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Policy brief: A leaky system

Strengthening monitoring of oil-related imports and exports in Nigeria

Summary

This brief summarises research on the potential of commercial and independent data to strengthen monitoring of maritime oil-related imports and exports in Nigeria. It also provides an overview of how approaches, such as remote sensing, could be employed to track illicit activities related to crude and refined oil product imports and exports.

There are significant challenges to monitoring the import and export of oil products in Nigeria: for example, metering of oil production sites is often absent, and contractual arrangements in oil trading and other business agreements are opaque. Together, this lack of transparency exposes Nigeria to significant risk in managing its natural resources, including the potential for large-scale oil theft.

SDN’s Creeks to sea research project identified significant and consistent discrepancies between Nigerian government figures on oil exports and refined product import volumes, and those provided by independent sources. Official figures for 2018 appear to over report import volumes up to 41%, and under report export volumes by 3%, compared to independent sources. This is unlikely to be the full picture, but the finding strongly implies that there continues to be major fraud in its fuel subsidy programme, and significant crude oil theft from export terminals. This costs the Nigerian government billions of Naira in revenue, ultimately defrauding Nigerians of funds which should be supporting services and other public goods.

On-the-ground investigations and increasing regulatory transparency remain vital in addressing these risks. However, we identified new methods of monitoring oil movements to help track these risks, using commercial and independent sources of data, which could support the Nigerian government and others to strengthen monitoring of imports and exports and identify suspicious behaviour.

Policy recommendations

The Nigerian government and international actors—especially those with the ability to support detection and enforce response—should cooperate to develop a systematic approach to monitoring, identifying, and investigating illicit activities. This can be done by building on the approaches outlined in this briefing.

The Nigerian government, as its major priority, should mandate and oversee the installation of a comprehensive oil volume metering system. This should be capable of taking measurements from the point of production to the point of export and along the transit system. The government should ensure the system itself is independently maintained and monitored.

The Nigerian government should publish disaggregated data on exports and import volumes by vessel, export terminal, crude oil grade or refined product type, and journey details. This will promote transparency and reduce opportunities for loss of crude oil and associated revenue.

Published: 01/06/2020

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