On a visit to the US in late July, President Muhammadu Buhari told an audience at the Nigerian Embassy he wanted to put an end to the theft of the country’s crude oil by ministers seen, he said, under his predecessor, Goodluck Jonathan.
“The amount involved is mind-boggling. Some former ministers were selling about one million barrels per day,” he was reported as saying.
He also mentioned a lower figure of 250,000 barrels per day and, approached by Africa Check, Garba Shehu, the president’s special assistant on media and publicity, said: “the official position on the quantity of crude oil stolen per day in Nigeria is 250,000 barrels.” Asked for evidence, he said there was none.
Both of the president’s figures cannot be correct. Are either of them? Africa Check investigated.
How much oil does Nigeria produce?
Nigeria is Africa’s biggest oil producer with a maximum production capacity of about 2.5 million barrels per day. But attacks on oil platforms, pipeline vandalism and oil theft reduce actual production and falling international oil prices have further stricken the sector.
In its 2015 statistical update, the Organisation of the Petroleum Exporting Countries put Nigeria’s actual output at around 1.8 million barrels per day.
What’s exported doesn’t tell us what comes out of the ground
However such tallies are flawed because they are taken at the terminal not the wellhead. This means that no one knows how much actually comes out of the ground originally, and how much is diverted en route.
“The oil fields are not sufficiently metered in a way that permits independent verification,” Nnimmo Bassey a Nigerian environmental activist explained to Africa Check. “This state of affairs makes it impossible to have a good guesstimate of the nation's crude reserves also.”
How is crude oil stolen?
What is known is that theft takes place and happens in a number of ways, ranging from the artisanal to the internationally-organised.
One of the main methods employed by thieves is to tap either the pipeline (easy in cases where maintenance is shirked and the metal is corroding) or the wellhead. “This process involves… attaching a hose to siphon off the oil,” Judith Asuni explained in a 2009 report entitled Blood Oil in the Niger Delta.
“From there, the oil is placed on small barges and taken out to sea, where it is loaded onto large ships lurking out of sight of the authorities”.
In such cases, local youths do the dirty work, but international syndicates from “Eastern Europe, Russia, Australia, Lebanon, the Netherlands, and France all play roles in financing, transporting, and laundering the money associated with blood oil,” the report stated.
Another approach is for companies to pump more oil than their licenses allow. “This type of bunkering [the Nigerian term for oil theft] often involves a number of oil company staff and Nigeria’s state oil company, the Nigerian National Petroleum Corporation (NNPC), as well as top government officials who give the oil lifting contracts,” the report explained.
Industrial-sized illegal refineries have emerged to process stolen oil within Nigeria, often for sale in other nations, where pump prices are not held at artificial lows.
So how much oil goes missing?
The short answer is: no one knows.
“If you do not know the quantity of crude oil you produce per day, how can you measure the quantity of crude oil that is stolen?” queried Sunny Ofehe, founder of the Netherlands-based Hope for Niger Delta Campaign.
“I don’t have the figures. Nobody is sure what is stolen,” agreed Ohi Alegbe, general manager of NNPC’s public affairs division.
Some decent guesses have been made. Among the many reports on crude oil theft in Nigeria, two stand out. Both produce figures lower than those presented by Buhari in Washington – one considerably so.
A 2013 study by London think-tank Chatham House, entitled Nigeria’s Criminal Crude, suggested oil was being stolen on an ‘industrial scale’, involving politicians, soldiers, militants, oil industry personnel, traders, communities and organised criminal groups. “The best available data suggest that an average of 100,000 barrels per day vanished… in the first quarter of 2013”, it concluded.
Chatham House’s research took into account the number and operational capacities of active export bunkering rings and the business of ‘white collar’ oil theft. It also followed the transit, anchoring and fuelling patterns of ships suspected of stealing oil in Nigerian waters; surveyed small to mid-sized tankers regularly anchored offshore in the Niger Delta; and mapped the main bunkering hot spots.
Global Financial Integrity, a Washington-based not-for-profit organisation, conducted another credible report on behalf of the Central Bank of Nigeria. It estimated that Nigeria lost 232,000 barrels of oil to theft in a day in 2013.
Its methodology involved analysis of satellite data, interviews with 61 operators in the illegal trade, estimates by industry officials, and a comparison of Nigeria’s export figures with import figures from some of its client states.
In 2013 Nigeria’s then-finance minister Ngozi Okonjo-Iweala told a parliamentary committee that 400,000 barrels of crude were being lost daily. However, this included losses due to pipeline vandalisation as well as theft. “It is not as if the entire 400,000 barrels is stolen,” she said.
To date, we have not found good estimates for oil theft in 2014 or 2015.
Conclusion: claims are ‘guesstimates’ but Buhari’s lower figure may be near mark
Since it is not known how much crude oil actually comes out of the ground, it is not possible to know for sure how much is diverted en route to the oil terminals.
Certainly, there is no evidence in the public domain to support the president’s claim that one million barrels of oil were stolen per day by ministers under the previous government. The reports produced by the Chatham House think-tank and the Washington NGO Global Financial Integrity both put the figure lower than the government’s official estimate that 250,000 barrels were being stolen a day. But they are close enough to say that figure may be near the mark.
What is clear is that, until reliable, independent figures are produced showing true production levels, all such numbers are mere guesstimates. And no such figure has yet been produced for oil production, or theft, under the current government.
Edited by Eleanor Whitehead