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Oil Theft: Nigeria Lost $3.5 Billion In 2021 – Report

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Oil theft, especially in a developing country like Nigeria is a major factor in the country’s declining economic growth.

Experts revealed that in 2021 alone, Nigeria’s oil revenue loss was  $3.5 billion, amounting to about 10 percent of the country’s foreign reserves. The year ended with a report that Nigeria, the largest oil and gas producer in Africa, experienced a deficit of almost 200 million barrels of crude in the first 11 months of the year, mainly due to oil theft.

In November 2015, thieves stole $250 million worth of crude from just one pipeline, around half a billion liters. With this incessant oil theft crime, it is almost impossible for to meet its OPEC quota of 1.68 million bpd of crude for January 2022.

A report by OilPrice revealed that cartels in the Niger Delta region generally steal crude by ‘hot tapping’ – attaching a secondary pipeline to a mainline, or ‘cold tapping’ – blowing up a pipeline and replacing it with their own. They then export this oil illegally to countries such as Ghana, Cameroon, Cote d’Ivoire, and South Africa while some even reach the international market, with exporters bribing officials that control the transportation of the product to turn a blind eye.

Investors King also gathered that this menace is gradually driving international investors away, as oil majors are now taking their money to more reliable markets with better monitoring and surveillance practices.

Remarkable examples are Shell, ExxonMobil, Chevron, and Total who have all already moved their operations to other regions, despite Nigeria being Africa’s biggest producer.

In view of this, there is a need to invest more in technologies that could monitor oil.

A report on ‘5 Emerging Technologies That Will Make Natural Gas Exploration & Production Safer In 2020’, noted that the oil and gas industry has begun to benefit from the development of more advanced technology.

With the development of this technology, oil and gas companies have been able to use sources of technology that are smarter and which are also more efficient.

According to the report, these oil and gas software solutions include artificial intelligence, big data analytics, electric monitoring, and drone technology.

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Crude Oil

NNPC Limited Discovered 395 Illegal Refineries

The Nigerian National Petroleum Company Limited (NNPCL) has discovered 395 illegal oil refineries among other illegal assets.

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Oil Declines Below 60USD A Barrel

The Nigerian National Petroleum Company Limited (NNPCL) has discovered 395 illegal oil refineries among other illegal assets.

At the Senate briefing in Abuja on Tuesday, the Chairman of NNPCL discloses that the company has discovered and shut down 395 illegal oil refineries. He also noted that 273 wood boats were taken down while 374 illegal oil reservoirs were destroyed. 

Mele Kyari noted that serious actions are being undertaken to curtail oil theft in the Niger Delta region.

“We have deactivated 395 illegal refineries; we have taken down 273 wooden boats, we have destroyed 374 illegal reservoirs, we destroyed 1,561 metal tanks.” Mele Kyari said.

He added, “We have seized over 49 trucks and burnt them down; we have discovered illegal oil pits of 898 so far, and, 219 cooking sites have been taken down.”

Addressing the senate committee, Mele Kyari noted a criminal enterprise of such magnitude can cripple the oil revenue. 

The NNPC chairman also disclosed that they had caught wind of an illegal connection of four kilometres route into the sea running from its major Forcados line, which he estimates has been around for 9 years.

Investors King had earlier reported in September that for the first time in five years, Nigeria lost its crown as Africa’s largest oil producer to Angola.

According to the Managing Director and Country Chair for Shell, Mr Osagie Okunbor, oil theft was one of the reasons why Nigeria could not meet its OPEC quota of 1.8 million barrels a day.

Similarly, the head of the Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe said in a statement that about 141 million barrels of oil were produced in the first quarter of 2022, but only about 132 million barrels of oil were received at export terminals. 

Meanwhile, Kyari has proposed capital punishment for oil thieves and pipeline vandals. He noted that oil thieves are the country’s enemy and they should be treated as such. 

