Oil
Crude oil theft would lead to collapse of oil industry – Shell
ABUJA – Nigeria’s oil and gas industry faces imminent collapse if the problem of crude oil theft and illegal oil refining are not tackled speedily and decisively, Shell Petroleum Development Company (SPDC) has warned. The company is further alarmed that it has been losing a whopping 60,000 barrels of crude daily, in the last one year.
Shell said Nigeria, which depends on the oil industry for approximately 95 percent of export earnings and 80 percent of government revenue, would not realize its ambition of increasing its production level through investment from international investors because of the threat posed by crude oil theft.
The company’s position corroborates the Nigeria Extractive Industries Transparency Initiative (NEITI) report, which indicated this week, that crude oil theft, deliberate sabotage and vandalism, resulted in the loss of over 136 million barrels, estimated at $10.9 billion, between 2009 and 2011.
The loss represents 7.7 percent of the total revenue which accrued to the federation in the audit period. It was in addition to a loss of about 10 million barrels, valued at $894 million, as a result of pipeline vandalism in downstream operations.
“The government aspires to increase oil production to four million barrels per day (bpd), grow reserves to 40 million barrels and earn as much from gas, as from oil, by 2020. But in order to do this, we must tackle oil theft,” said Shell.
Mutiu Sunmonu, managing director Shell Production Development Company and country chair of Shell companies in Nigeria, said at the 2012 Nigeria Annual International Conference and Exhibition (NAICE) of the Society for Petroleum Engineers (SPE) Tuesday.
“The impact of the activities of crude oil thieves and illegal refineries on the environment in the Niger Delta and the Nigerian economy is now a crisis situation. At some point this year, over 60,000 barrels of crude was being stolen from SPDC lines every day. The activities of illegal refineries are extremely damaging to the environment. A significant proportion of the stolen crude used in the illegal refineries is disposed of in the environment.”
Sunmonu, who was represented by Chike Onyejekwe, managing director of Shell Nigeria Exploration and Production Company (SNEPCo), observed that the scale and complexity of the problem was beyond the control of any one company. “Personally, I believe the perpetrators of these crimes need to be arrested and prosecuted. Until there is a deterrent, the industry does not stand a chance against illegal bunkering of the scale we are seeing today.”
Egbert Imomoh, president, SPE International, said the deepwater frontiers present huge opportunities, and that a large portion of the global deepwater frontiers were yet to be discovered.
He said the use of enhanced oil recovery (EOR) techniques was becoming central to meeting the world’s increasing energy demand, adding that EOR could add about 20 billion barrels per day of production in the next few years.
He Nigeria ought now to attract young talents into the oil industry. “There is no question that we must attract young talents into our industry, and we must do that now. We must sow our seeds early. We must prepare them for the future, fast.”
He stressed the need to position Nigeria to take advantage of the increasing opportunities in the global industry.
Speaking on the marginal field development programme, George Osahon, director of the Department of Petroleum Resources (DPR), said until 1996, lease administration was originally structured to ensure that all onshore and shallow water leases were held by International Oil Companies (IOCs).
The Petroleum (Amendment) Decree 1996 was enacted to award fields which were uneconomical for the IOCs but were considered good enough for indigenous operators.
The purpose was to promote indigenous participation and build capacity in the upstream, increase production capacity through acceleration of development of discovered reserves, increase the oil and gas reserves base through aggressive exploration, and create employment opportunities for Nigerians.
According to Osahon, who was represented by Samuel Obiora, deputy director, upstream division, out of the 24 marginal fields awarded in 2003 and five discretionarily awarded later, only nine have started production.
He added that the marginal field programme had not evolved as intended, and that the challenges had been adequately analysed and remedial legislation and actions were being proposed.
– BUSINESS DAY
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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