Monday, November 24, 2008

Theft of Nigerian oil

EVER since the first shipment of crude oil from Oloibiri, Bayelsa State, in 1958, the quantity of Nigerian oil shipped abroad has remained an object of approximations and conjecture. Dimeji Bankole, the Speaker of the Federal House of Representatives recently lamented about a situation where for 40 years, the Nigerian National Petroleum Corporation (NNPC) does not have the exact record of what the country has earned from crude oil sales since 1968. The Department of Petroleum Resources (DPR) that is charged with the responsibility of ascertaining the actual volumes of crude oil shipped to foreign customers has never operated with the independence envisaged by the law creating it.

The DPR has always been under the thumb of the NNPC, an obtuse body that many suspect to be inefficient and corrupt. The stubborn refusal of former President Olusegun Obasanjo to appoint a substantive Minister of Petroleum throughout his eight-year tenure further exacerbated the lack of transparency and accountability for which the NNPC has become known. Quite predictably, whilst Obasanjo was the captain of NNPC, there was hardly a conclusive audit of the giant firm in eight years.

It has been estimated that 20 per cent of Nigeria's crude oil is stolen annually by big and small time operators. No responsible government can allow this amount of economic hemorrhage to go unchecked. The amount of money we are losing to oil thieves can easily fix our decayed infrastructure, build roads and power plants and promote qualitative education.

President Umaru Musa Yar'Adua, evidently exasperated by this unsatisfactory state of affairs has decided to take the bull by the horns. He has for the first time in history appointed a foreign company, Messrs. Cobalt International Services Limited, as pre-shipment inspectors of crude oil exports with effect from November 1, 2008. In this role, Cobalt International will carry out crude oil inspections in addition to the non-oil pre-shipment inspections which it currently undertakes. The president's move appears to have taken top officials of NNPC by surprise and they have voiced their opposition to it. Given the antecedents of the NNPC, an objection from top NNPC officials may well be a justifiable reason to support the president as he tries something new.

We suspect that the horde of inspectors crowding out the various export terminals may join hands with their friends in the NNPC/DPR to thwart the performance of Cobalt International as it tries to master novel equipment and calibrations in all 21 export terminals. The contractor must face up to possible uncooperative DPR officials in addition to the army, the police, the navy, the customs services, the security organisations all of which have been known to exert influence at the export terminals. For the new initiative to succeed Cobalt International should be given a free hand in carrying out its tasks which must be reviewed periodically.

We commend the initiative of President Yar'Adua in helping to stem an odious situation. Nigeria currently produces between 2.2 and 2.6 million barrels of crude oil per day but has the capacity for three million barrels. About 20 per cent of this production is stolen annually. Anything that can remedy this ugly situation is welcome. Cobalt International should look out for known methods of cheating at the terminals including but not limited to doctored calibrations, and top-ups to compensate for volatility and ballast.

We believe that given seriousness of purpose and adequate professionalism, Cobalt International should be in a position to ascertain the actual quantity of crude produced daily and the ports of disembarkation of the cargo. However, government should not delude itself into believing that it has solved the problems of oil theft merely by the appointment of Cobalt International. The so-called bunkering going on in the Niger Delta is likely to continue.

Most oil bunkerers do not load their cargo at the export terminals. They rupture pipelines deep in the creeks and siphon crude oil into barges. The barges then steam up the waterways to the high seas where they discharge their illicit cargo to waiting vessels in international waters. These barges are easily visible from the air and have been operating openly in the coastal waters of the Niger Delta with hardly any law enforcement agencies going after them. Once in a while a ship is caught with stolen crude oil. The prosecution is often half-hearted and eventually the culprits are allowed to escape justice.

Nigerians will recall the curious case of MT African Pride a few years ago which was involved in a clandestine trade in Nigerian crude oil. On board ship were Russians, Romanians, Poles, and some Nigerians. The ship was apprehended as it tried to speed off with 150,000 barrels of crude oil. Expectations were high that at last Nigerian security agents have managed to apprehend one maritime offender.

The ship's owners and crew were arraigned before a Lagos High Court whilst their ship was detained as exhibit. One night, the ship vanished. When an alarm was raised, the hot pursuit by Navy speed boats and helicopters surprisingly failed to locate the ship. In the end after a lot of commotion two senior Navy officers were dismissed for their part in the disappearance of MT African Pride. But the ship still got away with 150,000 barrels of stolen Nigerian crude oil.

The government of President Yar'Adua must follow a two-pronged approach to the problems of the Niger Delta. It must ruthlessly go after the criminals behind bunkering. Patrol boats and helicopters should force thieving barges to return to base for prosecution and the severest penalties should be awarded to convicted economic saboteurs. At another level, it must continue to pursue a policy of enlightened self-interest in the Niger Delta by remaining constantly engaged in a manner that enables the people to see tangible and measurable benefits derivable from oil exploration in their various communities.