Stop illegal refining, save the economy

INDUSTRIAL-SCALE criminality proliferates in Nigeria’s oil sector. To gauge the depth, the Nigerian National Petroleum Company Limited stated recently that it had destroyed about 6,800 illegal refineries between 2022 and now. The report said the pillage has remained unabated in Rivers, Delta, Akwa Ibom, Abia, Bayelsa, Imo, Cross River, and Ondo states. President Bola Tinubu must rejig the security architecture in the Niger Delta to stamp out illegal refining operations in the short-, medium- and long term.

According to the NNPC, the illegal refineries run clandestine operations with crude and makeshift methods to the detriment of the flora and fauna. The report stated that these refineries are often tucked in remote areas, swamps, and forests.

The criminals build these refineries with metal scraps, wood, and plastic. They use oil drums, containers, metal tanks, and pipes and deploy heating processes through open fires. They pollute the nearby streams and swamps by spilling and deposing their waste products there.

This is alarming. The effects include the death and extinction of fish and wildlife, the absence and contamination of drinking water, and deaths due to the unpalatable climate.

Illegal refining affects Nigeria in other ways, especially its crude oil output. The Organisation of Petroleum Exporting Countries says Nigeria currently produces 1.4 million barrels per day. This is below the OPEC quota of 1.5 mbpd. Given that Nigeria’s 2024 budgetary expenditure was hedged against the 1.78 mbpd production assumption, the country has witnessed gross revenue shortfalls.

Crude oil and gas constitute 80 per cent of Nigeria’s budget revenues and 95 per cent of its foreign exchange earnings. Without diversifying exports, the economy is endangered.

The flip side of the menace is pipeline vandalism and oil theft. The Nigeria Extractive Industries Transparency Initiative stated that between 2017 and 2022, the country recorded 7,143 cases of pipeline breakages and deliberate vandalism. This led to crude theft and product losses amounting to 208.63 million barrels, valued at $12.74 billion.

The National Security Adviser, Nuhu Ribadu said Nigeria loses 400,000 bpd to theft, costing about $4 million.

In April, the NNPC decried that it witnessed 9,000 pipeline infractions in one year, although military operations in the South-South, tagged Delta Safe, recovered four million litres of crude. Despite spending N136 billion on security, repairs, and maintenance of vandalised infrastructure in 2023, it has yielded little or no impact on the rapacious activities of criminals.

The ripple effect on the environment diminishes and destroys livelihoods, and water, and destroys potential agricultural resources and fertile land. The National Oil Spill Detection and Response Agency stated that 43,000 barrels of oil were spilled in 881 cases between 2019 and May 2021.

The Nigerian Upstream Petroleum Regulatory Commission stated in a 2023 report that 571 oil spill incidents were witnessed, while 59.01 per cent of spills were due to sabotage. Apart from spills, illicit refining, and reckless gas flaring have led to the greenhouse effect. This has triggered a rise in respiratory ailments, malnutrition, and ill health in the oil-producing states.

As such, Nigeria should learn from Saudi Aramco and Norway’s Equinor. The two companies deploy leak-detection sensors, acoustic sensors, fibre optic sensing, satellite surveillance, pressure drop analysis, and corrosive monitoring to combat oil leakages.

Tinubu should implement measurable performance targets for the military in the region. He should embark on a deep reconnoitre of the security situation to decide whether there is a need to onboard more boots, encourage local security collaborators, or combine both to stop the menace.

Reports of alleged conspiracy and collaboration of criminals with corrupt members of the security agencies should be curtailed by constantly changing the boots on the ground.