IOC Claims Nigeria Lost N2.3trn Revenue To Oil Theft In 12 Months

Nigeria lost its potential to produce and export roughly 65,700,000 barrels of oil in the past year due to problems with pipeline vandalism and subsequent oil theft.

This corresponds to a loss in oil income of around N2.3 trillion if the current exchange rate and average oil price are applied.

At the recently ended Nigerian International Energy Summit held in Abuja, the Chairman of Shell Companies in Nigeria, Dr Osagie Okubor, stated that the 180 000 barrels per day Trans Niger Pipeline had been closed for more than a year—from March 2022 to March 2023.

The total shut-in/loss from March of last year to March of this year is around 65, 700,000 barrels. Between March 2022 and March 2023, the price of Brent crude averaged roughly $83 per barrel, which means that the government might have lost up to N2.3tr to the threat.

A significant pipeline with a capacity of 180,000 barrels of crude per day to the Bonny export terminal is the TNP, a Joint Venture run by SPDC.

The TNP was closed for a year as a result of the extensive crude oil theft on the pipeline, according to Okunbor, who was speaking at the NIES.

According to Shell, the pipeline is an essential component of the infrastructure for the evacuation of gas liquids, which is necessary for maintaining domestic power generation and liquefied gas exports.

“What keeps me awake today as regards my onshore business in Shell is the fact that we cannot operate a pipeline, and that’s what is responsible for the 60 per cent capacity.

“I think today that is almost just how much gas we can supply,” he said.

“And this is because one of our key gas infrastructures — the TNP — was shut down for one year; we removed 460 illegal connections on that line.

“We just reopened that line. Today we are struggling to catch up with our first programme.”

According to Okunbor, the loss was frequently seen as having an impact on Nigeria's Organisation of Petroleum Exporting Countries oil output quota.

He emphasised that the issue was also having terrible effects on how much gas was being supplied to the Nigeria Liquefied Natural Gas.

“So, if you ask me what the number one issue has to be for the incoming administration, it has to be the security of oil and gas infrastructure.

“If you don’t fix it, then we have a huge problem on our hands,” Okunbor said.

Okunbor recommended the new administration give security of the oil infrastructure first priority.

Last October, there were rumours that the Federal Government will reactivate the pipeline.

However, it appears that negotiations with the Bodo people in Rivers State's Gokana Local Government Area have broken down.

However, according to Okunbor, Nigeria has enough written documentation and frameworks for addressing the numerous problems in the oil business.

He pointed out that although strategies to increase gas utilisation were mentioned in the decade of gas plans, execution was still difficult.

For his part, Philip Mshelbila, the managing director of Nigerian Liquefied Natural Gas Limited, noted that theft had left 40% of the capacity of well-known gas companies idle.

He continued by saying that the industry was still challenged by its lack of ability to carry out the policies and suggestions included in the many papers and regulations governing the oil sector.

The four-kilometre Afremo test line was connected illegally to the Trans Escravos pipeline last year, according to the Nigerian National Petroleum Company.