23 Drilling in the dark

This blog piece was first published on 234NEXT on May 5, 2011[1]

The Nigerian oil sector must be one of the sectors that tolerate blatant disregard for transparency in the land. Being a mono-product economy and depending so much on foreign expertise, technology and dictates opens the sector to peculiar challenges.

A reading of the 2005 Nigerian Extractive Industries Transparency Initiative’s (NEITI) audit report[2] reveals three interesting things. One of them is that the Niger Delta Development Commission (NNDC) claimed to have received more money than it was given. There must be more miracles lurking in the accounting books of the NNDC. Remember that in their 2010 budget, they had a chicken-change sum of N90m for staff marriages and bereavements! The commission defended the outrageous budgetary allocation on the grounds that it was dictated by emotional intelligence. Peculiar intelligence, one would say.

The second interesting matter that emerged from the NEITI audit was that the Nigerian National Petroleum Corporation still relies largely on paper-based accounting systems. This could be a possible reason why we keep receiving conflicting signals as to whether the corporation is solvent or insolvent. Besides cracking our brains over the incoherence that reigns in the chambers of the executive council, we should perhaps pardon ministers and big shots who have been shooting out those divergent messages. If you have to drill through all those piles of paper, with figures backed with endless zeroes, at the end of the day, you could end up at any end of the pipe. And, who knows, some rats may help themselves to some of those delicious crude covered accounting sheets. Some calculators were said to have become overheated during election figures collation simply because they were not given enough time to cool down before new figures were hammered in.

The third thing we will consider should receive the gold medal for crass impunity. The NEITI auditors reveal that Nigeria does not know exactly how much crude oil is being drilled from the many wells of the Niger Delta on a daily basis. The operators, the oil companies who often claim to be baking the national pie, would simply not provide such data to the auditors. But they do provide some sort of figures, don’t they? Of course. They give figures of how much crude reaches the export terminals and other distribution points.

The question is: what happens between the pump heads and the terminal points? The massive leakage that occurs between those points is what the oil companies do not want us to know. That gaping hole is what the Nigerian government must plug. That sore gash is what the Nigerian people must demand an account of.

Reports are replete in the news media of petty oil thieves in the creeks of the Niger Delta who break pipes, siphon crude oil into drums and tanks and then refine them in rickety contraptions often referred to as illegal or bush refineries. While no one can deny the existence of these pilferers, the truth must be told about where the bulk of Nigerian crude goes and into whose throats and pockets.

Why would the oil companies refuse to give figures of extracted oil measured at the well heads? Why is the Directorate of Petroleum Resources (DPR) unable to independently measure and provide such figures? Who are those raising brick walls against transparency? Why are we prostrate before the altars of these oil moguls? We have heard of offers being made to the DPR to acquire equipment as well as training for independent metering of production in the oil fields. What or who stopped the acceptance of that much-needed capacity boost?

The clear suspicion in all these is that the oil companies are complicit. There must be something to gain by hiding the figures. Pronouncements from public figures such as the outgoing Speaker of the House of Representatives and the governor of Delta State, among others, add up to mean that probably as much oil as is being officially exported daily is also being stolen.

Remember that a ship caught with stolen crude sprinted out of naval detention a couple of years ago. We perceive a matrix of high-powered players in the oil theft industry. This is far beyond pointing fingers at petty thieves who steal crude oil in buckets only to ferry them in crude barges to ships lurking off the coast. An international syndicate must be at play, with local fat cats keeping the machines well oiled, literally.

The NEITI Act empowers the body to prosecute any company or government official who refuses to give needed information, or who falsifies the information that may be needed in the furtherance of the pursuit of transparency in the sector. Not knowing exactly how much oil is being extracted daily raises a number of concerns. For one, we cannot reasonably be sure of how much Nigeria’s oil reserves are if the amount being extracted is not known. Secondly, we cannot reasonably estimate how much crude oil is being stolen or lost into the environment.

Why no oil company or government official has been prosecuted for refusing to tell Nigeria how much crude oil is being drilled on a daily basis, is a question that needs an answer. We simply cannot keep on drilling in the dark.

  1. http://www.legaloil.com/NewsItem.asp?DocumentIDX=1304689984&Category=news (accessed 31 May 2016)
  2. See at http://neiti.org.ng/index.php?q=pages/2005-audit-report (accessed 31 May 2016)


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