N2.6bn worth of crude oil stolen daily, says Shell


Royal Dutch Shell, which accounts for half of Nigeria oil output, yesterday said that 150,000 barrels of oil valued at N2.6bn are stolen daily. The oil firm added that criminality and corruption which the theft fosters was the greatest challenge facing oil and gas companies in Nigeria.

Speaking at the Nigeria Oil and Gas Forum in Abuja, Shell’s Director for Sub-Saharan Africa, Mr. Ian Craig, said the theft which is the failure of the Nigeria National Petroleum Corporation, NNPC, to meet its funding commitments and regulatory uncertainties constituted a major disincentive for investments.
He said Nigeria could produce four million barrels of oil per day (bpd) but that big changes would be needed for this to happen.

“We still face major challenges ... (there is) chronic underfunding of the onshore joint ventures where NNPC is the majority shareholder,” Craig told the conference.
“The greatest challenge, however, is the massive organised oil theft business and the criminality and corruption which it fosters. This drives away talent ... increases costs, reduces revenues both for investors and the government and results in major environmental impacts,” he added.

Nigeria currently produces about 2.5 million bpd of combined crude oil condensate, and this will soon increase by 180,000 bpd, Petroleum Minister Diezani Alison-Madueke said in her speech.
Craig said loss of oil to theft in Nigeria was currently in the region of around 150,000 barrels per day.

Thieves in the oil-rich Niger Delta use explosives or even just hacksaws to cut open pipelines and siphon out oil, a practice known as bunkering that hurts production and is thought to be part of a large international criminal enterprise.
Since an amnesty for militants in 2009, attacks on oil facilities have become much less frequent and less destructive, but bunkering operations remain a costly headache.
Regulatory uncertainty, meanwhile, will be cleared up only by the Petroleum Industry Bill, PIB, which aims to change everything from fiscal terms to an overhaul of the state oil company but which has been stuck in the National Assembly for years.

It shows no sign of being passed soon. President Goodluck Jonathan said in an interview last month that he expected a final version to be submitted to parliament by the end of this month, but nothing has surfaced yet.
“The challenges I have described in the onshore, shallow water and gas sectors have held back development and have unfortunately led to a reduced appetite for exploration,” Craig said.
The output rise in Angola had proven that Nigeria’s oil development is well below potential,” he said.
French energy major, Total said on Monday that production from its Nigerian Usan offshore oil project would begin next month.

“A major enhancement of deepwater oil production was achieved as a result of the arrival of the FPSO Usan into the Nigerian waters ... in a few weeks oil production will increase by about 180,000 barrels per day,” Alison-Madueke said.
Nigeria has for decades milked profits from crude exports rather than investing in local downstream infrastructure. Refining capacity has fallen in the last decade, despite several government promises and missed targets.
Most of its petrol is imported, despite the fact that its crude is amongst the sweetest and lightest in the market.
“All refineries will be working at 90 per cent of their capacity in the next two years after maintenance is completed by the original construction companies,” Alison-Madueke said. Currently all operate at below 30 per cent.
She conceded there were major problems in Nigeria’s oil industry in a question and answer session.

“We are mindful of the challenges still within the sector, mostly characterised by sabotage, financial leakages, lack of structure and other deep-rooted inefficiencies. There is undoubtedly a need for change,” she said.
Chief amongst complaints by Nigerians is the massive corruption in the sector, which siphons off billions of dollars in a country of woefully inadequate infrastructure where the majority live on less than $1 per day.
A week of protests over fuel prices put Nigerian government under more pressure than ever to make good on long-unfulfilled promises to reform its corrupt energy sector.

Alison-Madueke said she expected an investigation by the Economic and Financial Crimes Commission, EFCC, that she set up last month in the wake of the protests to deliver results soon.
“They’ve been at it for the past three to four weeks since we invited them in, and I have no doubt they will soon come out with a final report. But they work as an independent body, therefore I cannot facilitate or fast-track what they do,” she said.
Past investigations into oil industry irregularities have produced reports that went nowhere.
Meanwhile, in defiance of the official pump price of N97 per litre for Premium Motor Spirit, PMS, otherwise known as petrol, marketers have resorted to self-help as scores of them have adjusted their pump price to between N110 and N120 per litre in major towns in some parts of the North.
This is coming just as regulatory authorities keep mum over the total disregard of the subsisting fuel price regime in the country.

Investigations by National Mirror yesterday revealed that some marketers in Minna, Jos and Use, a suburb of the Federal Capital Territory, were selling PMS above the official pump price as queues in the fuel stations have assumed a more worrisome dimension.
In one of the fuel stations in Minna, Niger State, where one of the distribution vehicles re-fuelled in the early hours of yesterday, the pump price was N110 while in Jos marketers were already selling at N115 for the past two days.
Hoodlums and black marketers have cashed on the situation by taking over around the fuel stations, selling fuel at exorbitant price to customers who cannot take the patience of waiting for hours on queues.

Although Alison-Madueke had stated in one of her public comments last week that the: “current fuel scarcity will soon be over,” the situation may get worse if nothing is done to discharge more PMS before the end of the week in most of the major cities in the North as the stocks in many fuel stations may have been exhausted by then.
The anxiety is even getting to feverish level as commuters, transporters and car owners are not sure what is likely to happen in the face of NNPC’s failure to make any clarification on the ugly situation that is gradually grinding business activities to a halt in many parts of the North.


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