There are indications that pipeline vandalism, oil theft, illegal refining and low investment have combined to reduce Nigeria’s oil output by 27.4 per cent to 1.4 million barrels per day, bpd, excluding condensate, in July 2024, from 1.9 million bpd, recorded in July 2014.
Data obtained from the August 2024 edition and other Monthly Oil Market Reports, MOMRs, of the Organisation of Petroleum Exporting Countries, OPEC, indicated that the oil output of Nigeria, the leading African producer, was more than 1.9 million bpd before it started dropping consistently to the current level.
Checks by Vanguard indicated that from the International Oil Companies, IoCs to their indigenous counterparts, almost all operators have at different times experienced many attacks, especially pipeline vandalism and oil theft in Nigeria.
For instance, in early August 2024, Shell recorded oil spill cases in Assa Rumuekpe Pipeline at Elele-Alimini, Rumuekpe Nkpoku Pipeline at Rumuji, and Kolocreek-Rumuekpe Pipeline at Odau, according to the company’s Oil Spill Incidents Data obtained by Vanguard.
Similarly, in July 2024, the company, which attributed a greater per cent of the spills to pipeline vandalism, oil theft and illegal refining, recorded incidents in Tunu Brass Creek Delivery Line at Agbidiama, Bomu Bonny TNP at Bodo City, Rumuekpe Nkpoku Pipeline at Mbodo Aluu, Assa Rumuekpe Pipeline at Umudioga, Kolocreek Well 22T flowline at Imiringi, Nkpoku Manifold at Rumujima, and Assa Rumuekpe Pipeline at Elele-Alimini.
Also, in June 2024, Shell recorded other incidents in Yokri Manifold 8HP Bulkline – Riser at Yokri, Okordia Rumuekpe Pipeline at Edeoha, Okordia Rumuekpe Pipeline at Ikata, Bomu Bonny Pipeline at Freetown, Trans Ramos Pipeline at Obotobo, Kolocreek – Rumuekpe Pipeline at Rumuekpe, Kolocreek – Rumuekpe Pipeline at Okoma, Oguta well 6 wellhead at Oguta, Etelebou Flowstation at Etelebou, Kolocreek Rumuekpe Pipeline at Owerewere, Rumuekpe Nkpoku Pipeline at Rumuji, Bomu Bonny Pipeline at Owokiri, Rumuekpe Nkpoku Pipeline at Rumuekpe, Trans Ramos Pipeline at Ogbotobo, Ogale Bomu Pipeline at Egbalor, and Adne Well 2 Flowline at Biseni, Kolocreek – Rumuekpe Pipeline at Ihuowo.
Most oil spills caused by oil theft, sabotage — Shell
In its latest briefing notes obtained by Vanguard, Shell stated: “Most oil spills in the Niger Delta region are caused by crude oil theft, the sabotage of oil and gas production facilities, and illegal oil refining, including the distribution of illegally refined products.
In 2023, about 94% of the oil spills of more than 100 kilograms from SPDC-operated facilities were caused by illegal activities of third parties – 139 incidents with a total volume of 1.4 thousand tonnes, compared to 75 incidents in 2022 with a total volume of 0.6 thousand tonnes.
“The increased number of spill incidents in 2023 can directly be attributed to an increase in illegal connections to pipelines, with 119 of the 139 incidents caused by illegal connections. However, through daily inspections from the air and on the ground, we are identifying illegal connections. A total of 675 illegal connections were removed from SPDC pipelines in 2023, compared to 468 in 2022. Through these measures we have made progress, but illegal connections continue to be a challenge.”
Shell is not alone as these attacks have also caused other IoCs, including ExxonMobil and Eni to divest their land and swamp oil and gas to assets to indigenous companies and move to the offshore and deep offshore assets, which require advanced technologies.
Impact on nation’s economy
Oil theft and others have impacted negatively on the government budget and revenue despite the 2.3 per cent marginal month-on-month, MoM, increase in output to 1.534 million barrels per day, bpd, including condensate, in July 2024, from 1.5 million bpd in June 2024.
Specifically, the nation’s 2024 budget, which was benchmarked at $77.96 per barrel and 1.7 million bpd, respectively, suffered a shortfall of about 166,000 bpd in July 2024, according to the Nigerian Upstream Petroleum Regulatory Commission, NUPRC August 2024 Crude Oil and Condensate Production report, obtained by Vanguard.
The 166,000 bpd shortfall amounted to about $13,050 based on the current oil price of $78.62 per barrel in the international oil market and N20.8 million based on the N1,592 exchange rate of the Central Bank of Nigeria, CBN.
