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HomeTop NewsNigeria's oil sector bleeding, loses $3.27 bln to oil theft in 14-month

Nigeria’s oil sector bleeding, loses $3.27 bln to oil theft in 14-month

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Nigeria on Thursday admitted the grave threat to its economy and its oil industry as the government raised alarm over the rising rate of crude oil theft in the Niger Delta, noting that about $3.27 billion worth of oil had been lost to vandalism and theft in the past 14 months.

The government said the syndicate involved in the oil theft posed great threat to the country’s corporate and economic existence, with the industry now thinking of transporting crude oil from fields to export terminals by trucks.

This came on a day the Defence Headquarters announced the destruction of 49 illegal refineries and arrest of 70 oil thieves and pipeline vandals in the Niger Delta.

In a presentation at a stakeholders’ engagement in Abuja yesterday, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), said the government is extremely worried about the huge loss of oil revenue to vandals.

In its report on the trend in oil theft, the NUPRC said, “Total value loss for the period January 2021 to February 2022 is about $3.27bn.

“Average monthly value loss for the period is about $233.99 million. Average daily value loss for the period is about $7.72 million.”

Chief Executive of NUPRC, Gbenga Komolafe, who disclosed this, said much of the crude oil losses came from Bonny Terminal Network, Forcados Terminal Network and Brass Terminal Network.

He listed factors aiding the criminal activities to include economic challenges, inadequate security, poor surveillance, poor community engagements, exposed facilities and stakeholders’ compromises, stressing that due to the high level of theft, the country had been unable to meet its OPEC production quota.

Komolafe said the government was determined to end the menace, so the country could benefit from the rising price of oil and also protect the environment from oil spills.

“The issue of oil theft has become a very worrisome one to the government of Nigeria and I believe to you as investors too,” he said.

He said it was important that government and oil companies work together to resolve the issue, especially on the agreed volume of oil lost to vandals, since the issues strike at the heart of federation revenue.

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“You will recall that in the last one week, we have set up a crack team to determine the accurate figure because as a government, we cannot continue to act on the basis of an abstract or inaccurate figure in dealing with an important issue as crude oil theft because the issue goes to the heart of federation revenue.

“The concern of the government is to increase our national oil production. Basically, we are an oil economy and when the upstream is sick, it affects the well being and health of the country.

“The situation happening in the upstream is getting to the level of threat to the existence and well-being of Nigeria. As responsible regulators, we are very concerned about it.

“We have been doing a lot and we are not relenting. We will do everything possible to increase oil production in a manner that will make the nation benefit from the upward swing in the international price of crude oil,” Komolafe added.

Reacting to proposals by some operators that crude oil could be transported by trucks as an alternative measure, the NUPRC boss stated: “I quite agree that alternative evacuations that are being proposed now will be just an intervention mechanism that cannot be a permanent solution to the problem we are facing.

“I will take note of that as a regulator because already, people are pressured by the challenge to look for alternative solutions. They are seeing it (trucking) as a solution but they are not having a long-term look at the effect that the criminals could equally switch their strategies (to attack the trucks).”

Oil Producers Trade Section (OPTS) Chairman, Rick Kennedy, who doubles as Managing Director, Chevron Nigeria Limited, and represented IOCs at the meeting, described the massive oil theft across the country as an organised criminal activity.

Kennedy, who was represented by the Managing Director, ExxonMobil Nigeria, Richard Laing, said, “When I say it is an organised criminality, the sophistication of the engineering involved points towards a high degree of sophistication and technology, as well as the distribution.

“I think we’ve just got to be honest and accept that this is not theft but more than that.”

The IOCs called for a quick solution to the menace, stressing that the development posed a serious threat to their existence.

“It is important that the Federal Government, industry, and a whole bunch of other stakeholders find a solution and find it quickly. That will be my strong advice,” Laing stated.

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