New Telegraph

Need to address declining oil production, theft

Vinkmag ad

The recent decline of Nigeria’s oil production or supply to the international market and the losses the nation incurred as a result of oil theft have once again demanded continued actions to improve operational and production efficiency in the nation’s oil sector. Stakeholders also demand improvement in the security of the oil and gas infrastructure of the country.

A current report by Energy Intelligence revealed that Nigeria and Russia accounted for a shortfall of 440,000 barrels per day (bpd) while the crude supply of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) recording its 10 month low in March 2023. OPEC+ in March recorded a total production of 37.64 million bpd which is a decline of 680,000 bpd from that of February.

The report further revealed that Nigeria and Russia and other factors culminated in the total drop of 680,000 bpd experienced in the past 10 months. It specifically opined that the massive decline was aggravated by oil theft, pipeline vandalism, and illegal refining in Nigeria as well as the Russian – Ukraine war, which led to the ban of Russian oil by the United States, United Kingdom and European Union.

The Organisation of Petroleum Exporting Countries, stated in its Monthly Oil Market Report for April 2023 that using secondary sources, Nigeria’s oil production declined to 1.354mbpd in March, which is a decrease of 17,000 bpd; while using OPEC crude oil pro- duction based on direct communication, it reduced to 1.268mbpd, indicating a decrease by 38,000bpd. Nigeria’s oil production in December 2022, was 1.271mbpd; in January 2023, it was 1.308mbpd; and in February, it produced 1.380mbpd.

The report of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on the lat- est crude oil production status confirmed that Nigeria’s crude oil production growth declined by 2.95 per cent month-on-month, in March 2023, to 1,268,202 barrels per day(bpd) from 1,306,304 bpd recorded in February 2023. This means that Nigeria’s crude oil supply level crashed to below 1.3mpd mark after a six-month consistent crude oil production increase.

The production decrease has been seen as a setback to Nigeria’s prospect of reaching 1.69mbpd, which is the 2023 budget crude oil production target and also a reduction to the country’s quest to meet its OPEC production quota of 1.8 million bpd.

$48bn lost to oil theft

The Nigeria Extractive Indus- tries Transparency Initiative (NEI- TI) revealed that Nigeria lost $48bn worth of crude oil to crude oil theft. The Executive Secretary, NEITI, Dr. Ogbonnaya Orji, quoting from the policy brief on crude oil theft, lamented that in 12 years, between 2009 and 2020, Nigeria lost 619.7 mil- lion barrels of crude oil valued at $46.16 billion or N16.25 trillion.

He added that between 2009 and 2018, Nigeria also lost 4.2 billion litres of petroleum products from refineries valued at $1.84 billion. He noted that the volume of crude oil losses represented a loss of more than 140,000 barrels per day. private sector investment in the down and midstream petroleum sector, led to low employment generation since the refining process is done outside Nigeria. Orji said: “Between 2009 and 2020 (12-year period), Nigeria lost 619.7 million barrels of crude oil valued at $46.16 billion or N16.25 trillion. The volume of crude oil losses, he reiterated, represents a loss of more than 140,000 barrels per day. “Between 2009 and 2018, Nigeria also lost 4.2 billion litres of petroleum products from refineries valued at $1.84 billion. These findings and recommendations on tackling crude oil theft have been submitted to the President through the Presidential Committee on Crude Oil Theft in which NEITI also served as a member.” Controversy over crude revenue A twist was added to the crude oil financial losses as there was the allegation of the loss of over $2.4bn in revenue from the Illegal sale of 48 million barrels of crude oil export in 2015. The House of Representatives alleged that the Minister of Justice and Attorney General of the Federation, Abubakar Malami (SAN), was in receipt of funds that accrued from the sale of 48 million barrels of crude oil in a China deal without remitting same to the federation account. Chairman, House of Representa- tives Adhoc Committee investigating the ‘alleged loss of over $2.4 billion in revenue from the illegal sale of 48m barrels of crude oil export in 2015 including, all crude oil ex- ports and sales by Nigeria from 2014 till date,’ Mark Gbillah, made the startling revelation while addressing invitees at a public hearing of the panel.

He said that the hearing was a result of intelligence from a whis- tle-blower. Those summoned outside MalaMI8 included the Finance Minister, Zainab Ahmed, the Nigerian National Petroleum Company Limited (NNPCL), the Nigerian Upstream Regulatory Commission, NEITI, oil and gas companies who engaged in export, and the Oriental Energy Limited who was given a week ultimatum to provide all necessary details regarding its involvement in crude oil lifting and sales within the period under review. He said: “We are looking at the issues that have to do with allegations of 48 million of crude oil barrels sold in China. We are looking at the issue of Crude oil export in general from Nigeria for the period under review.

