Nigeria held Africa’s largest oil and gas reserves and was the continent’s biggest exporter of crude oil till mid-2022 when it fell short of production, displaced by Angola and Libya. According to a report by the Organisation of the Petroleum Exporting Countries (OPEC), Nigeria produced 1.1 million barrels per day (bpd) of crude oil compared to 1.18 million bpd and 1.12 million bpd produced by Angola and Libya, respectively. As of August 2022, production declined to 972,394 bpd, down 30.22 per cent compared to January’s output.
Some of the core reasons for the sharp drop in crude oil production include a lack of good refineries, oil pipeline vandalism and crude oil theft. These dragged the West African country down from its first position as Africa’s top crude oil exporter to 3rd.
However, a new report shows Nigeria’s crude output significantly heightened OPEC’s crude production in December 2022. The country’s December production reached 1.35 million bpd following a crackdown on oil theft by security companies linked to Government Ekpemupolo (Tompolo), a former Niger Delta warlord. Subsequently, OPEC increased production by 150,000 bpd – largely contributed by Nigeria’s output – with a total group output of 29.14 million bpd. Consequently, Nigeria regained its spot as Africa’s top crude oil exporter
Is the NNPC-Tompolo N48 billion deal a marriage of convenience?
Tompolo is a former leader of the Movement for the Emancipation of Niger Delta- one of the militant groups in the oil-rich region. He is based in Delta State.
In August 2022, the Nigerian government awarded a N48 billion pipeline surveillance contract to Tantita Security Services Nigeria Limited (TSSNL), a company linked to Tompolo. The surveillance contract is worth N48 billion per year (N4 billion per month). His surveillance covers Delta, Ondo, Imo and Rivers and parts of Bayelsa States. The NNPC said the decision came because of the need to hire private contractors to man the oil pipeline network to curb theft nationwide.
Although the Senate committee on petroleum (Upstream) backed the decision last November, other stakeholders in the Niger Delta have expressed displeasure with the decision. Chief among them is Mujahid Asari-Dokubo, ex-militant leader and founder of the Niger-Delta People Volunteer Force (NDPVF).
After the N48 billion surveillance contract was awarded to Tompolo, Asari-Dokubo reportedly cried foul. He stated that the contract was facilitated by Timipre Sylva, Nigeria’s Minister of State for Petroleum Resources, to spite and tame him. He was not pleased that the Nigerian government financed Tompolo to secure territories supposedly under his jurisdiction.
Therefore, he threatened to “serve it hot to anybody who entered his Kalabari homeland in connection with an oil pipeline.” He further warned Tompolo to stay away from Rivers and Bayelsa states. With these sorts of threats in motion, how sustainable is the NNPC-Tompolo partnership?
Expert opinion
“Under former President Goodluck Jonathan, Tompolo secured PIL assets. But the Buhari-led administration put an end to that and declared Tompolo wanted. However, the government had to go back to working with the ex-warlord because it lost huge oil revenue after it was unable to meet its oil production quota. But you can’t blame other ex-militants like Asari-Dokubo, for challenging Tompolo. They believe Tompolo alone is benefitting,” said a top legal expert familiar with the matter.
According to the expert, Nigeria’s new Petroleum Act made a provision that 3% of the budget of oil companies be paid to Host Community Trust for the development of their communities. Meanwhile, 70% of it must be spent on capital projects. However, if members of host communities destroyed oil installations, the cost of repairs shall be deducted from the 3%. The rule clause was infused to make host communities responsible for the security of oil installations.
“This new deal with Tompolo may work in the short term because the plan is not sustainable. Oil is key to Nigeria, accounting for 80% of foreign exchange. The government should not leave the security of pipelines in the hands of militants but in the care of government establishments,” he said. “What happens if another govt comes and terminates the contract? A fight will begin again because money will stop flowing to them. What if other rivals start destroying the installations in their areas? I believe that this type of contract would only encourage other militants to increase their capacity to disrupt government installations to gain attention.”
