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HomeOil & Gas / EnergyLosing $10m Daily To Oil Theft: Challenge Of Nigeria’s Economy

Losing $10m Daily To Oil Theft: Challenge Of Nigeria’s Economy

As a leading member of the Organisation of Petroleum Exporting Countries (OPEC), Nigeria is one of the world’s highest producers of crude oil and natural gas.

The country currently gets an allocation of about 1.8 million barrels per day (mbpd), but it is only able to produce 1.1million barrels per day due to oil theft, a situation that has become a major challenge to the country’s economy.

Recently, International Oil Companies (IOCs) converged on Abuja at the Nigeria Oil and Gas (NOG) conference to proffer solutions to the menace. Nigeria is one of the leading countries richly endowed with crude oil and natural gas resources, as well as a frontline member of the Organisation of Petroleum Exporting Countries (OPEC).

The realisation that Nigeria is endowed with abundant crude oil resources, which is why the country had produced four Secretaries-General of OPEC in the 60 years history of the oil cartel, The Trumpet gathered.

The late Mohammed Bakindo was billed to end his tenure as Secretary-General of OPEC before his sudden death recently. Nigeria has also produced several presidents of OPEC since 1961 when it joined the organisation, which came into being a year earlier.

Over the years, Nigeria had grappled with crude oil theft on the high sea, swamps, land and in the creeks of the oil rich Niger Delta. However, the situation had worsened as notable stakeholders of the industry revealed in recent times.

Managing Director of TotalEnergies EXP Limited, Mike Sanger, who spoke recently at the International Oil Companies (IOCs) conference with the theme: _The Future of Nigeria Energy Sector, Petroleum Industry Act

(PIA) Era_ in Abuja, disclosed that Nigeria loses about 100,000 barrels of crude oil daily.

Sanger said with crude oil selling even at $100 per barrel per day (bpd), the country was losing $10 million daily, adding that Nigeria lost a whopping $1 billon to the menace in the first quarter of 2022 alone.

He said stakeholders thought the coming on board of PIA, which was signed into law a year ago would have addressed the issue of oil theft and host communities-related challenges, adding that the situation has not turned out positively as expected.

“TotalEnergies EP has declared a force majeure on its OML 58 and had stopped production since February 24, 2022 due the vandalism of its oil and gas infrastructure. You can see some of the figures in the media. I mean maybe it is 100,000 barrel per day, which is a loss of $10 million daily.

“That is a huge loss for the country and so, I think the situation really needs to be prioritised to look beyond the host communities and how the stakeholders in the oil sector and how we can address the crude safety and eradicate the theft once and for all,” he stressed.

Stangster, therefore, urged the Federal Government and industry stakeholders to find a lasting solution to the issue of vandalism to make Nigeria an investment destination for oil investors.

In his presentation, Managing Director of Shell Nigeria, Osagie Okunbor, said the huge losses of crude oil in the county called for serious concern.

Okunbor disclosed that the high crude oil theft had led to Nigeria’s daily production declining from 1.8 million barrels per day to a little over 1 million barrels per day in the last three years and cautioned that the new marginal field licences that would be operating Shell’s oil Mining Lease (OML) 53 and 57 might experience difficulties evacuating their products.

“In three to five years, we were reduced from 1.8 million barrels per day to a little over 1 million barrels a day and quite frankly, most of that output comes from deep water and offshore. So, our OML 53 and 57 marginal field licenses, depending on how quickly they can bring production on stream, those on land, swamps and shallow water evacuation will be an issue, so it is an existential issue for us,” he explained.

He also noted that the country was not doing enough to tackle oil theft in the country, a situation, he said, had impacted negatively on the country’s revenue.

“We need to address it, because if we don’t address it urgently, we can’t do all the new oil development issues that will continue to occur. But what is really going to move the needle for us in terms of bridging the gap of hundreds of thousands of barrels per day is resolving the evacuation challenge.

“So, if there is one thing we need to take away from this conference, it is how industry experts, government, regulators, communities, security agencies and other stakeholders can come together on how we can deal with the challenge,” he said.

Also speaking, Managing Director of Chevron Nigeria and Middle Africa Business Unit, Rick Kennedy, called for institutionalisation of the PIA, which he hoped would define a clear role for industry stakeholders going forward.

