Twin events are coming together to help shore up Nigeria’s oil production, which fell to historical level in September, closing at 900,000bpd. First is oil theft, which the state oil company’s chief says has been considerably reduced. This is in addition to Organisation of Petroleum Exporting Countries (OPEC), the oil cartel, saying its production cuts have come to stay, which will likely shore up oil prices.
Malam Mele Kyari, Group Chief Executive Officer (GCEO), the Nigerian National Petroleum Company Limited (NNPC Ltd), who attributed reduction of oil theft to interagency cooperation, said that many more illegal pipelines used in the siphoning of oil have been discovered. He made this known on Tuesday in Abuja at the ongoing Energy and Labour Summit 2022 organised by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN). Kyari delivered the keynote address titled: Energy Transition: Positioning the Nigeria Energy Industry for the Future (Government Perspective).
“The situation of vandals’ action on our pipelines and generality of crude oil theft has reached the point that it needs all to react. The government, security and regulatory agencies, whether service or operating, are on the table today,” he said. While expressing optimism that the country will have access to more crude and revenue in the coming weeks, said the Petroleum Industry Act passage had made the industry competitive, bringing companies back and major investments decisions were being made.
Nigeria’s quota of 1.826mbpd leaves a lot of room for growth when she finally secures its oil pipelines from vandalism. Chief Timipre Sylva, Minister of State Petroleum Resources, says the Organisation of Petroleum Exporting Countries (OPEC) decision to cut two million barrels of crude oil production is a unanimous one. Sylva said this in a statement on Tuesday entitled “On OPEC+ Decision to Cut Crude Oil Production.” He said that the step was taken to stabilise the market and not for any ulterior motives.
Sylva said the decision which was taken by OPEC+ during its ministerial meeting on October 5, to voluntary adjust crude oil production downward by two million barrels per day, was unanimous. He said it was taken for the exclusive purpose of ensuring the long-term stability of the oil market. “It was purely to balance supply and demand, and forestall a degeneration of the current volatile oil market to a situation where larger production cuts will be required to balance it. This proactive decision was based on a thorough assessment of market conditions as OPEC plus has always been guided,” he said.
Nigeria’s losses from oil theft stood at 470,000bpd, amounting to US$700 million monthly, says Bala Wunti, Group General Manager, National Petroleum Investment Management Services (NAPMS). “If you’re producing 30,000 barrels a day, every month, you get 1.940m barrels. So, what it means is that you can take it to 270(000) every four days, calculate it in a month; you will have seven cargos on a million barrels, that’s seven million barrels. When you multiply seven million barrels by $100 that is $700 million lost per month, and about 150,000 barrels expected are differed; we are not producing due to security challenges.”
Mr Wunti also said the pipelines around Bonny terminal cannot function due to the activities of criminals. “The Shell Petroleum Company (SPDC) trunk line, TNP transnational pipeline cannot be operated and this has been like this since March the 3rd. Just take your calculator, 150,000, it means if you want to arrive at one million barrels per day, it means every week as a minimum, basically for one week alone, it’s four cargo and four cargo(s) is four million barrels. You can do your calculations by yourself, take whatever price you want, take this to multiply by the number of days that have been shortened since March 3rd.”
Other terminals, such as Forcados and Brass, are also beset with challenges.
Ayodelé is a Lagos-based journalist and the Content and Editorial Coordinator at Meiza. All around the megacity, I am steering diverse lifestyle magazine audiences with ingenious hacks and insights that spur fast, informed decisions in their busy lives.
