By Muyiwa Adetiba
It turned out to be a promising and educative afternoon. At least for me. But that was not the intention. It was to be a leisurely afternoon with a small group of friends who tax themselves every year to raise funds for those very indigent people who can’t afford their hospital bills.
One of us who resides in the UK was in town for about a week and wanted to indulge in as many local cuisines as possible. It was in fulfillment of this obligation that led some of us to a serene estate in Lagos to savour the delight of pounded yam with Nsala soup. Along with banters and liquor naturally came discussions on the topics of the moment.
And one of the topics of the moment was the crude oil theft which has reportedly reduced our production to under a million barrels per day. Much has been made of this crude oil theft as the bane of our current problems. It is,according to a government which promised us eight years ago to move the economy away from oil, what has stopped us from benefiting from the Ukraine/Russia war.
It is what has made our leaders not to have funds to provide basic services. And if you believe it, it is what has made the prices of foodstuff especially grains, to soar. Even the governor of our Central Bank chipped in recently to blame his inability to manage our monetary policy on crude oil theft. According to him, the exchange rate to the dollar will continue to be high unless the oil theft is dealt with. Even some disingenuous people might claim the current fuel shortage is a result of oil theft.
Fortuitously, for me at least, I was having lunch with people who could constitute as good a panel as any for an impromptu session on oil. Of the six of us on the dining table, four are engineers. Three of the four had spent the bulk of their careers in the oil industry. One was involved in the investigation of that famous Pan Ocean Oil scandal in what turned out to be a collaboration between the company and an international oil firm to defraud the country.
Another was a member of an oil theft committee during the Jonathan years – obviously, oil theft has been with us for a while. The fourth engineer was one of those headhunted from the university about four decades ago to form the nucleus of Nigeria’s ill-fated Steel Industry. His view on why the Steel Industry failed– especially Ajaokuta where he was based – is different from the common narratives.
But that is a topic for another day. The only other person apart from me who is not an engineer, retired as a Commodore from the Nigerian Navy. So he has more than a passing knowledge of the movements of ships on the high seas including the politics of oil security.
Until the Tompolo expose, an average Nigerian believed oil theft was limited to bunkering alone. But what we saw on TV showed something more intricate, more sophisticated. Something that could not be done without the connivance of the industry players. The government has tried to pass this pipeline tampering as the reason our production levels dropped abysmally from the possible peak of almost three million barrels to less than a million.
Almost to a man, this impromptu panel of seasoned industry players scoffed at the notion. Then seeing I was the least knowledgeable about the topic, they turned to me and patiently explained the basics of crude oil production and marketing. Many of the things I learnt during this crash course are still foggy but the scenario is a little clearer.
I shall try to summarise. For starters, ‘the panel’ tried to put the touted loss of almost two million barrels a day in context to me. According to my teachers, the 33,000 litre petrol tanker we are used to on the road is just a little over a hundred barrels of oil. So one can imagine how a million barrels can disappear on a daily basis without being noticed.
This is in an industry where it is extremely difficult for a novice to sell one single barrel in the international market without being caught. Besides, the largest ships in the world carry about a million barrels each. And no such ship can berth in your territory without notice and permission. Three main reasons according to them, are attributable to Nigeria losing the said two million barrels a day.
They are physical, digital and lack of investment. Physical loss is through oil bunkering and pipeline diversion. Digital loss is through a manipulation of production levels. This involves high level complicity and connivance. But the most probable reason our production crashed is a lack of investment. According to my teachers, a rig is sometimes 60% water.
So to keep production levels constant, we have to keep digging new oil wells. This where the government through NNPC has failed. In other words, the bulk of what we ascribe to as a loss is not really a loss since it is still under the Nigerian soil. Unfortunately, the least impactful of the three is the one we are making so much noise about.
When I asked if the government did not realise disinvesting would come to this, they laughed in a way that suggested there was more to the oil industry than what could be exhausted during a two-hour lunch. But that it comes down to the desire of government to provide the requisite protection and diet for the goose that lays the golden eggs.
That diet includes putting skilled and knowledgeable people in the right places. It includes investing in the development of the industry. It includes a certain level of transparency. They told me of a person who was recently appointed to a sensitive position who knows next to nothing about his job. That person would be manipulated by the players.
He probably would leave there rich, but the industry would suffer and the country would suffer as a result. On whether the oil discovery in the North would make an impact, one of them laughed and said ‘oil is like water, you can find it almost anywhere if you dig deep enough. The determining factors would be cost and quantity’.
I wanted to learn more but my teachers were anxious to get back to their meals and choice drinks. But not without telling me how high the stakes are in the industry and how ruthless some of the players can be. It is an industry of carrots and sticks. The carrot is a heavy financial inducement to make you look the other way while the stick is your life if you decide to be ‘stubborn’ – you could be told bluntly that the same money you have refused, will be used to pay those who will get rid of you.
There is little of what is being ‘discovered’ – or touted -as theft that is not known to industry players. And by extension, to Government.