Oil Theft: Nigeria Lost $1.35 Billion in the First Half of 2019: Obaseki

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SWITZERLAND, SEPTEMBER 20 – Edo state governor, Godwin Obaseki, on Thursday said the Nigerian National Petroleum Corporation (NNPC) reported that the 22.6 million barrels of crude oil valued at approximately $1.35 billion was lost during the first half of this year.

Obaseki disclosed this while speaking with journalists after the National Economic Council (NEC) meeting on the report of a 13-member adhoc-committee he chaired to address the impact of vandalization, oil theft, and illegal bunkering on oil production.

“The adhoc committee discovered that there were huge losses. In fact, the NNPC reported to the committee that the 22.6 million barrels of crude oil valued at approximately $1.35 billion was lost during the first half of this year. And if this situation is not contained in two years, we would have lost in excess of $2.7 billion.

The losses that were recorded in the first half of the year were broken down as follows: “The Nembe creek trunk-line lost 9.2 million barrel, the Trans-Niger pipeline lost 8.6 million barrel, the Trans-Focadoes Pipeline lost 3.9 million barrel, Trans-Escravos pipeline, we lost 877,000 barrel,” he said on his report to the NEC.

He said the adhoc-committee reported that the governance structure of the pipeline was in a situation whereby no one was held accountable whenever there were breaches and when such losses occurred.

In a recent article on Today’s Echo, guest columnist and oil analyst, Epa Stevens analysed how the indigenous oil companies in Nigeria are bearing the brunt of damage and loss resulting from oil theft.

Apart from the hundreds of lives that have been lost in fatal accidents from bunkering activities in recent years in Africa’s largest oil-producing country, companies have and are still counting huge losses and so is the country.

According to a report published mid-year by a non-government organisation, Nigeria Natural Resource Charter (NNRC) , Nigeria loses between a whopping $7bn and $12bn annually on crude oil theft. The group attributed the imprecision of the fact to a lack of effective measurement in the sector. In 2015, Vice President of Nigeria, Prof. Yemi Osinbajo alleged that Nigeria loses 400,000bpd of crude oil which amounts o N4.8bn daily. To put in proper context, the figures attributed to daily oil theft in Nigeria is greater than the production capacity of over 60 oil-producing countries.

“Unfortunately, the main causalities of these nefarious acts are indigenous oil companies. Nigerian oil exploration companies (NOC) have their assets constantly sabotaged but owing to an array of reasons, are ill-disposed to announcing force majeures, unlike their foreign counterparts. These patriotic firms are endlessly hindered from fulfilling their financial obligations to investors due to these detestable acts,” Stevens wrote

“In accordance with their utmost patriotism and efforts at making significant contributions to the national treasury, NOCs will rather keep up production following facility sabotage rather than halting operations. In addition, the overwhelming angst of creating a perception of incompetence amongst industry regulators and governmental stakeholders contrive to dissuade these companies from frequently ceasing production. NOCs are generally disinclined to constant cessation of production; however, they resort to when the matters deteriorate beyond their control, Stevens said 

During his address to the press, Obaseki said his committee also discovered that the slow and inadequate prosecution of thieves despite numerous arrests and seizures had continued to encourage the menace. He said the absence of petroleum products in filling stations in most of the oil producing communities around the Niger Delta made them resort to illegal bunkering and illegal refineries.

The Edo governor said the committee recommended among others that there should be special courts to try offenders and also have a special legal task force to coordinate the prosecution of arrested offenders as well as trained special judges to handle cases of oil theft. He said the committee also advised that NNPC should be encouraged to engage with the National Intelligence Agency (NIA) to identify the markets for stolen petroleum products across the continent.

The governors of the oil producing states, he added, were tasked to set up actions to develop the communities that were most prone and implement programmes that would make life easier for the people.

The adhoc committee also made the recommendations:

“That there is need to restructure the maintenance and ownership of oil pipelines as a way of tackling the perpetrators of crude and other products.

“That they should emphasis creating employment opportunities for young people and youths in the region.

“That the proposed funding arrangement to be jointly funded by the federal, states and the oil companies to ensure the communities through which these pipeline traverse get some benefits to encourage them to protect these lines.”

The council, however, resolved “that recommendations should be presented to the president who is also the minister of petroleum for the final decision for implementation.

“The chairman of council also asked the NNPC to make a presentation to council on the state of PMS and other products which are smuggled across the borders,” he added.

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