunkering activities in the creeks.

In the last four months, the JTF in the Niger Delta, ‘Operation Pulo Shield’, Tuesday, May 7, said it had destroyed 748 illegal refineries in the region. The JTF also disclosed that it arrested 498 suspects in connection with oil bunkering within the period under review. During this period, the JTF seized 545 assorted boats, 26 barges and 18 vessels.

According to JTF, illegal refining activities were more prevalent in Delta, Bayelsa and Rivers states during the period. It also impounded a vessel over alleged involvement in crude oil theft along Otokomabie creek near Oloma community in Rivers State. “A giant barge was intercepted lurking around an illegal oil loading point close to Burma Rice Farm between Brass and Obiama water-ways in Brass Local Government Area of Bayelsa State. Seventy-six suspects were reportedly arrested during the raids on identified locations by operatives of the JTF. The vessel, MT Shandy, was intercepted by the personnel of 146 Battalion patrol team of Sector 2,” according to Lt. Col. Onyema Nwachukwu, media coordinator of the JTF in Yenegoa, Bayelsa State. Nwachukwu regretted that after they handed over the suspects to the police and the EFCC none had been effectively prosecuted and convicted. Rather, they have been granted bail after the arrest.

Esele lends credence to Nwachukwu’s views when he recalled that there was a time a Russian vessel was arrested and the commission said that it was taking them to court but the whole thing fizzled out after some time and nobody hears of the matter again. Esele does not also think that the reach out to the international community to fight oil theft will work. “If you are able to steal 10,000 barrels of crude oil and sell at $90, the gain is too much. The only way out is political will to deal with the people involved. Going to the global community is like telling a man that his house is on fire. Instead of removing the thing that causes the fire, you are looking for the fire brigade.” According to Esele, crude oil theft is done by international syndicate, foreign nationals and locals. “There is no solution in the horizon until those responsible to bring them to book, – the executive and the judiciary – are ready to do so. Otherwise we will still be speaking grammar,” Esele said.

However, he thinks that the problem can be solved if we want to. “The crude oil theft is well organised with security agents, gun runners, politicians and militants involved. When you have such people, there has to be a commitment and the political will, which is lacking on the part of government. “Political will is the key to resolving the seemingly intractable problem,” he said.

“Some people are responsible for bringing them to book. But the Judiciary is corrupt, so where will one turn to? Weak institutions – who is responsible for manning the pipelines? Security agents. Who is to regulate to show how much crude oil is produced? The institution is weak and can’t carry out any effective supervision. The whole thing is in a mess,” Esele said.