Nigeria: 3.5 billion in oil stolen in 2021 alone. Investors flee
2021 ended with an alarming figure for Nigeria: 200 million barrels of oil would have disappeared in the first 11 months of the year, mainly due to theft. An exceptional figure, but which is not new for the West African country.
Oil theft in Nigeria is facilitated by several factors: the infrastructure is obsolete, especially the pipelines, making it easier for thieves to access the crude. Furthermore, the general underinvestment across the industry and the poor security of the country's waterways mean that little is being done to tackle crime. Some security agencies are even accomplices of the underworld and corruption is rampant.
While Nigeria hopes to reach its OPEC quota of 1.68 million barrels per day of crude oil by January 2022, these types of crimes are making things more and more complicated. In recent months, Nigeria has produced around 1.25 million barrels per day, a figure that is far from the targets set. Meanwhile, the thefts are driving large international investors away. Oil majors are taking their money to more trusted markets with better monitoring and surveillance practices. Shell, ExxonMobil, Chevron and Total have already moved their businesses to other regions, despite Nigeria being Africa's largest producer of black gold.
These thefts amount to $ 3.5 billion in lost revenue in 2021 alone, or about 10% of the country's foreign reserves . Nigeria is thought to have lost 42.25 million barrels in 2019 and 53.28 million barrels the previous year, due to the theft of oil. Hence, it seems clear that the situation is worsening, perhaps in part due to the economic hardships faced during the pandemic, as well as the ease of access to outdated pipelines and the prevalence of corruption.
In September last year, the Nigerian government established a committee for the recovery of crude oil and illegally refined petroleum products. The group included the Department of Petroleum Resources, Nigeria National Petroleum Corporation, the National Oil Spill Detection and Response Agency, the Nigerian Army and Navy, and the Nigeria Civil Protection and Security Corps, all of which did not stop the thefts.
Criminal cartels in the Niger Delta region generally steal crude oil by "hot tapping" – connecting a secondary pipeline to a main line, or "cold tapping" – by blowing up a pipeline and extracting oil. They then illegally export this oil to countries like Ghana, Cameroon, Cote d'Ivoire and South Africa. Some even reach the international market. Corruption comes into play easily as tankers are often too full, with exporters bribing officials who control the transportation of the product to turn a blind eye.
Nigeria is not the only country facing the problem of oil theft, with similar cases in Ghana, Morocco, Uganda, Mozambique, Mexico, Thailand, Azerbaijan and Turkey, to name a few. The problem is that the West African state is not investing in any technology that could potentially stop this scourge. Resource scarcity and corruption, directly linked to each other, make the problem seemingly unsolvable, despite Nigeria being the African country with the most oil resources.
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The article Nigeria: 3.5 billion in oil stolen in 2021 alone. Investors flee comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/nigeria-rubati-35-miliardi-in-petrolio-solo-nel-2021-gli-investitori-scappano/ on Mon, 10 Jan 2022 09:00:12 +0000.