Oil Companies Owe Banks N5.93 Trillion Amid Losses, Embezzlement - CBN

Data from the Central Bank of Nigeria (CBN) shows that as of June 2022, the total amount borrowed from banks by oil companies engaged in the upstream and downstream sectors of the country's oil and gas industry was N5.93 trillion.

Operators in the upstream and services subsectors owed banks N1.65tn, compared to N4.28tn owed by operators in the downstream, natural gas, and crude oil refining subsectors.

From the $5.68 trillion in total debt in December 2021, this is an increase of N250 billion.

The Petroleum and Natural Gas Senior Staff Association of Nigeria had previously expressed concern in March about the significant losses experienced by oil and gas companies as a result of theft and vandalism.

Festus Osifo, the president of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), claimed that between October 2021 and February 2022, operators vandalised more than 90% of the crude oil they poured into the Trans National Pipeline.

He pointed out that despite the current high price of crude oil on the global market, this had prevented Nigeria from generating more revenue.

Another issue caused by vandalism, according to Osifo, is that businesses are being forced into curtailment when the assets/export pipelines are broken since they are unable to export their output, which results in production losses.

He claims that each operator in the industry suffers a monthly output loss of 10 days on average as a result of vandalism.

“Recent preliminary work showed that about 150 illegal tappings were used in siphoning crude oil from the TNP.”

He claimed that businesses in the industry were compelled to turn to financial institutions in an effort to balance the rising costs.

"The expense of operating oil and gas companies, both those in the downstream and upstream sub-sectors, is very high right now, especially due to concerns with vandalism and security," he continued.

“You will see that because of insecurity problems, many of these companies, both onshore and offshore, employ the services of heavy security personnel to safeguard their equipment. Sometimes even their staff has to be secured.

“This additional security costs a lot of money, and this is affecting their bottom line.

"On the issue of vandalism, I have observed that a lot of these firms are being harassed by their host communities, which is why they improve their CSRs and give back to these communities.”

The House of Representatives had earlier this month condemned the rising tide of oil theft in Nigeria and warned that, if it persisted, it may bring the country's economy to a halt.

In a recent statement, the House Minority Caucus expressed alarm over the widespread oil theft in Nigeria.

According to recent reports, in order to lessen the amount of oil theft and pollution brought on by bunkering activities in the area, the Federal Government awarded a pipeline surveillance contract to Government Ekpemupolo, better known as Tompolo, the former leader of the Movement for the Emancipation of the Niger Delta.