The Nigerian National Petroleum Company (NNPC) Limited has encountered an alarming 9,000 infractions on its oil pipeline network within just one year, according to Mele Kyari, the Group Managing Director (GMD) of the company. Kyari highlighted the pervasive issue of crude oil theft, noting that it is an extensive problem across Nigeria, involving a large number of individuals. He underscored the widespread nature of the theft, stating that it is clear that various parties are complicit in the illicit activities surrounding the nation’s oil resources.
Kyari made this revelation during a visit by the House of Representatives Special Committee on Oil Theft to NNPC’s headquarters in Abuja, where they conducted an oversight review. The committee was briefed on the scale of the ongoing security challenges plaguing the oil sector. According to Kyari, the NNPC has made significant efforts to tackle the problem, having deactivated over 6,400 illegal refineries and dismantled nearly 4,900 illegal pipeline connections since 2022.
However, despite these efforts, Kyari admitted that the actual scale of the issue is likely far greater, with additional illegal connections remaining undetected. He explained that even after removing a significant number of illegal connections, new ones are quickly set up in the same locations. In some cases, these illicit operations are disturbingly close to local settlements or even within proximity to government headquarters, complicating efforts to eradicate the problem.
Security and Infrastructure Challenges in Tackling Oil Theft
Kyari emphasized that security remains the primary hurdle in combating pipeline vandalism and crude oil theft. The NNPC has worked to integrate all relevant security agencies into a unified platform to combat these criminal activities, alongside private security forces. Despite these efforts, Kyari noted that the scale of the infractions was “unbelievable,” with criminals often replacing stolen connections almost immediately.
Furthermore, the GMD expressed frustration with the inability to guarantee consistent production due to the thefts. He explained that while the NNPC has the capacity to produce more than two million barrels of oil per day, the company is currently struggling to meet even its budgeted target of 1.6 million barrels per day. Kyari attributed this shortfall to crude oil theft and the overall insecurity in the oil sector, which has led to underinvestment, as no investor is willing to invest in an industry where they cannot guarantee the security of their output.
In 2022, the situation worsened significantly when production dropped to as low as 1.1 million barrels per day. On some occasions, production even fell below one million barrels per day due to these infractions. Kyari clarified that while the theft was a major factor, the true underlying issue is the insecurity and lack of a viable mechanism for ensuring oil production is not disrupted.
Regulatory Gaps and Transparency Issues in Oil Theft and Pipeline Vandalism
The Chairman of the House Special Committee on Oil Theft, Hon. Alhassan Ado-Doguwa, joined Kyari in acknowledging the vast scope of the challenges surrounding oil pipeline operations in Nigeria. He expressed concern over the opaque and often non-transparent regulatory practices at crude oil export terminals, which he argued exacerbate the problem. Ado-Doguwa pointed out that these issues were not limited to pipelines alone but also affected oil wellheads, flow stations, loading terminals, and export terminals, where daily breaches are recorded.
The lawmaker also highlighted troubling reports of approvals being granted hastily to vessels involved in crude theft, a practice that he described as covering up official complicity. This, combined with unreported crude oil lifting activities, has contributed to the staggering volume of crude oil theft in the country. Ado-Doguwa indicated that the committee is actively compiling data on these violations, which paint a grim picture of Nigeria’s oil sector.
The Broader Impact of Oil Theft on Nigeria’s Economy
The ongoing problem of pipeline vandalism and crude oil theft continues to have a detrimental effect on Nigeria’s oil production and, by extension, the country’s economy. The loss of crude oil through theft is a significant revenue drain, depriving the government of much-needed oil revenue that could otherwise fund vital infrastructure and development projects. As the oil industry continues to grapple with these challenges, both the government and the private sector are being forced to reevaluate their strategies to address the security issues that undermine the nation’s oil industry.
Kyari and Ado-Doguwa’s statements underscore the need for urgent and comprehensive measures to combat oil theft, improve regulatory transparency, and strengthen security across the oil value chain. Until these issues are addressed, Nigeria’s oil industry will continue to struggle with underproduction and inefficiency, affecting the country’s economic stability.
