Stakeholders in the Oil and Gas sector have proffered solutions to oil theft and vandalism as the Country battle with dwindling revenue, security challenges, weak infrastructure and unsustainable fuel subsidy.
This was made known at the Lagos Chamber of Commerce and Industry (LCCI) public-private dialogue session oil oil theft held in Lagos.
The president of LCCI, Dr. Michael Olawale-Cole, said crude oil theft has taken a worrisome dimension spiking production costs to $32 a barrel, losses from pipeline vandalisation and theft are overwhelming International Oil Companies (IOCs).
He noted that several indigenous oil firms contend with rising operational expenses driven mostly by personnel, maintenance, and security costs, saying “there are concerns about the culpability of the nation’s security agencies as barges of oil cannot be stolen and moved on the coastal waters without the collaboration of some powerful stakeholders.”
He pointed out that the menace of oil theft has become a national disaster and a critical threat to the revenue base, adding that Nigeria is losing crude oil at the level of about 91 percent of output.
Olawale-Cole explained that 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 with the official rate of N416.25 to the dollar exchange rate.
“In the first quarter of 2022, oil theft was worth N434 billion (about $1 billion). 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,” he said.
The MD/CEO of Waltersmith Petrolman Oil Limited, Mr. Chikezie Nwosu said: “we have to think differently about the crude theft, to reduce the amount of crude export on those line and instead concentrate on building modular refineries next to each of these producing stations.”
The chief executive officer of Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe said that the monumental scale of losses arising from crude oil theft has created a hostile environment and disincentive to investors in the Nigerian upstream oil sector and magnitude of divestments in the industry.
According to him, many operators have undertaken deliberate shut-in of wells, facilities and pipelines which has further exacerbated the low production scenario. It is instructive to note that the above challenges have also impacted gas production, both for domestic utilisation and export.
On the ongoing effort at enabling the industry to deliver on the government production target of three million barrels of oil per day in three years, he stated that the commission has developed some key initiatives aimed at reducing the menace to the barest minimum in the short run, and eventual elimination in the long run.
He listed roadmap for tackling the security challenges in the industry as in identification and implementing areas of collaboration between the government and operators and ensuring that operators realise their full production potential.
He added that collaborating with the top echelon of the Nigerian Security Forces for a robust security framework that ensures Government Security Forces (GSF) provide pipeline and asset security; promote the implementation of Nodal surveillance technologies on the main trunk lines at each manifold for real-time loss detection that will enable swift and more proactive responses; among others.
We’ve got the edge. Get real-time reports, breaking scoops, and exclusive angles delivered straight to your phone. Don’t settle for stale news. Join LEADERSHIP NEWS on WhatsApp for 24/7 updates →
Join Our WhatsApp Channel
