October 5, (THEWILL) – The Nigerian National Petroleum Company Limited (NNPCL) has declared that Nigeria is in a bad situation, over oil theft and pipeline vandalism.
The Group Chief Executive Officer (GCEO), Mele Kyari, stated this before the Senate’s joint committees on Petroleum (Downstream), Petroleum (Upstream) and Gas.
The theft of crude oil is harming the revenue of the federal government, thus denying the country the much-needed fund to boost economic development.
Apart from revenue loss, the issue of oil theft is currently threatening not just the NNPC’s quest for energy security for the country, it is also having a debilitating effect on Nigeria’s foreign exchange earnings.
In the first quarter of this year, Nigeria lost $1bn in revenue to crude oil theft and production shut-in caused by pipeline vandalism.
With a daily loss of over 700,000 barrels of crude oil to theft, pipeline vandalism and production shut-ins, caused by tapping of crude oil from a maze of pipelines owned by oil majors, experts have said that it has become compelling for the government to adopt a holistic approach to address the crude oil revenue loss challenge.
At an average price of $100 per barrel of crude oil, Nigeria is currently losing about $70m monthly to crude oil thieves and production shut-ins.
Nigeria relies on crude oil revenue for over 90 per cent of its foreign exchange earnings and about 70 per cent of government revenue.
The high level of oil losses caused by crude theft had led to a drop in daily oil production from 1.8 million barrels per day in the last three years to just a little over one million bpd.
According to Kyari, the crime of oil theft in Nigeria has been on for many years and specifically about 22 years ago but the dimension and rate it assumed in recent times, was unprecedented.
“As earlier stated as a result of the oil theft, Nigeria lost about 600, 000 barrels per day which is not healthy for the Nation’s economy and in particular, the legal operators in the field which had led to the close down of some of their operational facilities.
“But in rising up to the highly disturbing challenge, NNPCL has recently clamped down on the economic saboteurs in collaboration with relevant security agenciestime in collaboration with relevant security agencies, clamped down on the economic saboteurs.
“In the course of the clamp down within the last six weeks, 395 illegal refineries have been deactivated, 274 reservoirs destroyed, 1, 561 metal tanks destroyed, 49 trucks seized and the most striking of all, is the 4 kilometres illegal oil connection line from Forcados Terminal into the sea which had been in operation undetected for 9 solid years”, he said.
Kyari explained to the committee that in addressing the menace, NNPCL carried out aerial surveillance of the affected areas, and saw the economic saboteurs carrying out their activities unchallenged and unperturbed.
“The problem at hand is not only security but social as locals in most areas where the illegal refiners operate, unknowingly serve as their employees by mistaking them for operatives of licensed companies for oil exploration and production in the area”, he said, adding that being a problem requiring urgent solution, the Cambodia and Mexico models of involvement of non – state actors are being adopted by NNPCL with involvement of three private security companies.
“Is not abnormal to involve non–State actors for protection of oil pipelines and other critical infrastructure as done in Cambodia and Mexico which produced desired results”, he said.
On non–remittances from NNPCL into the federation account since January, Kyari told the committee members that the company is not owing Nigeria but Nigeria owing it N1.3trn
In his closing remarks, the Chairman of the joint committee, Mohammed Sabo Nakudu, told the NNPCL boss to get prepared for oversight functions on Port Harcourt and Warri Refineries claimed to have been rehabilitated.
All members of the three committees attended the interactive session which lasted for about four hours.
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