“We are also looking at the whistle-blower revelations and recoveries, in which the federal goverNment publicly declared that they have made recoveries.”

$10bn loss

Speaker of the House of Representatives, Mr Femi Gbajabiamila, said that it was reported that about $700 million worth of crude oil was lost to oil theft monthly in Nigeria, adding that between January and July 2022 alone, the country lost $10 billion to the crime.

Confirming the probe, he said the $2.4 billion revenue probe over the alleged illegal sale of 48 million barrels of crude oil export from 2014-2015 was not a witchhunt. He stated that in the light of dwindling revenue accruing to Nigeria from crude oil sales, it was alarming to learn, from a whistle- blower, of allegations that over $2.4 billion dollars in possible revenue for Nigeria was lost. This, according to him, is from the sale of 48 million barrels of Nigeria’s crude oil cargoes in China.

Gbajabiamila lamented that Nigeria’s revenue-to-GDP ratio was below five per cent, which was rated among the five lowest countries in the world.

Efforts to address challenges

Not only that oil companies, including international oil companies (IOCs), have deployed their resources to fighting crude theft, the Federal Government of Nigeria has also shown commitment to ad- dressing the challenges as security agencies have continued to record some successes.

Illegal connections removed

Managing Director of Shell Petroleum Development Company of Nigeria (SPDC), Osagie Okunbor, said the company detected and re- moved 460 illegal connections on the Trans Niger Pipeline (TNP) before resuming operations after a one-year shutdown.

The TNP, operated by SPDC, is a major pipeline capable of transporting about 180,000 barrels of crude per day to the Bonny export terminal. Okunbor, who spoke at the 2023 Nigeria international energy summit in Abuja, said the TNP remained shut for one year due to the massive crude oil theft on the pipeline. Okunbor said the loss was often viewed as affecting Nigeria’s oil production quota to OPEC and that the situation was also having devas- tating implications on the supply of gas to the Nigeria Liquefied Natural Gas (NLNG). Challenging the incoming ad- ministration to prioritise the security of oil infrastructure, the Shell MD said Nigeria was not short of frameworks and written documents on how to tackle the various challenges in the oil sector.

“What keeps me awake today as regards my onshore business in Shell is the fact that we cannot operate a pipeline, and that’s what is responsible for the 60 per cent capacity. I think today that is almost just how much gas we can supply,” he said. “And this is because one of our key gas infrastructures — the TNP — was shut down for one year; we removed 460 illegal connections on that line. We just reopened that line. Today we are struggling to catch up with our first programme. “So, if you ask me what the number one issue has to be for the incoming administration, it has to be the security of oil and gas infra- structure. If you don’t fix it, then we have a huge problem on our hands,” Okunbor said.

Arrests, refinery deactivation

The Eastern Naval Command of the Nigerian Navy recorded laudable achievements in efforts to check oil theft as it arrested 27 vessels allegedly involved in illegal bunkering, crude oil theft and other maritime illegalities. It also claimed that it deactivated 294 illegal refinery sites.

The immediate past Flag Officer Commanding (FOC) Eastern Naval Command, Rear Adm. Ibrahim Dewu, while handing over the leadership of the command to his successor, Rear Adm. Olusola Oluwagbire, in Calabar, also explained that the arrests were made between the period he assumed office as Flag Officer of the Command, on February 4, 2022, to April 11, 2023; when he handed over to his successor. He explained that the command also sustained effective patrol of its maritime area of responsibility as well as under- took several ‘clearance and swamp bug- gy operations’ in the backwaters.

According to him, the operations resulted in a considerable reduction of piracy in Nigeria’s maritime domain. He also said the command took part in some independent, joint and combined exercises like; Operation Calm Waters, Operation Tripartite Border Patrol, Operation Tsare Teku, Operation Gba Pada, Operation Dakatar Da Barawo and Operation Obangame 2023. Dewu said: “Within the period under review, from Feb. 4 2022 till date, our sustained operations led to the arrests of 27 vessels engaged in illegal bunkering, crude oil theft and other maritime illegalities.

“Other achievements include deac- tivation of about 294 illegal refining sites and still counting, destruction and evacuation of illegally refined diesel, kerosine and crude oil and destruction of several pirates as well as kidnappers’ camps.

Last line

All stakeholders must continue to be committed to synergise and strategies to stop or substantially reduce oil theft and its detrimental impacts on the economy before it collapses the economy and de- velopment.

Read Previous

Restoring constitutional order in APC not negotiable

Read Next

I’ll Create Jobs, Develop Rural Areas – Kano Gov-Elect

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular