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Stolen $50b crude oil from Nigeria in 10 years, found in Europe, America and Asia

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OilNigeria’s Vice President, Yemi Osinbajo, talked tough on crude theft during the June 1, launch of Ogoni clean up earlier recommended by the United Nations Environmental Protection (UNEP). He has all reasons to do so. Crude theft, not even the series of attacks on oil installations, is, according to a document of the London-based Chatham House, the biggest conduit pipe through which Nigeria loses millions of dollars daily.

While Osinbajo, who was in Ogoniland area of Rivers State, to represent President Muhammadu Buhari, directed his anger on small scale crude theft by militants and other criminals in the Niger Delta creeks, Nigeria loses multimillion dollars daily to unmetered wellheads. Over $50 billion worth of crude, sources said, disappeared with the connivance of oil mafias in the last decade.

A classified document of the federal government seen by Saturday Telegraph revealed that Nigeria has, in a stretch of 10 years, been losing $5.35 billion yearly due to non-metering of oil wellheads and related facilities. DPR’s inaction and ‘unholy’ collaboration DPR, an agency of government in charge of regulation, is alleged to be aware of this glitch. But, the regulatory agency is not,

however, ready to get any IOC to metre some of their important oil wellheads even though that is the standard practice in other countries. Whistle blowers like Delta State’s former Commissioner for Oil and Gas, Omamofe Pirah and a former Chief of Naval Staff, Vice Admiral Usman Jibrin, had, over the years, came up with allegation of oil theft.

They had both indicted the IOC. According to them, the International Oil Companies, were aiding crude oil theft, illegal bunkering and piracy, and “the DPR has kept graveyard silence on the issue.” And because of its conspiratory stance on the matter, the DPR, they further alleged, never bothered to discuss it at any public forum as a problem that needed urgent solution.

As the DPR treats this issue of unmetered wellheads with levity, millions of barrels of crude are unaccounted for at the rigs as well as over 100 flow stations in the Niger Delta. Why wellheads are not metered Shell, the oldest and biggest oil company in Nigeria by production and assets, admitted that the over 1,000 wellheads in the country are not metered.

But, why will Nigeria be one of the very few countries where these international companies do not, for over 50 years of active production, metre their wellheads? In other countries, the metering of amount of crude for export takes place beginning from the wellheads.

The Country Chairman of Shell and Managing Director of Shell Petroleum Development Company (SPDC), Osagie Okunbor, said that the metering requires “huge equipment that needs a programming before oil companies could start rolling out these metres.” However, it took about six months before Saturday Telegraph could get Okunbor and his company to react to the issue.

The problem had been there since February 1958 when first oil production of about 5, 100 barrels per day oil at Oloibiri commenced. He told this newspaper on the sideline of the launch of Shell in Nigeria Brief note in Lagos that sometimes “when people talk about metering wellheads, what people have at the back of their minds is the NEPA metre.”

He went on to confirm that crude oil wells are not metered in Nigeria unlike other countries. But said that what is important is what you metre at the flow stations and what gets to the terminal, not what came out from the well originally. Asides this, the wellheads are also left unmetered, according to Okunbor, because “what we are talking about here are huge equipment. You need a programming before you start rolling out these metres. And we have a lot of wellheads in the Niger Delta.

“But we have a lot of flow stations where we gather crude from different wellheads; at that point, we metre. What is important is what you metre at the flow stations and what gets to the terminal. You can measure what goes out from the flow stations to the terminals.”

To him, “it is what happens to the oil between the flow stations and the terminal that is the issue; which should be seen as points where crude theft takes place.”

However, the wellheads, where the actual barrels of oil that comes out of the wells of each company could be ascertained, are not metered.” Managing Director of Seplat Petroleum Development Company, Austin Avuru, believes that the crude theft figure being brandished by various companies and government in Nigeria are arbitrary.

He further claimed that oil producers delivering crude into the export pipelines do not metre what they produce and deliver to the export lines. Avuru was cornered by Saturday Telegraph at the just concluded Offshore Technology Conference (OTC) in Houston, Texas, after about four months chase.

He declared that metering of critical wellheads and point of delivery to exports line became necessary to measure and determine accurately what is water and what is crude before it gets to the pipeline that flows into the terminal. Admitting that to provide metre for the wells in the country will be expensive, the former president of the Nigerian Association of Petroleum Explorationists (NAPE), said that every “producer delivering crude oil into exports pipeline must metre what it is delivering;

it is a must. Wherever you join the export pipeline, you must metre that unit; you must measure the gross volume you produce and net volume you produce. “That way when you sum up all producers in any particular pipeline and you match that against metre at the end of the export terminal, if there is any difference, then you can begin to say where the difference is coming from – whether it is theft or shortage. Until that is done, all the theft factors we are quoting in this country are arbitrary.

You won’t pay electricity until they metre what you are consuming,” Avuru said. He added: “You cannot have a situation where different flow stations are delivering crude with different BS and W value. If you produce 10, 000 and your BS and W is 40 per cent, what it means is only 6, 000 barrels that is oil; 4000 barrels is water.

If that BS and W goes up from 40 per cent to 45 per cent, your crude oil is no longer 45 per cent, in fact, 4, 500. “In that wise all the flow stations delivering into the export pipeline will be assuming different BS and W of different volumes and you only fiscalise at the terminal and now you tell me that what is applying to everybody is theft.

You must measure accurately what is water and what is crude before it gets to the pipeline that goes to the terminal.” The government’s involvement Beyond the explanation by Avuru, a document of the federal government, seen by Saturday Telegraph, revealed that over $5 billion worth of crude get missing annually at the unmetered wellheads of the oil companies.

While the DPR appears to have taken the back seat, the Ministry of Trade and Investment, the document showed, had once moved to check the missing crude through unmetered wellheads. The ministry has the statutory duties of issuance of permit for exports and measurement at the wellheads.

In a review of the procedures for the issuance of export permits in the oil and gas sector, the ministry, through the Commodities and Products Directorate and the Ministry of Trade, was allegedly stopped from carrying out these statutory duties. Recent checks by this newspaper validated earlier findings which showed that the Ministry of Trade has the mandate of ensuring all trade transactions in the economy are legal, accurate and fair.

The Weigh and Measurement Act (2004) also empowers it to ensure that every trade transaction is scientific, legal and measurable. However, a security document designed to measure the transactions in the oil wells and flow stations, issued in the second quarter of 2012, but seen by Saturday Telegraph in 2015, indicted the Nigerian National Petroleum Corporation (NNPC).

It showed that the corporation officials allegedly forged documents to cart away 93 million barrels of oil. Journey to mega crude theft In a memorandum to former President Goodluck Jonathan dated August 26, 2011, entitled:

“Memorandum on Weight and Measurement (Legal Metrology) Service Fee Order 2010 as provided in Measures Act Cap 467 LFN 1990 (now Cap W3 LFN, 2004),” the ministry made an observation. It said that the lack of legal metrology in the nation’s oil terminals was making the country lose a minimum of N30 billion annually because “it does not have the equipment and personnel to discharge these functions.”

The memorandum, signed by Olusegun Aganga, sought the president’s nod to outsource the operations. “It requires no government funds. It would earn revenue for government and it conforms to international best practices and the World Trade Organisation (WTO)’s requirements,” the memo read. The request got a Presidential approval with the signature of Jonathan boldly appended on it.

“HM, T & I, approved, but brief FEC,” on the same day, the approval dated August 26, 2011, read. Further checks revealed that though the first shot on approval of metering of oil terminals and wellheads was made since 1999 by former President Olusegun Obasanjo, 41 years after the discovery of oil in Nigeria, it did not take off until after the approval by Jonathan.

Despite the approval by the former president, operators and the regulator in the oil industry, the DPR, NNPC and the oil majors, according to findings, ensured that only sighting continued instead of the online monitoring system. The company, which consulted for the Ministry of Trade and Investment had recommended and insisted on “metering and online monitoring.” But, the crude thieves at the wellheads, chased away the consultants and officials of the Ministry of Trade and Investments.

Till date, the scam has persisted. “At the beginning, it was discovered that Nigeria was losing $5.35 billion due to non-metering of oil wells and inaccurate ship-to-shore differences while loading and offloading of vessels.

“Data currently supplied by government- appointed pre-shipment inspection agents cannot be relied upon for proper reconciliation of oil revenues from oil and gas. Several billions is lost annually to round-tripping and fictitious claims by oil marketers due to poor measuring equipment,” the report from the inspectors revealed. Kpor fire:

A clampdown on shadows Sylva Odili is an operator of Kpor fire, the name that illegal refinery is commonly called in the Niger Delta creeks.

He told Saturday Telegraph how the Joint Task Force (JTF), a military operation in the Niger Delta, allegedly clamped down on activities of Kpor fire operators. Odili was particularly enraged that the military was selective because the renewed crackdown, according to him, only targeted the thieves who supply crude to the Kpor fire.

In a recent operation, according to the Commander of the task force in Edo and Delta states, Sam Okaula, a Chief Superintendent of Police, one mobile policeman and a soldier were among 29 persons arrested. Their offences range from pipeline vandalism to oil theft.

They were arrested at various locations in Edo and Delta states. Two other mobile policemen also caught in the act, however, escaped and have been declared wanted by the task force. The policemen had allegedly chartered a commercial bus, driven by one Uzebu Eguabon, to help them convey many jerry cans of stolen fuel from a vandalised pipeline in a bush in Edo State.

A truck conveying 53 drums, Okaula said, was intercepted by the JTF on Niger Delta which handed the vandals over to them because of the mutual rapport existing between the two outfits.

