Nigerian Oil thieves and a clueless government
This report takes a critical look at Nigeria’s crude oil production and how a whopping 150,000 bpd remains the exclusive preserve of organised oil thieves while the government seems to be at a loss with strategic ways of nipping this nefarious act of economic sabotage in the bud.…
SOMETIMES in the year 2011, Shell, a major operator in Nigeria’s upstream oil sector raised an alarm over the activities of oil thieves on some of its flow lines running through the creeks of the Niger-Delta and the dent it brings to its operations and the economy in general.
In an effort for this not to be a wolf cry, this operator decides to take both Nigerian and foreign journalists on a helicopter over-fly across these danger zones.
Destination was the Cawthorne channel and environs, flight time was about 25 to 30 minutes and all through the flight journalists had the opportunity to visualize first-hand, the daylight rape on Nigeria’s economy by organized criminals whose negative activities currently costs the Nigerian state a whopping 150,000 barrels of crude oil daily.
Again, on the 6th of February, 2012, the concerned multinational conducted another Helicopter over-fly with some selected journalists out of worry from dwindling production and it confirmed thriving crude theft activities at Tora Manifold, Santa Barbara River, SEGO Manfiold, Awoba, Krakrama, Bille, Cawthorne Channel and Alakiri all in Rivers and Bayelsa states, even as some other connections were made directly to wellheads.
The situation which dealt a deep blow on its operations brought this reaction from the operator of the line “It is difficult to sustain production in the circumstance as we have to shut down when a facility trips and fix the cause before restarting.
This happened three times just between the 26th and 30th of January. We have increased surveillance of the route so we can detect crude theft activities and respond early to spills, but what is urgently needed is robust intervention at federal, state and local government levels. We need increased patrols of creeks and waterways, removal of illegal off-take points and dismantling of illegal refineries.”
The shocker in this development is that since it came to the fore that the economy of the nation is being immensely sabotaged by faceless criminals the Goodluck Jonathan led government has neither made any pronouncement or move on this gross anomaly.
Nigeria’s crude oil production is about 2.4 million barrels of oil daily, this is away from condensate which is over 400,000 barrels with potentials of an increase, and inspite of these the country is still facing infrastructural decadence and severe economic set-backs, most of which has been traced to clueless leadership that is bereft of the basic ideas required to move the economy forward. It is however sad to note that from these proceeds oil thieves are milking 150,000 barrels every single day.
At the just concluded Nigerian Oil Gas conference in Abuja, Nigeria’s largest upstream operator, Shell told the nation that if it must address the pressing issues of infrastructural development currently affecting the growth of its economy it must urgently take action against massive organised oil theft business, which has been the bane of economic development in the country.
Ian craig, Shells Executive Vice President, sub-saharan Africa who dropped the hint during a technical session at the conference told his listeners that this incidence is currently causing Nigeria about 150,000 barrels of crude oil daily.
This leaves so much to be desired especially in the light that neighbouring Ghana has advanced its oil production to about 120,000 barrels of oil daily and the West-African nation is basking in the euphoria of this capacity, making plans towards national development and here in Nigeria the government is not perturbed that well over Ghana’s oil production levels goes to criminals on a daily basis.
This development according to some of the delegates who spoke with Sweetcrude at the conference is sadly the greatest challenge facing the country economically today, even as some noted that there are also other challenges facing the sector like the non passage of the Petroleum Industry bill which is expected to address very serious issues like the tax/fiscal regime amidst other cogent issues currently affecting the sector in Nigeria.
Ian Craig had earlier on explained that a typical land-based well costs about $20 million to drill in Nigeria. But in deep water costs can be well over $100 million, and one well is of course never enough to prove a prospect, you normally need several appraisal wells to be sure that a discovery is viable.
“When you are lucky enough to have a commercial discovery, the development costs and timescales are daunting; perhaps 10 billion dollars for a large integrated oil and gas project. The execution of the project may take 5 years or so and many years beyond that before the initial outlay can be recouped.
