As we bear witness to a steadfast “rise of the rest” within the global marketplace, Nigeria has proven to be not simply geopolitically ambitious, but also boasts a competitive advantage early in the contest.
We harbor a bevy of natural resources that should draw reverence in the international community and earn the admiration of our esteemed colleagues within the nations of the BRICS. This would-be envy might even lead to resentment, were it not for the oft-unspoken reality that precautions are seemingly in place at home and abroad to ensure our highest peaks in sustainable development are not met.
Though there is much to be accomplished in fortifying our national infrastructure and in fostering a climate of political unity, crude oil theft no longer occupies a low rung on the priority ladder for reform in Nigeria. This widespread larceny, occurring through various innovative and even entrepreneurial methods, collectively tarnishes our GDP as well as our reputation as an able host for energy procurement, refinement, and export. Today, Nigerian oil is absurdly exported in crude form from the shores of West Africa, shipped for distillation and then imported back to us. One reason why this is the case? Because today, almost three years since amnesty was agreed to with Niger Delta militants, crude oil theft, commonly referred to as “bunkering”, is on the rise again.
Shell, the biggest operator in the region, has said that Nigeria loses over $1.6billion annually to oil theft–that equates to approximately 150,000 barrels per day stolen from Nigeria. The international ramifications are indeed immediately obvious; earlier this year, increasing oil thefts prompted multinational corporations–including Shell, AGIP, and Eni–to close down outright in certain parts of the country.
Although the illegal refiners only make up for a small portion of the theft, their environmental impact is also vast. The destructive methods of the thieves have helped to further ruin fishing habitats and contaminate water and arable lands already degraded by decades of oil production in the area.The majority of the theft is on a larger scale however, when coordinated groups of workers tap into oil infrastructure, siphoning crude into barges before transporting the oil onto larger crafts for refining in volatile ‘firewood’ distilleries offshore.
The complicity of security officials and often even executive political authorities means that there is little will to find a lasting solution. Although the government allocated a portion of the budget to regenerating the Niger Delta after the amnesty agreement, many local politicians have not delivered on their promised jobs, roads, schools, and hospitals. Unemployment has therefore not fallen and has begotten further poverty and crime.
President Goodluck Jonathan's administration has pledged to crack down on oil theft but this ambitious initiative so too has failed to bear fruit. No sooner is one hole on a pipeline shut or one illegal distillery closed down than two others arise in their place. Over a three-week period, the Navy blocked 600 illegal distilleries, only to find that 400 new ones had been established around them.
While I do laud the Joint Task Force (JTF) and indeed the current administration’s own efforts to deal with oil theft, I believe that we will continue to see limited success in the fight until we secure the support of forward-thinking international businesses, business men and women that have the innovative minds to realize that Nigeria presents unprecedented opportunities that are, yes, complex, but at the same time, too worthwhile to pass up as a result of misplaced fears or stereotypes.
But there is another viable solution to prosperity–building a major refinery industry in-country is vital for Nigeria’s future.
Many would challenge the notion that Nigerians can together foster an infrastructure conducive to deterring corruption, adhering to best practices and effectively refining autonomously. However, I am an example of but one entrepreneur who was able to succeed by staking his bets not on what most people do but rather on the right thing to do.
If we refined our own oil we would not be at the mercy of import prices and fuel subsidy scams. If neighboring communities were regenerated we would reduce criminal activity. If people had jobs they would not be stealing.
Nigeria has two refineries in the Port Harcourt area, for example, but neither runs close to full capacity. And while I support steps undertaken by everyone interested in investing in refining–my own SLOK Group are currently exploring options–I am aware that similar efforts have been wrecked to protect the interests of powerful fuel importers.
It is a scandal that, for all of these reasons, our nation has to import more than three-quarters of its own fuel despite being the continent's biggest producer, serving to douse the hopes of many for a new Nigerian century.
If we fail to invest in our refining sector, if we fail to effectively deter massive theft, if we fail to provide jobs and if we fail to advance our local communities then we will only increase insecurity in the Delta region and perpetuate Nigeria’s reputation as a nation abundant in potential however mired in mismanagement.
Dr. Orji Uzor Kalu is an international entrepreneur, and the chairman of SLOK Holding and the Daily Sun newspaper, who served as the governor of Abia State, Nigeria from 1999 to 2007. More information about his work and writings may be found here, and he may be found on Twitter at @OUKtweets.
a global affairs media network
The Oil Crisis in Nigeria
October 10, 2013
As we bear witness to a steadfast “rise of the rest” within the global marketplace, Nigeria has proven to be not simply geopolitically ambitious, but also boasts a competitive advantage early in the contest.