The Edo Police Task Force boss confirmed that “recently, we were able to make a breakthrough in terms of arrest of vandals and recovery of tools.

On April 7, somewhere in Benin, a soldier, who abandoned his duty post in Lagos, was caught indulging in pipeline vandalism. We have written to his formation to find out whether he was a soldier or not. From the interrogation so far with him, we discovered he had abandoned his duty post for two months and has been involved in this despicable act around Benin. He is in our cell now.”

He disclosed that 10 suspects were caught “red-handed” tampering with pipelines in Auchi. At Ibada-Elume in Delta State, three suspects were also arrested while vandalising pipelines. On a monthly basis, the government, through the JTF, has diligently continued a clampdown on those considered as crude thieves. Illicit inflow and outflows of stolen oil proceeds The London-based Chatham House once stated that Nigerian crude oil is being stolen on an industrial scale. In a report published in 2013, Chatham House claimed that the stolen product found their ways into the US, Europe and some Asian countries.

This is done, according to the revelation, through a trade cabal comprising Nigerian politicians, top military officers, oil companies, and their partners in foreign land. The stolen crude lost recorded from onshore and swamp operations alone, according to the London-based institution, was over 100,000 barrels per day, accounting to about five per cent of total output, in the first quarter of 2013.

“Some of what is stolen is exported. Proceeds are laundered through world financial centres and used to buy assets in and outside Nigeria, polluting markets and financial institutions overseas, and creating reputational, political and legal hazards. It could also compromise parts of the legitimate oil business.

“Officials outside Nigeria are aware that the problem exists, and occasionally show some interest at high policy levels. But Nigeria’s trade and diplomatic partners have taken no real action, and no stakeholder group inside the country has a record of sustained and serious engagement with the issue.

The resulting lack of good intelligence means international actors cannot fully assess whether Nigerian oil theft harms their interests,” the Chatham House report read in part. Although a document of the Chatham House released in London, the United Kingdom, three years ago, had indicted some Nigerians and their foreign collaborators, the JTF has continued to parade ‘oil thieves,’ leaving behind those responsible for metering the wellheads and some flow stations.

Metering is an important part of oil field, which is responsible for the three-phase of the liquid, oil and gas of each well and provides oil reservoir engineering information for geological authority.

It is important to also understand that the external segregator of oil field metering station separates natural gas, oil and water. Conflicting figures on stolen crude Top government officials and the IOCs bandied different figures, representing what Nigeria loses yearly to crude oil theft through non-metering and illegal bunkering.

But, a survey conducted by the Global Financial Integrity for the Central Bank of Nigeria (CBN) obtained by Saturday Telegraph, showed that the country loses between $6.5 billion and $12 billion in revenues yearly to oil theft and bunkering in the Niger Delta.

The CBN had, in 2014, commissioned the Global Financial Integrity to carry out a survey of oil theft and bunkering in the oil-rich region. The final report estimated that 65 million barrels was lost yearly. The survey was done by interviewing those involved in the shady deals and government officials.

The report also involved satellite imagery analysis over a five year period, which identified the exact location of bunkering vessel clusters and illegal refineries in the oil-producing region. The DPR spokesperson, Dorothy Bassey, neither picked calls for clarification on the issue when Saturday Telegraph put a call through to her nor reply to the text message sent to her phone on the same matter.

Also, the Group General Manager, Group Public Affairs of the NNPC, Garbadeen Muhammed, did not respond to inquiry by this reporter.

His predecessor, Ohi Alegbe, had said earlier when such inquiry were sought from him that he was unable to respond to the question. His response text message simply read: “I’m sorry; I am unable to respond to your inquiries now. Regards.” However, the immediate past Director of DPR, George Osahon, admitted to a gathering at a forum organised by Nigerian Association of Petroleum Explorationists (NAPE) on non-metering of wellheads, in Lagos, that the department was aware of the issue.

He added that it was unfair to say that nothing is being done to address the matter. Yet, many are surprised that the issue of unmetered oil wells has escaped President Buhari’s 13 month-old government thus far. Though, his Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has said that the president is ready to deploy drone to fight crude theft.

But, would the drone not concentrate on the petty crude theft rather than go after the alleged mega thieves at the wellheads of the IOCs? Kachikwu warned, at the special conference on Security in the Gulf of Guinea organised by the Gusau Institute, that if left unchecked, the menace could invariably make it impossible for the NNPC to operate the refineries.

“We are launching an armada of approaches, which will include incorporation of drones to check movements of vessels within our territorial waters.

“We are looking at the current logistical nightmares of changing staffing at the loading bay of crude oil export terminals virtually every 90 days. We are trying to equip the navy sufficiently, though they are very well equipped in terms of skill set, but not in terms of arsenal for patrols within the maritime area,” he said.

By Adeola Yusuf

Source: New Telegraph

Republished with permission.

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