By Merit Ibe

Stakeholders in the Oil & Gas Sector  have revealed that the country lost about $3.2 billion to crude oil theft between January 2021 and February 2022.

A report by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the LCCI Oil Producers Trade Section, and the Independent Petroleum Producers Group (IPPG), puts the figure at about N1.36 trillion when converted to Naira at the official rate of N416.25 to the dollar exchange rate.

The disclosure was made at the Public-Private Dialogue session on Oil Theft and Artisanal Modular, Refineries organised by the Lagos Chamber of Commerce and Industry (LCCI).

Industry  players at the event, who decried the menace of oil theft which  has become a national disaster and a critical threat to the nation’s  revenue base, identified myriads of problems confronting the sector and proffered solutions. 

President of the chamber, Michael Olawale- Cole,  noted that in recent years, Nigeria has had to battle with dwindling revenue, security challenges, weak infrastructure, rising inflation, high cost of production and a burdening and unsustainable fuel subsidy.  He decried the Crude oil theft that  has taken a worrisome dimension spiking production costs to $32 a barrel, losses from pipeline vandalism and theft which  are overwhelming International Oil Companies (IOCs).

He, however, pointed out that there were also concerns about the culpability of the nation’s security agencies, noting that barges of oil cannot be stolen and moved on the coastal waters without the collaboration of some powerful stakeholders.

“The menace of oil theft has become a national disaster and a critical threat to our revenue base. Various reports confirm that the Bonny Terminal Network, Forcados Terminal Network, and Brass Terminal Network are major routes for this organized crime. 

Nigeria is losing crude oil at the level of about 91 percent of output. Nigeria lost $3.2 billion in crude oil theft between January 2021 and February 2022, as revealed by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the LCCI Oil Producers Trade Section, and the Independent Petroleum Producers Group (IPPG). 

This puts the figure at about N1.36 trillion when converted to Naira with the official rate of N416.25 to the dollar exchange rate.

He noted that this menace has prevented Nigeria from meeting its crude oil output capacity. Out of about 141 million barrels produced in the first quarter, about nine million barrels were lost to crude oil theft. 

Related News

“The Chamber has consistently advocated for the removal of fuel subsidies and full deregulation of the petroleum downstream sector to attract required investments into the sector. No investor wants to invest in an industry where they cannot even recover their cost of production.

 “While we expect some respite from the commencement of commercial private sector refining and modular refineries, we call on the regulators to ensure a conducive business environment that supports these investments coming on stream soon. The twin factor of fuel subsidy payments and crude oil theft have combined to deny Nigeria the gains of the high crude oil price on the international market. The OPEC’s quota for Nigeria at about 1.8 million barrels per day (mbpd) has become a missed opportunity as the country has struggled to produce 1.399 mbpd in January, 1.258 mbpd in February; 1.238 mbpd in March; 1.219 mbpd in April, and 1.42 mbpd in May. That is a shortfall of a third of the OPEC quota.

Vice Admiral  AZ Gambo ,Chief of Naval Staff, represented by Rear Admiral Yakubu Wambai,  spoke on the security aspect of the dialogue.He noted that the topical issue as the country is struggling with the meanace of crude oil theft and its humongous effect on the economy. 

He noted that stakeholders needed a huge commitment to collaborate to find solution to the menace of the theft and it’s devastating impact on the environment.hw said Crude oil theft is one of the major maritime security challenges in the country maritime environment which has assumed a frightening dimension with attendant effects capable of denying the nation of the much needed revenue.  “The theft is associated with pipeline vandalism, illegal oil bunkering  as well as proliferation of illegal oil refineries and illegal local refining sites which are most privalent in the Niger Delta area.

Citing the reports of the NUPRC , he also stated that crude oil theft is also responseible for Nigerians inability for Nigeria to meet up with opec quarter of 1.8million barrels of oil per day. This he said underscores the need to device more  workable means  to curtable the activities of oil thieves and illegal oil bunkering.

He said generally illegal oil thrives because of  disloyal service of retired oil  workers as well as connivance of some security and some private surveillance contractors who have good knowledge of the oil pipeline network. “Other factors include poverty, high unemployment rate, which leads to youths idleness and reactiveness and also connivance with some compromised communities and youth leaders in affected areas. There is always a growing demand of locally refined products due to its comparatively low cost and complexities on the part of security agencies.”

Dr Ken Opara, president, chartered institute of bankers of  Nigeria (CIBN) pointed out that One of the things the banking sector has observed is that operators in the bunkering activities attempt to launder their money through the bank. He said if it’s not detected promptly, it will have a devastating effect. He advised banks to be more sensitive in terms of money laundering, record  keeping.

He said the institute was trying to collaborate with the regulators , EFCC and the  financial intellence  unit basically to as much as possible see where it can curtail  it. He emphasised on putting structures in place to enable a dedicated intervention funds. He emphasised the need to involve host communities and get the youths empowered  to reduce theft

Chikezie Nwosu, Managing Director and CEO,  Waltersmith  Petran Oil Ltd, spoke on  the need to invest in modular refineries which are gas plants for domestic consumption.

“We have to attach infrastructure within the communities to boost industrial cities and increase employment, promote diversification.

Other speakers included Gbenga Komolafe, CEO, NUPRC; Olusina Sipasi, Partner Aelex among others.