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IOCs seek solutions to oil theft, decline crude output in Nigeria

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International oil companies (IOCs) operating in Nigeria have again expressed their frustration over the escalating oil losses in the Niger Delta due to the activities of oil thieves.

The oil firms include Shell, Chevron, TotalEnergies, and ExxonMobil.

Speaking at the industry leaders’ panel on the topic: “The Future of Nigeria’s Energy Sector in the PIA Era,” Managing Director of Shell Nigeria Limited, Osagie Okunbor, said the high oil losses caused by crude theft had resulted in Nigeria’s daily oil production declining from 1.8 million barrels per day in the last three years to just a little over 1 million bpd.

Okunbor also warned that the new marginal field licensees that would be operating Shell’s Oil Mining Lease (OML) 53 and 57 may experience difficulties evacuating their products.

“In three to five years, we were brought down from 1.8 million barrels a day to a little over 1 million barrels a day and frankly, most of that comes out of deep water.

“So, our OML 53 and 57 marginal field licensees, depending on how quickly they can bring production on stream, those who are on land, swamps and shallow water, evacuation is going to be an issue. So it’s an existential issue for us,” he explained.

He said two of the most important oil pipelines in the country are currently shut down with hundreds of thousands of barrels a day shut in.

“We need to address it. If we don’t address it, we can 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 this gap of hundreds of thousands of barrels a day is solving the evacuation problem.

“So if there’s one thing we need to take away from this conference, it’s how we can put our heads together: Industry, government, regulators, communities, security agencies as to how we can deal with this culture,” he explained.

Managing Director of Chevron Nigeria Limited and Chairman of the Oil Producers Trade Section (OPTS), Rick Kennedy, said while the industry stakeholders collaborate to fine-tune the Petroleum Industry Act (PIA) in a manner that offers encouragement to all players, it was also imperative for the oil theft challenged to be addressed by all parties.

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“My observation is that, leading up to the completion of the PIB and now with the passage of the PIA, there is the need for an unprecedented level of collaboration and partnership across the industry, with the regulators with the ministry, and with NNPC.

“And I think that will do us well going forward as we all take on the challenges ahead of us, including the high crude theft that we are going through. Let’s just carry on that collaborative mindset and ensure we address these challenges,” Kennedy said.

The Executive Director at ExxonMobil Nigeria, Oladotun Isiaka, who represented his Managing Director, Richard Laing, said stakeholders should work together to tackle the oil theft challenge as it was impacting negatively on investments in the upstream sector.

“I see two things: When you talk about production, there are two variables in there. There’s capacity and there’s downtime. So security and the downtime aspect, and I agree it is existential,” he stressed.

However, the Managing Director of TotalEnergies E&P Nigeria Limited, Mike Sangster, said the PIA had brought some level of frustration, explaining that rather than enhancing investment, the Act was enhancing divestments by the IOCs.

“I can sense a certain level of frustration that the PIA has been passed. There’s been more, let’s say more enhancements in terms of divestments than they’ve been about new investments.

“What I would like to suggest is that we have another dialogue between the industry and the authorities, because we were involved in the definition of the PIA and we worked well with the GMD and with the minister through that process,” Sangster stated.

According to him, there have been some delays in the implementation of the Act since its assent in August last year, pointing out that it took a long time for the post-PIA regulations to be published.

The TotalEnergies boss suggested that another working group be set up between the authorities and the industry in order to find ways to address some of the issues.

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