High Asset

Escalating Oil Theft Widens NNPC Security Strategies Around Industry Assets

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Oil theft in Nigeria is considered to be the illegal appropriation of crude or refined oil products from the pipelines of multinational oil companies.

Oil theft in Nigeria is facilitated by the pragmatic co-operation between security forces, militia organizations, the local population, and oil company employees who use a variety of methods to steal oil from the multinational oil corporations that are stationed within the country.

Currently, Shell, Eni, Exxonmobil, Chevron, Statoil, TotalEnergies are the largest multinational oil companies present in Nigeria but due to the lack of oversight and a large network of corruption, oil theft is primarily cellular rather than hierarchical and requires frequent collaboration between a variety of random players depending on the level of oil theft being committed.

A recent report revealed that Nigeria may have lost about 200 million barrels to organised theft in the first 11 months of 2021.

According to data from the Nigerian Upstream Regulatory Petroleum Commission (NURPC), while Nigeria was expected to pump approximately 635 million barrels of oil by last November, only 441 million barrels were produced within the period.

This also aligned with a report from the Nigerian Extractive Industries Transparency Initiative (NEITI) released earlier last year that Nigeria loses 138,400 barrels of crude per day (about 7 per cent of its total production) to theft, oil-spills, or shortage-in production. The loss, according to the report, is “neither hypothetical nor episodic. It is real and endemic.”

Chairman of Heirs Holdings Tony Elumelu and the founder of Tony Elumelu Foundation (TEF), said the situation in Nigeria was getting “worse and worse”, saying, “How can we be losing over 95 per cent of oil production to thieves?

Elumelu, who is also the chairman of Heirs Oil and Gas, blamed the shortfall in Nigeria’s daily oil production quota on the inability of the security agencies to protect oil installations in the Niger Delta. “Look at the Bonny Terminal that should be receiving over 200,000 barrels of crude oil daily, instead it receives less than 3,000 barrels, leading the operator Shell to declare force majeure.” “Why are we paying taxes if our security agencies can’t stop this? It is clear that the reason Nigeria is unable to meet its OPEC production quota is not because of low investment but because of theft, pure and simple!”

Also, the president of the Independent Petroleum Producers Group, the umbrella group for indigenous oil producers, Abdulrasaq Isa, has consistently complained that oil theft is impacting negatively on the groups production and increasing cost of doing business as huge funds are deployed to security of assets.

Isa, stated: “The key challenges now are in the areas of security and high operating costs. We look forward to the government in finding long-lasting and sustainable solutions to these challenges.”

However, there have been notable measures adopted by the Nigerian National Petroleum Company, NNPC, Limited to keep a tight rein on the menace.

Already, the NNPC, has strengthened its collaboration with the Joint Security Task Force and other stakeholders.

Chief Executive of the Company, Malam Mele Kyari, said, “the combined efforts of government security and regulatory agencies, the host community, and oil companies represented a new approach to combating oil theft and bunkering.”

In addition, kyari also said that, “the pipeline vandalism, oil theft and illegal refining activities were threatening the growth of the country’s oil and gas industry.

“The Nigerian Navy was also doing enormous work and has made several arrests and equally prevented illegal movement of oil through the vessels.”

However, the NNPC boss expressed optimism about the organization’s determination to solve the problem, emphasizing the importance of increased security on the ground and modern technology to combat the threat.

This effort received a major boost during the week when President Muhammadu Buhari mandated the Minister of State, Petroleum Resources, Mr. Timipre Sylva, the NNPC boss Mallam Mele Kyari as well as the Chief of Defence Staff, Gen. Lucky Irabor to assess the level of oil theft in the Niger Delta.

The presidents order was a direct response to public outcry against the massive stealing of Nigeria’s crude oil, which had hobbled the country’s ability to meet the quota allocated by the Organisation of Petroleum Exporting Countries (OPEC).

The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, had on Monday lamented the unprecedented rate of oil theft recorded in recent times and its debilitating effect on government revenue and accretion to reserves.

LEADERSHIP WEEKEND reported the concern of the Co-founder and former Chief Executive Officer of Seplat Energy Plc, Mr. Austin Avuru, who called for a state of emergency in the Nigerian oil and gas sector.

Avuru, revealed that up to 80 per cent of oil pumped in the country, particularly in the East, is stolen, further corroborating comments by Elumelu, who had equally bemoaned the worsening state of the industry, stressing that about 95 per cent of oil production does not get to the terminal.

Earlier, Aiteo Eastern Exploration and Production Company (AEEPCO), operators of the Nembe Creek Trunk Line (NCTL) pipeline, had threatened to exit the facility due to incessant vandalism, perennial sabotage and outright theft.

However, at the group’s first ports of call in Port Harcourt, Rivers state, Delta and Bayelsa states Sylva who described the perpetrators as criminals, said the deployment of top stakeholders by Buhari was to underscore the importance of the situation.

“We have come because of the activities of these criminals. The government and the country can no longer afford these activities and that’s why we are here. I don’t want to say much, but we are going now, the CDS, myself and the operating companies and the GMD, we are going to overfly and see for ourselves what’s happening.

“And then I can assure you that within the next few days, operations will start in earnest and we are very sure that we are going to be victorious in a few months.

“The problem of security has come to the attention of the president and Mr. President has directed myself and the CDS and the GMD to ensure that this problem is handled once and for all,” the minister said.

According to Sylva, there are three elements to the solution to the extant problem, including the communities, as in his words, “these people involved in the illegal activities are not ghosts.”

Sylva argued that since the perpetrators are from communities, the host communities need to be involved in finding a lasting solution to the menace.

“The security too must be involved because you are the law enforcement arm of government and of course we also as part of government we must be involved and then the third arm, are the operating companies.

“All the elements are complete now. We are here as government, the operating companies are here and of course we are going to the communities. So, I believe that finally, this problem will be resolved.

“We are determined to stop it because we can ill afford the continuation of the insecurity in the oil industry. So I want to let everybody know that these criminals have their days numbered.

“We are here to ensure that this problem is finally resolved and to reclaim this industry for the country because this country has lost so much from the activities of these criminals and the government and country can no longer afford these activities and that’s why we are here,” he maintained.

Kyari, on his part, stated that the government had concluded plans to move against oil bunkering, pipeline vandalism and illegal activities threatening the country’s oil sector.

Kyari noted that the government would leave no stone unturned to arrest the increasing spate of oil theft and destruction…

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