We harbor a bevy of natural resources that should draw reverence in the international community and earn the admiration of our esteemed colleagues within the nations of the BRICS. This would-be envy might even lead to resentment, were it not for the oft-unspoken reality that precautions are seemingly in place at home and abroad to ensure our highest peaks in sustainable development are not met.
Though there is much to be accomplished in fortifying our national infrastructure and in fostering a climate of political unity, crude oil theft no longer occupies a low rung on the priority ladder for reform in Nigeria. This widespread larceny, occurring through various innovative and even entrepreneurial methods, collectively tarnishes our GDP as well as our reputation as an able host for energy procurement, refinement, and export. Today, Nigerian oil is absurdly exported in crude form from the shores of West Africa, shipped for distillation and then imported back to us. One reason why this is the case? Because today, almost three years since amnesty was agreed to with Niger Delta militants, crude oil theft, commonly referred to as “bunkering”, is on the rise again.
Shell, the biggest operator in the region, has said that Nigeria loses over $1.6billion annually to oil theft–that equates to approximately 150,000 barrels per day stolen from Nigeria. The international ramifications are indeed immediately obvious; earlier this year, increasing oil thefts prompted multinational corporations–including Shell, AGIP, and Eni–to close down outright in certain parts of the country.
Although the illegal refiners only make up for a small portion of the theft, their environmental impact is also vast. The destructive methods of the thieves have helped to further ruin fishing habitats and contaminate water and arable lands already degraded by decades of oil production in the area.The majority of the theft is on a larger scale however, when coordinated groups of workers tap into oil infrastructure, siphoning crude into barges before transporting the oil onto larger crafts for refining in volatile ‘firewood’ distilleries offshore.
The complicity of security officials and often even executive political authorities means that there is little will to find a lasting solution. Although the government allocated a portion of the budget to regenerating the Niger Delta after the amnesty agreement, many local politicians have not delivered on their promised jobs, roads, schools, and hospitals. Unemployment has therefore not fallen and has begotten further poverty and crime.
President Goodluck Jonathan's administration has pledged to crack down on oil theft but this ambitious initiative so too has failed to bear fruit. No sooner is one hole on a pipeline shut or one illegal distillery closed down than two others arise in their place. Over a three-week period, the Navy blocked 600 illegal distilleries, only to find that 400 new ones had been established around them.
While I do laud the Joint Task Force (JTF) and indeed the current administration’s own efforts to deal with oil theft, I believe that we will continue to see limited success in the fight until we secure the support of forward-thinking international businesses, business men and women that have the innovative minds to realize that Nigeria presents unprecedented opportunities that are, yes, complex, but at the same time, too worthwhile to pass up as a result of misplaced fears or stereotypes.
But there is another viable solution to prosperity–building a major refinery industry in-country is vital for Nigeria’s future.
Many would challenge the notion that Nigerians can together foster an infrastructure conducive to deterring corruption, adhering to best practices and effectively refining autonomously. However, I am an example of but one entrepreneur who was able to succeed by staking his bets not on what most people do but rather on the right thing to do.
If we refined our own oil we would not be at the mercy of import prices and fuel subsidy scams. If neighboring communities were regenerated we would reduce criminal activity. If people had jobs they would not be stealing.
Nigeria has two refineries in the Port Harcourt area, for example, but neither runs close to full capacity. And while I support steps undertaken by everyone interested in investing in refining–my own SLOK Group are currently exploring options–I am aware that similar efforts have been wrecked to protect the interests of powerful fuel importers.
It is a scandal that, for all of these reasons, our nation has to import more than three-quarters of its own fuel despite being the continent's biggest producer, serving to douse the hopes of many for a new Nigerian century.
If we fail to invest in our refining sector, if we fail to effectively deter massive theft, if we fail to provide jobs and if we fail to advance our local communities then we will only increase insecurity in the Delta region and perpetuate Nigeria’s reputation as a nation abundant in potential however mired in mismanagement.
Dr. Orji Uzor Kalu is an international entrepreneur, and the chairman of SLOK Holding and the Daily Sun newspaper, who served as the governor of Abia State, Nigeria from 1999 to 2007. More information about his work and writings may be found here, and he may be found on Twitter at @OUKtweets.
