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IOCs fear collapse as FG says N1.36tn crude stolen in 14 months

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Nigeria’s crude oil has been stolen to the tune of $3.27bn between January 2021 and February 2022, according to the Federal Government. This amounts to N1.361tn at the official exchange rate of N416.25 to the dollar. International oil companies said that the huge amount of oil theft going on across Nigeria is a threat to their existence and the Nigerian economy.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), in collaboration with the Oil Producers Trade Section (OPTS) and the Independent Petroleum Producers Group (IPPG), convened a meeting of stakeholders to discuss crude oil theft. NUPRC made a presentation at the event stating that oil theft had sharply risen between 2021 and 2022. An official from the IPPG said that about 91% of total crude produced at the Bonny Terminal was stolen in January 2022.

Crude oil theft has become a prevalent issue in Nigeria, and the NUPRC has outlined the main reasons why this is the case. Inadequate security, lack of community engagement, economic difficulties, and poor surveillance are among the primary reasons that facilitate crude oil theft. Furthermore, compromised stakeholders and exposed facilities make it easier for thieves to steal oil undetected.

The massive oil theft across the country was described as an organized activity by the Chairman of the Oil Producers Trade Section (OPTS), Rick Kennedy, who is also the managing director of chevron Nigeria limited and represented IOCs at the meeting.

The IPPG has spoken out about the criminal operations taking place in host communities. The group’s Chairman, Abdulrazaq Isa, said that it’s important to stop these activities before they get worse. The NUPRC released a report stating that oil theft has led to a loss of government revenue due to the negative impact the oil theft has had on the revenue of operators. The NUPRC also said that there had been a loss of value arising from increasing costs due to frequent repairs of damaged facilities.

Crude oil theft has affected output in crude oil production and this has gone on to negatively affect Nigeria’s economy. Nigeria’s OPEC quota is pegged at 1.8 million barrels per day but in the last few years, the country has struggled between 1.3 and 1.4 million bpd. The Minister of State for Petroleum Resources, Chief Timipre Sylva, attributed this downscale to lack of investments in the oil and gas sector. However, the enormous amount of crude oil theft is a factor that should not be overlooked and it is possible that prices of AGO, PMS and DPK may be affected as a result of crude oil theft.

Source:  The Punch NG.

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