The Nigerian National Petroleum Company Limited (NNPCL) said it documented 148 crude oil theft incidents between September 2 and 8, 2023.
NNPCL disclosed this through its official X, formerly Twitter handle, on Tuesday.
The company said within the period under review, the theft incidents identified include the discovery of 78 illegal refineries, 14 AIS infractions involving vessels, eight instances of illegal connections, 34 arrests related to wooden boats, eight vehicle-related arrests, the detection of 4 oil spills, one vessel arrest, and one incident of pipeline vandalism.
It added that security agents apprehended the MV Ofuoma at Abuloma Jetty in Rivers State.
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Consequently, a vessel was found to be transporting 57,000 litres of illegally refined diesel.
The incident occurred in the Deep Blue Sea, 48 in the Western region, 31 in the Central part, and 55 in the Eastern region within the oil-producing areas of the Niger Delta, including Delta, Rivers and Imo states.
Meanwhile, At a time when oil producers are flush with cash, Nigerians are going through tough economic conditions, validating calls for deep scrutiny of its national oil company, which has failed to turn the country’s oil and gas resources into maximum value for its people.
President Bola Tinubu, at his inauguration on May 29, said monetary policy needed a thorough housecleaning, but an analysis of the results of other national oil companies in comparison with the Nigerian National Petroleum Company Limited (NNPCL) indicate that this ‘housecleaning’ should not end at the Central Bank of Nigeria.
Last year, Saudi Aramco declared a profit of $160 billion, the largest ever recorded by a publicly traded firm, while the NNPCL couldn’t even remit enough of the proceeds of oil sales to fund the government’s budget.
Nigeria is Africa’s biggest oil producer with reserves standing at 37 billion barrels but produced an average of 1.5 million barrels daily last year. In contrast, Saudi Arabia, with 258 billion barrels of oil in reserve, pumped over 11.5 million barrels daily on average in 2022.
Nigeria’s African peers, Angola and Algeria, with only 9 billion and 12 billion barrels in reserves respectively, are trailing with average production of 1.1 million barrels daily. At Nigeria’s current production rate, its reserves could last for about 55 years, while Saudi Arabia has about 70 years to exhaust reserves that are five times Nigeria’s.
This means that Nigeria is not extracting enough value from its oil at a time when revenues are badly needed to shore up declining revenue and prop up a bruised currency. In the second quarter of this year, Saudi Aramco paid cash dividends worth $29.38 billion, with most of it going to the government. NNPCL’s books were bogged down by subsidies.
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Oil mess
“The oil industry has been in a mess, with the Petroleum Industry Act (PIA) being the only bright spot in the last few years. From the oil subsidy to non-functional refineries, to oil theft and many others, the sector has not fulfilled its potential,” said Adewale-Smart Oyerinde, director-general of the Nigeria Employers’ Consultative Association.
The NNPCL, as the country’s oil firm, is at the centre of the chaos. Entrusted with 445,000 barrels of the country’s share of oil output from various contracts with local and international oil partners, the company has over the years turned to swapping crude for refined products because it could not maintain its refineries.
When the company began the opaque oil swaps in 2010, its refineries were working at only around 20 percent of capacity. The next year, banks unwilling to finance more open account imports that were at a deficit of over $3 billion forced the government to start granting waivers to marketers, ushering in the era of fraudulent petrol subsidies.
Refinery mismanagement
In the eight years of President Muhammadu Buhari, Nigeria burnt over N11 trillion on subsidies, according to government data, enough to build and equip another refinery. Though the NNPCL claimed it has spent billions of naira refurbishing its decrepit refineries, they produce nothing and record billions of naira in personnel payment.
The government has said the Port Harcourt refineries would start producing in December; even if it happens, inadequate crude output poses a threat. Already, NNPCL has pledged 67 percent of its share of oil production in the Dangote Refinery, which could challenge other local refineries. Unless production gets to 2 million barrels daily, Nigeria will continue to struggle.
Business operating models
Also requiring cleanup is NNPCL’s operating models. It uses Joint Venture Agreements with local and international oil companies to produce in onshore and shallow water oil wells. It owns 60 percent of benefits in these agreements but often fails to contribute its share of costs, leading to what is known as cash call arrears in the industry.
Most of these fields are troubled by sabotage and local community issues, forcing its multinational partners to opt-out. Under Nigerian law, they are required to decommission these fields – essentially leaving them the way they met them environmentally – but the costs are enormous. So they found a creative solution by selling their stake to local oil companies.
