The Nigerian National Petroleum Company Limited (NNPC) in its recent oil production update has confirmed that the country’s oil production has risen to 1.67 million barrels per day, though with few numbers lower than the 1.8 million bpd quota allocated to Nigeria by the Organisation of Petroleum Countries (OPEC).
But despite the appreciated figure, the country is losing revenue from the sector as oil thieves appear more brazing in the face of weak institutional structure.
The minister of state petroleum resources Chief Timipre Sylva, has attributed loss of revenue from crude production to theft, pipeline vandalism and decayed infrastructure.
He said in spite the challenges, the federal government was determined to end the trend.
On the other hand Nigeria’s contemporary, Saudi Arabia generated about $326 billion in oil revenues for 2022, although monthly revenues have been lower in recent months after oil prices slid to around $80 per barrel at the end of last year.
The figure represents Saudi Arabia’s highest-ever oil revenues back in 2012.
The rise in oil prices last year, especially the spike in the first half to over $100 a barrel after the Russian invasion of Ukraine, raised the revenues for the world’s largest crude oil exporter. The value of oil exports accounted for more than 70 per cent of all Saudi exports last year.
In December 2022, oil exports increased by 11.1 per cent year over year to $22.8 billion (85.5 billion Saudi riyals), but fell compared to November, according to data released by Saudi Arabia’s General Authority for Statistics on Tuesday.
The share of oil exports in total exports increased from 71.9 per cent in December 2021 to 79.0 per cent in December 2022, the authority said.
Sylva said the Federal Government was determined to end the trend through improved investments and security along the major oil and gas pipelines in Niger Delta region.
According to him, contrary to reports that about 40 per cent of the volumes of crude losses are due to measurement inaccuracies, adding that major sources of crude oil losses were theft, pipeline vandalism and production deferment as a result of pipeline non-availability.
He said: “It is a known fact that the major losses of crude oil in the country have been through theft and destruction of oil pipelines.
“Again, we also know that some of the oil infrastructure are old and decayed and cannot perform at maximum capacity.
“And there is also the issue of lack of investments in fossil fuel in the country and the drive towards renewable energy has really hampered new investments in this sector.”
The minister said the government had put measures in place to restore sanity in the sector.
Sylva added that contrary to the report, the problem associated with crude oil losses are systemic issues that the government was already handling with a view to finding permanently solutions to.
Sylva, therefore, urged the Nigerian Upstream Petroleum Regulatory Commission and the Midstream and Downstream Petroleum Regulatory Authority to harmoniously work together.
This, he said, would ensure that the constraints and impeding challenges in the optimal crude oil production volume were speedily addressed to boost national revenue.
According to him, the federal government cannot continue to lose revenue through perceived lapses in crude oil production, especially at this very critical period of scarce revenue for the nation.
The minister said this was not the time to dwell on the mistakes of the past or engaged in needless blame games but a time to work to close all existing leakages to enable government get maximum benefits from its crude oil and gas assets.
While expressing satisfaction at the improved security along the major oil pipelines in the region, Sylva called for sustained efforts by all concerned to maintain maximum crude oil production.
Sylva said, “We are very confident that Nigeria will achieve two million barrel per day crude oil production target very soon.
“The government is doing everything possible to get to where we should be and everyone is working hard to achieve this.”
Similarly, the Vice President Prof Yemi Osinbajo, said oil theft and losses pose a serious threat to Nigeria’s economy and impact negatively on the revenue of the nation.
According to the vice president, if left unchecked, these could fuel a public finance crisis that paralyses the government and makes the nation vulnerable.
Osinbajo spoke at the stakeholder’s conference of the Special Investigative Panel on Oil Theft and Losses in Nigeria on Tuesday at Transcorp Hilton Abuja
“Oil theft and losses is a threat to our economy and national security. They pose a serious threat to our oil economy and impact negatively on revenue of the nation and business prospects of investors in the oil and gas sector.
“If left unchecked this could fuel a public finance crisis that could paralyse the government and make our nation vulnerable,” he added, saying that Oil contributes about 80 per cent of government foreign exchange and contributes six percent of the country’s Gross Domestic Product (GDP).
He said large scale theft of crude has undermined the government’s efforts to maximise these resources.
“So the total value of oil lost between 2019 and 2020 is higher than Nigerian foreign reserves at any point in time and almost ten times Nigerian oil savings in the excess crude account. So it’s not an exaggeration at all to say that our oil and gas sector is facing the most serious threat for over half a centur,” he said.
Chairman of the Special Investigative Panel on Oil Theft/Losses in Nigeria, Major General. Barry Ndiomu, rtd, said there is no gainsaying the enormous impact the menace of oil theft has had on the nation’s crude oil production with Nigeria’s oil output hitting a 13-year low of 800,000barrels/day.
“The panel visited several sites across the Niger Delta such as the now infamous Yokiri Flow Station Area in Burutu Delta State where the illicit connection on the export line that fed off the TETL was discovered and saw other connecting points used for illegal refining,” he said.