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Crude Oil: Nigerian Government Set to Reopen 180,000bpd Trans Niger Pipeline

The Federal Government is set to re-open the Trans Niger Pipeline which has a production capacity of 180,000 barrels of crude oil per day. 

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Six months after the Trans Niger Pipeline (TNP) was shut down due to vandalism and oil theft, the Federal Government is set to re-open the pipeline which has a production capacity of 180,000 barrels of crude oil per day. 

Investors King learnt that Trans Niger Pipeline (TNP) serves as part of Nigeria’s gas liquids evacuation infrastructure, which is vital for domestic power generation and the export of liquefied gas.

According to a statement released by the General Manager of National Petroleum Investment Management Services (NAPIMS), Mr Bala Bunti on his official Twitter handle, the Trans Niger Pipeline will enhance Nigeria’s oil production capacity. 

The General Manager noted that NAPIMS has been in talks with the host communities along the pipeline to bolster security for the crucial oil infrastructure. 

“The NAPIMS leadership delegation under the  General Manager of Joint Venture operations, Engr Zakariya Budawara, had spent the last one week with the Bodo community in Gokana LGA of Rivers State where the pipeline is situated and runs through”. He said. 

Bunti further stated that the people of Bodo have pledged their commitment to ensure the security of the oil infrastructure in exchange for improved quality of life, job creation and capacity building. 

It will be recalled that the Trans Niger Pipeline was shut down by Shell Petroleum Development Company because of vandalization and oil theft. It has been moribund ever since because no crude has flown through it.

Investors King had earlier reported that Nigeria’s oil production has been characterised by theft, vandalism and sabotage which has led to a massive drop in production. 

Some major oil companies had announced a cease of operation because of vandalism and insecurity. 

In July 2022, the Managing Director and Country Chair for Shell Petroleum Development Company of Nigeria Limited, Osagie Okunbor said oil theft was one of the reasons that Nigeria could not meet its OPEC quota of 1.8 million barrels a day.

Similarly, in August 2022, for the first time in five years, Nigeria lost its crown as Africa’s largest oil producer to Angola.

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Fear of Global Recession Weighs on Crude Oil Prices

Global uncertainty concerning recession continued to dictate the price of crude oil and other global commodities

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Global uncertainty concerning recession continued to dictate the price of commodities, especially crude oil which has now declined for a second trading session on Monday.

Brent crude oil, against which Nigerian oil is priced, slipped by $1, or 1.2%, to $85.15 a barrel at 11:36 a.m Nigerian time on Tuesday. Brent crude dipped as low as $84.51, the lowest since Jan. 14.

U.S. West Texas Intermediate (WTI) crude shed 87 cents, or 1.1%, to $77.87 a barrel. WTI dropped as low as $77.21, the lowest since Jan. 6.

Brent and WTI slumped by about 5% on Friday.

The dollar index that measures the greenback against a basket of major currencies climbed to a 20-year high on Monday.

A stronger dollar tends to curtail demand for dollar-denominated oil.

Meanwhile, interest rate increases imposed by central banks in numerous oil-consuming countries to fight surging inflation has raised fears of an economic slowdown and accompanying slump in oil demand.

“A backdrop of global monetary policy tightening by the key central banks to quell elevated inflation, and a splendid run-up in the greenback towards more than two-decade highs, has raised concerns about an economic slowdown and is acting as a key headwind for crude prices,” said Sugandha Sachdeva at Religare Broking.

Disruptions in the oil market from the Russia-Ukraine war, with European Union sanctions banning Russian crude set to start in December, has lent some support to prices.

Attention is turning to what the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+, will do when they meet on Oct. 5, having agreed at their previous meeting to cut output modestly.

However, OPEC+ is producing well below its targeted output, meaning that a further cut may not have much impact on supply.

Data last week showed OPEC+ missed its target by 3.58 million barrels per day in August, a bigger shortfall than in July.

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