Nigeria Oil Pipelines: Mounting Losses despite Fresh Enforcement Efforts

Nigeria faces greater instability as a result of compromised security along its oil pipeline infrastructure. Despite fresh efforts form the Buhari administration to arrest pipeline vandals, oil thieves and those involved in terrorism with direct impact on oil infrastructure, the risk on stability is high and will likely remain a thorny issue over the long run.

In short, MEA Risk assesses that:

• Lack of pipeline security is greatly affecting at least three major stakeholders: Communities are struggling with the rise in the incidence of environmental disasters and criminality. Tension is also rising between communities and pipeline owners/operators. Pipeline owners/operators and by extension oil companies are spending millions of dollars dealing with pipeline vandalism, and many are hemorrhaging money as a result of halting production and other operations. The Nigerian government and by extension State/Local entities are also on the losing side of the equation. Billions of dollars are unaccounted for each year as a result of lost revenue, while security cost is on the rise.

• The newly elected President, Muhammadu Buhari pledged to open a new front against vandalism as a campaign promise. Already actions are being taken, including outfitting the military with hundreds of surveillance drones to monitor pipelines and push for arrests of vandals.

• However, MEA Risk believes that securing Nigeria’s pipeline infrastructure will not be easy. Beside the fact that the country’s primary security focus is on terror group Boko Haram and corruption, the country also needs an honest and objective assessment of the root causes of vandalism, many of which are the result of bad social-economic policies. As such, MEA Risk sees the vandalism issue persist for a long while.

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