He said that there have been engagements with the attorney general of the federation and minister of justice, the Economic and Financial Crimes Commission (EFCC), amongst others. which availed the panel information on the challenges the respective organizations faced in securing the nation’s oil assets and combating oil theft.
“These efforts provided us new knowledge and elicited honest discussions amongst panel members that led to some obvious conclusions. We surmised that the reported theft and loss of crude oil stemmed from the twin issues of complicity and negligence.
“The emergent picture suggests the existence of a sophisticated network of complicity between elements from the host communities, security agencies, and industry players- both government and private institutions alike- as well as international collaborators.”
Osinbajo declared that tackling crude oil theft and sabotage were major concerns of the federal government, saying those in charge must be accountable because, besides economic consequences, institutional and personal reputations are at stake.
But addressing a meeting of stakeholders in the oil and gas industry, called to discuss the challenges of crude oil theft and losses affecting the oil and gas industry, Kyari, said that the ‘rectangular’ security approach was already working.
According to him, the approach comprises the NNPCL and partners, regulators, government security operators and the communities, boosted by the adoption of technology, which ensured the recovery of production from what it was in July 2022 to 1.67 million barrels per day.
Kyari, who was represented by the NNPCL chief upstream investment officer, Bala Wunti, at the event chaired by Osinbajo, said the implementation of the ‘Detect, Deter, Destroy’ and Recover (3D strategy) has been a game changer in the fight against crude oil theft and vandalism.
He added that the establishment of the central command and control centre for effective monitoring and coordination, the launch of the whistle-blowers portal and the crude oil validation portal as well as the deployment of some of the best-in-class surveillance tools and technology had helped in reducing oil theft.
Kyari stated that a key element of the collaboration had been the on-boarding of the private security contractors from the host communities, which were hitherto isolated.
He said the security contractors’ in-depth knowledge of the terrain and modus operandi of the criminals had led to massive discoveries of illegal connections and interception of vessels ferrying stolen crude oil.
He said with the current sustained efforts, facilities that have been shut down have reopened, and injection of crude oil into major trunklines for evacuation to the terminals was being ramped up.
According to him, the oil and gas industry was poised to reposition itself for a sustainable growth trajectory as the efforts to rid Nigeria of the menace of crude oil theft continue to gain traction.
The NNPCL chief said a lot of work had gone into changing the old narrative and bringing all the industry stakeholders together to confront a common enemy.
Crude oil theft, he said, had been a major setback for Nigeria. Last August, crude oil theft forced the country’s production down to 1.1 million barrels per day. This had cut the contribution of foreign exchange earnings from crude oil export from 90 per cent when production was high to 78.5 per cent as of the third quarter of 2022.
To arrest the situation, the Company revealed the engagement of a private security, Tantita Securities Service owned by Government Oweizide Ekpemupolo (Tompolo) on August 13, 2023 for pipeline surveillance.
The NNPCL and the security agencies had put up a control centre to provide surveillance of all the country’s oil and gas assets in the Niger Delta. The surveillance system is known as the Central Coordination, Data Integration and Activation Control Room.
It was reported that in August last year, crude oil theft forced Nigeria’s production down to 1.1 million barrels per day far below the OPEC quota for the country.
The oil theft menace consequently cut the contribution of foreign exchange earnings from oil export from 90 per cent when production was high to 78.5 per cent as of the third quarter of 2022, according to reports.
The menace had made the NNPC to engage a private security outfit, Tantita Securities Service, owned by ex-militant leader, Government Ekpemupolo (Tompolo), on August 13, 2022, for pipeline surveillance.
Working with the private security outfit and government security agencies, NNPC had on November 9, last year discovered over 58 illegal connections to the trans-Escravos, trans-Forcados, and other major trunk lines by oil bunkers in Delta and Bayelsa States.
Also, the NNPC in collaboration with security agencies have put up a control centre, known as the Central Coordination, Data Integration and Activation Control Room, to provide surveillance of all the country’s oil and gas assets in the Niger Delta.
Like the Saudi Aramco, the NNPC Data Control Centre uses video visibility to monitor the country’s Niger Delta pipeline networks, where more than 90 per cent of the country’s crude is explored.
NNPC is also working with its business partners to make sure every data concerning Nigeria’s assets are visible through the centre to enable quick action during emergency.
However, through the Data Control Centre, the NNPC has the capability to see and monitor the movement of vessels in the coast of Nigeria’s territorial waters in real time.
From the facility, officials of the NNPC, working with operatives of the Nigerian Navy could determine, in real time, if a vessel is carrying out operations within Nigeria’s coastal waters legally.
The Data Centre also uses an intelligence system to detect when an incident of crude oil theft has occured, the location, and the vessels involved.
Immediately such illegal operation has been established, officials of the Centre through its Incidents Reporting System would immediately escalate such threat to the security agencies for immediate action.
Through the facility, the security agencies have been able to reduce their incidents response time from two to three days fee weeks ago to less than two hours currently.
