Crude Oil Theft and Illegal Refining in Nigeria: A Matter of Political and Moral Economy (Part I)

The scale and persistence of crude oil theft in Nigeria represent a monumental problem. Twelve-year data (2009-2021) from NEITI annual audit reports show that the country lost 643 million barrels of crude oil valued at 48 billion dollars (17.1 trillion Naira), primarily due to theft. This is more than half of the country’s 2021 debt stock of $90.89 billion. While several factors, including poor metering technology at the oil wells or flow stations and other technical flaws, are implicated in the losses, the dominant factor is oil theft. Nigeria has yet to meet its OPEC-approved daily oil production quota, even as Africa’s largest oil producer, due to oil theft. Indeed, the quota has declined from 2.5 million barrels per day in 2010 to the current 1,380 million. Currently, the country cannot meet its drastically reduced quota due to production and supply chain disruptions occasioned by stealing. With daily average losses of 100,000 barrels of oil per day in 2013 to 400,000 barrels per day in 2023, Nigeria tops the chart among the countries with the highest incidence of oil theft globally.

In this edition of Nextier SPD Policy Weekly, we explore the push and sustaining factors for artisanal oil theft and illegal refining to search for broader and more realistic solutions in approaching the problem from its aetiology rather than the symptoms.

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