Due to crude oil theft, Nigeria lost a staggering $1 billion in revenue in the first quarter of 2022, endangering the economy of Africa’s top producer.
This was disclosed by Gbenga Komolafe, the head of the Nigerian Upstream Petroleum Regulatory Commission in a statement seen by Reuters.
Nigeria loses millions of barrels of crude oil each year to theft and vandalism, including the theft of crude from a network of pipelines run by large oil companies. This illustrates how lax security results in significant financial losses for the nation.
What they are saying
Only about 132 million barrels of the 141 million barrels of oil produced in the first quarter of 2022 were received at export terminals, according to Gbenga Komolafe, the chairman of NUPRC.
Komolafe said, “This indicates that over nine million barrels of oil have been lost to crude theft…this equates to a loss of government revenue of approximately $1 billion…in just one quarter,”
He added, “This trend poses an existential threat to the oil and gas sector and, by extension, to the Nigerian economy if left unchecked.”
Theft of crude oil grew from 103,000 barrels per day in 2021 to 108,000 barrels per day on average in the first quarter of 2022, according to Komolafe.
What you should know
- Nairametrics reported that Inspector-General of Police, Usman Alkali Baba has ordered tactical and intelligence commanders of the Force to deploy assets towards tackling perpetrators of economic crimes aimed at sabotaging Nigeria’s revenue-generating value chains, including crude oil vandalism.
- Nairametrics also reported earlier this year that Austin Avuru, founding MD/CEO of Seplat Energy and Executive Chairman AA Holdings warned that Nigeria’s oil production has reached an emergency critical status. He stated that some oil production wells don’t get to see 80% of production making it to the terminals due to oil theft.
- The theft resulted in the Bonny Oil & Gas Terminal, a pipeline that transports crude from the oil-rich Niger Delta to export vessels among other places, declaring a state of force majeure, which made the atmosphere unfriendly and discouraging for investors.
- Although Nigerian President Muhammadu Buhari has vowed to eliminate oil theft and has established special tribunals to address the issue, it still happens.
- Nigeria’s oil minister, Timipre Sylva, predicted increased security in the industry this week, saying that by the end of August, Nigeria would be able to meet its OPEC output limit.
