THE Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, has disclosed that oil theft has grown from a daily average of 103,000 barrels recorded in 2021 to 120,000 barrels in the first quarter of 2022.
Komolafe said the Federal government has, however, developed key initiatives aimed at reducing activities of crude oil theft and illegal artisanal refining to the barest level.
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The NUPRC chief made this known today in Lagos at the Lagos Chamber of Commerce and Industry (LCCI) public-private dialogue on crude oil theft and artisanal modular refineries.
He expressed concern that daily average production in 2021 stood at 1.5 million barrels, while the national production figure advised by the commission was 2.2 million barrels.
“Consequently, only 58 per cent of the technical rate was achieved in 2021 and similar performance has continued in 2022, hence the need for more concerted efforts across all quarters to stem the tide.
“Unfortunately, the amount of oil received at the terminals indicates that over nine million barrels of oil is lost to crude oil theft, amounting to a loss of $1 billion in the first quarter of 2022,” he said.
Komolafe said that huge oil theft activities had resulted in the declaration of force majeure, shortage of wealth, and a hostile and unsafe environment, and was a disincentive to investors in the Nigerian upstream sector.
He added that many operators had deliberately shut down facilities and pipelines, a situation he said had further aggravated low oil production and was impacting gas production, both for domestic utilisation and exports.
Komolafe said that in view of the development and the ongoing government’s efforts to enable the industry deliver a production target of three million barrels daily in three years, the commission has developed some key initiatives.
He explained that the initiatives were aimed at mitigating oil theft and creating an enabling regulatory environment for local refining in Nigeria.
The initiatives include a roadmap for tackling the insecurity challenges in the industry, identifying and implementing areas of collaboration between government and operators in ensuring that operators realise their full production potentials, and massive collaboration with the top civil echelon of the Nigerian security forces for a robust security for both operators and host communities.
“The commission is also promoting the implementation of modern security technology for real-time loss detection that would enable swift and more proactive responses.
“We also advocate a refinery regulation in terms of establishment of more modular refineries to curb activities of artisans from refining crude, which is outside the ambit of the law and absolutely below acceptable minimum standards of technology in the 21st century,” Komolafe said.
The president, LCCI, Michael Olawale-Cole, expressed concerns on Nigeria’s battle in recent years with dwindling revenue, security challenges, weak infrastructure, rising inflation, high cost of production, and unsustainable fuel subsidy.
Olawale-Cole said that crude oil theft had taken a worrisome dimension, spiking production costs to $32 a barrel, with losses from pipeline vandalisation and theft overwhelming the international oil companies.
He added that the development had led to several indigenous oil firms contending with rising operational expenses driven mostly by personnel, maintenance and security costs.
Olawale-Cole said that there were also concerns about the culpability of the nation’s security agencies, noting that barges of oil could not be stolen and moved on the coastal waters without the collaboration of some powerful stakeholders.
“The menace of oil theft has become a national disaster and a critical threat to our revenue base as Nigeria is losing crude oil at the level of about 91 per cent of output.
“Nigeria lost $3.2 billion to crude oil theft between January 2021 and February 2022, as revealed by the NUPRC, the LCCI Oil Producers Trade Section, and the Independent Petroleum Producers Group (IPPG).
“This menace has prevented Nigeria from meeting its crude oil output capacity,” he said.
The LCCI president reiterated the chamber’s position in favour of the removal of fuel subsidies and full deregulation of the petroleum downstream sector to attract required investments into the sector.
He said that the twin factor of fuel subsidy payments and crude oil theft had combined to deny Nigeria the gains of the high crude oil price on the international market.
“No investor wants to invest in an industry where they cannot recover even their cost of production.
“While we expect some respite from the commencement of commercial private sector refining and modular refineries, we call on the regulators to ensure a conducive business environment that supports these investments coming on stream soon,” he said.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.