Oil theft, others come with environmental cost — Prof Hilary Inyang
In a telephone interview with Vanguard, yesterday, Chairman and Distinguished Professor, Global Institute for Sustainable Development, Advanced Analyses and Design (GISDAAD), Concord, NC, USA, Prof. Hilary Inyang, said: “Oil theft and other factors deplete government revenue that could have been utilized for development and other purposes.
But they also come with huge environmental cost. The government and other stakeholders would need billions of dollars to clean up many contaminated sites in the Niger Delta. They also need huge funds to tackle recent spills in the region for some reasons.
“Environmental pollution culminates in low life expectancy. Also, the conditions are worse in some parts of the Niger Delta, because of the large legacy oil pollution sites and more recent oil spills which my assessments put at about 2,900 in 2010 when I spent two years in Nigeria on the issue.”
We have adopted anti-theft mechanisms — Osagie Okunbor
However, the Country Chair of Shell Companies in Nigeria, Osagie Okunbor, said: “We have worked in close collaboration with key stakeholders, including the Nigerian government and our partner Nigerian National Petroleum Company Limited (NNPC Ltd.), to reduce crude oil theft across our production and transmission infrastructure in the Niger Delta.
“SPDC also has anti-theft protection mechanisms for key infrastructure such as wellheads and manifolds.
The programme to protect wellheads with steel cages continues to help deter theft. Other pipeline technologies have been introduced including specialised intelligent pigging and pipeline pressure monitoring. These have deterred illegal activities, prevented crude oil losses across the network and improved crude delivery through our joint venture pipelines to export terminals.
“Regrettably, however, spills were still caused mostly by crude theft and other illegal activities affecting SPDC’s onshore operations. SPDC has continued to clean up these spills and to remediate the affected areas. Closer engagement with communities has helped us to access spill locations faster, minimising environmental impacts of such spills.”
NNPC, security agencies uncover 33 illegal oil connections
Meanwhile, the Nigerian National Petroleum Company Ltd has uncovered 33 illegal crude oil connections in the Niger Delta at Ebubu,and Akwa Odogwa in Rivers state, Otokutu and Otor Eboh in Delta state, and Twonkubu, Fantuo, Igbeta-Ewoama, Okpoama and Ondawari in Bayelsa state.
The company in partnership with security agencies said it has destroyed 72 illegal refineries and arrested 42 suspected oil thieves between August 18 and 23, 2024.
In a video obtained from the NNPC social media handles, it uncovered 12 sites used in storing stolen crude oil while over 204 incidents of crude oil theft were recorded during the period.
Also, on the 18th of August, 2024, a vessel MV –Shantel, was arrested by security operatives from Operation Delta Safe with 12 suspects onboard at Benisede, Southern Ijaw Local Government, Bayelsa State, indicating that Nigeria’s oil theft has gone global with collaborators from the international community.
Operators should seal wellheads — Navy
As part of measures to tackle the theft, Chief of Naval Staff (CNS), Vice Admiral Emmanuel Ogalla, has called on the federal government, NNPCL and others to compel oil operators to seal all deactivated wellheads.
He said: “On the issue of deactivated oil wellheads, basically, all over the world not all wellheads may be manned, but we could have effective ways of ensuring that those unmanned wellheads are properly monitored using technology.”
Sustain battle needed — Kyari
On his part, the Group CEO of NNPC Limited, Mele Kyari, has called on the military to sustain the battle against crude oil theft and pipeline vandalism as production improved by 2.23 percent to hit 1.533 million barrels per day in July 2024.
Speaking while receiving the Chief of Defense Staff, General Christopher Musa, he said: “I call for enhanced and sustained security engagement. This is because we have reached a new peak in production that we haven’t seen in the last three years. This is related to the sustained efforts by the armed forces and other security agencies to protect our critical assets, particularly the pipeline infrastructure in specified areas where we work closely with these agencies. We are already seeing the results transforming into increased production.”
Experts harp on stiffer penalties, technology
In an interview with Vanguard, yesterday, Professor Emeritus in Petroleum Economics & Policy Executive Director, Emmanuel Egbogah Foundation, Abuja, Wumi Iledare, called for the introduction of stiffer penalties against culprits. He regretted that Nigeria is currently noted for massive oil theft, adding that such did not exist about 40 years ago.
However, the Director General of the World Trade Organisation (WTO), Ngozi Okonjo-Iweala, who harped on the deployment of modern technology, said: “Nigerians have seen for years how organised crude oil theft on a massive scale seriously undermines the economic and financial health of the country. All Nigerians must agree that stealing our national assets of any type is intolerable and must be stopped. There is so much technology available now to track such theft and there must be no more excuses for inaction.”
SOURCE: VANGUARD
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