Kennedy, who is also Chairman, Oil Producers Trade Section (OPTS), said while industry stakeholders collaborate to review the Petroleum Industry Act in a manner that would encourage all players, it was equally important for all stakeholders to address the challenge of oil theft in the country.

“My observation is that leading up to the completion of the PIB and with the passage of the PIA, there is the need for an unprecedented level of collaboration and partnership across the industry with the regulators, minister and the Nigerian National Petroleum Corporation (NNPC).

“And I think that will do us well going forward, as all of us should take on the challenges ahead of us, including the high crude oil theft that we are experiencing. Let us continue with collaborative mindset and ensure that we address these challenges,” Kennedy said.

On his part, Executive Director of ExxonMobil Nigeria Limited, Oladokun Isiaka, who represented the Managing Director, Richard Laing, also stressed the need for stakeholders in the country’s oil sector to work together to tackle the crude oil theft, as it was impacting negatively on investments in the country’s upstream sector.

He faulted the PIA Act for its failure to achieve what it was thought it would achieve when President Muhammadu Buhari signed it into law last year, adding: “I see two things, when you talk about production, there

are two variables, which are capacity and downtime. So, to that extent, I agree that the challenge is existential, when viewed from the point of security implications of the downtime aspect.

Isiaka noted that the PIA had brought some level of frustration, maintaining that instead of enhancing investments, the Act was actually boosting divestments by the IOCs.

The IOC chiefs, who gathered for the conference and examined the oil theft issue headlong, also expressed disappointment that the country was losing between 100,000 and 700,000 barrels of crude oil daily, while they watch helplessly.

They wondered why with President Buhari as the Minister of Petroleum Resources and Timipre Sylva is Minister of State for Petroleum Resources, the huge and increasing oil theft was still taking place.

Respondents also wondered about the whereabouts and efficiency of the many naval personnel in the Niger Delta and officials of the Nigerian Maritime Administration and Safety Agency (NIMASA), who are paid heavily

from the tax-payers money in the face of the continuing huge oil theft in the country?

They also indicted the IOCs and security apparatuses in the Niger Delta, who seem to look the other way when oil theft continues unabated for the past three to five years and expressed concern that the country was losing $1 billion in each quarter to crude oil theft, while the Federal Government continues to take loans for sundry sources.

At the current exchange rate of N452 to the dollar in Import and Export (I&E) window, the country has lost a whooping N452 billion in the first quarter of the year, a situation that looks absurd and for which most Nigerians wonder how and why ships could come to Nigeria high sea to steal huge amounts of crude oil without security forces arresting any of them.

Nigerians are asking pertinent questions. Who are the buyers of Nigeria’s stolen crude oil and why has President Buhari, who doubles as Minister of Petroleum not been able to use the International Police Organisation (INTERPOL) to identify and arrest the crude oil thieves all along.

How come the country is losing about 700,000 barrels daily and no ship has been arrested for about three to five years now? With the country’s huge debts and dwindling crude oil income, how does the country hope to repay its huge debts?

Some respondents are of the view that highly placed government officials and top military echelon are complicit in the crude oil theft, hence the Federal Government and the IOCs appear helpless to stop the crime.

They insist that the IOC chiefs know where the foreign ships that buy the country’s stolen crude oil in the high sea and where they are being refined, but chose to pretend not to know, stressing that the earlier the government did the needful to halt the theft, the better for the country.

Nigerians also wonder why the IOC chiefs are the ones lamenting the issue, while the NNPC, which controls 60 per cent of the oil business and pay taxes to the government remain aloof, adding that management of NNPC management could not absolve the corporation from their alleged complicity in the oil theft.

If Nigeria were a sane country, President Buhari, Timipre Sylva, Group Managing Director (GMD) of NNPC, Naval Chief of Staff, Director-General of NIMASA and all intelligence security chiefs ought to have resigned their positions due to the embarrassment oil theft is causing the country.

But this is Nigeria where government officials engage in all manner of misconducts and still remain in their positions. After all, none of them could be sanctioned, especially given the fact that President Buhari had been Minister of Petroleum in the last seven years.

(The Trumpet)

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