There are also political risks. In recent years for instance we have witnessed nationalisation in Venezuela, where the government took control of various assets operated by foreign oil and service companies, and in Middle East and North Africa unrest has forced most oil companies to temporarily withdraw from several countries in the region.
In the past week we have seen South Sudan suspend all its oil production and Iran pre-empting a European ban on importing Iranian oil.
So companies like Shell are not risk averse. We acknowledge all of the above risks, and many more and we make every effort to minimize the potential impact. So before we drill in new frontiers we use every available technology and international expertise to improve our chances of success, and before we sink billions of dollars into projects that may take a decade to return the capital, we try to ensure that the necessary fiscal, legal and political structures are in place” he said.
The Oil boss averred further that Nigeria can be regarded as a mature province in some regards because fifty years of onshore oil production must surely classify the sector as mature.
“ Substantial oil reserves remain onshore but there are non technical challenges to deal with. The militancy which crippled onshore production from 2005 to 2009 has abated but staggering levels of theft and criminality prevail.”
Mr. Craig noted that despite the fact that Nigeria is referred to as a gas province with some oil, the lack of effective market mechanisms and infrastructure in both gas pipelines and the power generation and distribution network has greatly curtailed the development of Nigeria’s gas reserves for domestic use. According to him much more could be done to develop this under used resource for both export and domestic consumption.
The Shell boss stated that contrary to some views making the rounds there is no shortage of investment opportunities in Nigeria, from mature onshore to maturing shallow water to still developing deepwater or gas opportunities abound for willing investors in the country.
Has urged the federal Government to urgently consider its strategic cooperation with operators of the oil and gas sector if the growth required in the sector is to be achieved.
In a similar vein, Mark Ward, Chairman of Exxonmobil companies in Nigeria said that it is highly imperative for the federal government to strategically partner with oil operators in the upstream sub-sector if the much required economic growth is to be achieved.
According to him with Nigeria’s rich hydrocarbon it would play a key role in global energy demand between now and 2030.
According to Ward the importance of stable energy policies that support long-range thinking, encourage long-term investment and allow the oil and gas industry to maintain the required momentum therefore cannot be over-emphasized. “We have heard in sessions about the significant position that Nigeria holds in terms of oil and gas resources.
We have also heard about how the government’s aspirations to significantly grow production have not been realized in the short term. There have been many reasons brought forward ranging from militancy to lack of funding, time consuming bureaucracy, lack of local capacity, no clarity on PIB. But finding the answers to these questions is Key to determining “what’s next” for Nigeria’s Exploration and Production industry”.
Like its contemporary Shell, the Exxonmobil boss was also able to explain that the economy would never grow without strategic government policies aimed at giving a long-term solution to the highly controversial oil sector. Simply put government needs to walk the talk, and in doing that prepare for long haul policies that would among other things checkmate the nefarious activities of economic saboteurs popularly called oil thieves.
This anomaly, as recorded by the oil and gas sector in Nigeria accounts for part of the insecurity which now globally defines Nigeria.
These and other issues stare the government in the face with little being seen to be done about it and all it concerns itself with is shopping for foreign investors, and not a few industry watchers have raised doubts about this move as nobody would want to invest in an unstable or unsecured economy.
In a mono-dependent economy such as Nigeria it is a certainty that 150,000 barrels of crude oil per day is huge, and the last thing
Dr.Jo Mr. Sunmonu said: “It is difficult to sustain production in the circumstance as we have to shut down when a facility trips and fix the cause before restarting. This happened three times just between the 26th and 30th of January. We have increased surveillance of the route so we can detect crude theft activities and respond early to spills, but what is urgently needed is robust intervention at federal, state and local government levels. We need increased patrols of creeks and waterways, removal of illegal offtake points and dismantling of illegal refineries.”
The last thing Dr. Jonathan’s government wants to do is turn the other eye and play ignorance while saboteurs are smiling to the bank.
It could be imagined how many developmental programs proceeds from that amount of stolen crude could do to the nation’s extra-dilapidated infrastructure even at local government level if properly channeled, managed and supervised.