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.
Lack of Inflows, Revenue Shortage Plunge Nigeria’s Excess Crude Account By 89%
The ECB balance declined from $4.1 billion recorded in November 2014 to $472,513
Weak foreign revenue inflow amid fluctuations in the global oil market has plunged Nigeria’s Excess Crude Account (ECA) by 89% in the last eight years.
The Excess Crude Account (ECA) is an account used to save excess crude oil revenue by the Nigerian government.
The ECB balance declined from $4.1 billion recorded in November 2014 to $472,513 in the same period of 2022, according to a statement from the Ministry of Finance, Budget, and National Planning.
Economists attributed the substantial decline to the nation’s persistent depreciation in foreign revenue inflows and the struggle with crude oil production amid global uncertainty.
According to Jonathan Aremu, professor of economics at Covenant University in Ogun State, the decline was a result of constant withdrawal without replenishment.
“For you to increase the ECA, the oil price must rise above the budgeted price. If it does not, nothing goes in. Also, if what you are spending is higher than what goes in, it depletes. This is the situation,” he noted.
On Thursday, crude oil prices declined following the Group of Seven (G7) nations’ proposed plan to cap Russian oil at $65-70 a barrel.
Brent crude oil, against which Nigerian oil is priced, declined to $85 a barrel while the West Texas Intermediate (WTI) crude fell by 0.6% to $77.48 a barrel.
Despite the fact that the benchmark price for oil in the 2022 budget was $57, the price of oil today is still about $30 higher. In spite of higher oil prices, the ECA has been on a decline since early 2022, suggesting that the issue is internal.
“Nigeria’s crude production plunged below 1 million barrels per day (mbpd) for the first time since Buhari became President this year and has averaged about 1.2 mbpd most part of 2022. Therefore, it is impossible to take advantage of the Russian-Ukraine war inflated oil prices like we did during the Gulf war under former president Ibrahim Babangida,” Samed Olukoya, CEO/Founder Investors King Ltd stated.
The government needs to address internal issues, revamp refineries, reduce oil theft and diversify the economy to reduce overexposure to global oil fluctuations.
Crude Oil Opens at $85 as G7 Nations Move to Cap Russian Oil
The Group of Seven (G7) proposed to cap Russian crude oil at $65-$70 a barrel
Crude oil opened lower on Thursday, declining to a two-month low following the Group of Seven (G7) proposal to cap Russian crude oil at $65-$70 a barrel.
A greater-than-expected build in U.S. gasoline inventories and widening COVID-19 controls in China added to downward pressure.
Brent crude dipped 50 cents, or 0.6%, to $84.91 a barrel, while U.S. West Texas Intermediate (WTI) crude fell by 46 cents, or 0.6%, to $77.48 a barrel.
Both benchmarks plunged more than 3% on Wednesday on news the planned price cap on Russian oil could be above the current market level.
The G7 is looking at a cap on Russian seaborne oil at $65-$70 a barrel, according to a European official, though European Union governments have not yet agreed on a price.
A higher price cap could make it attractive for Russia to continue to sell its oil, reducing the risk of a supply shortage in global oil markets.
That range would also be higher than markets had expected, reducing the risk of global supply being disrupted, said Vivek Dhar, a commodities analyst at Commonwealth Bank in a report.
“If the EU agree to an oil price cap of $65‑$70/bbl this week, we see downside risks to our oil price forecast of $95/bbl this quarter,” Dhar said.
Oil and gas exports are forecast to account for 42% of Russia’s revenues this year at 11.7 trillion roubles ($196 billion), according to the country’s finance ministry, up from 36% or 9.1 trillion roubles ($152 billion) in 2021.
The G7, including the United States, as well as the whole of the European Union and Australia, are planning to implement the price cap on sea-borne exports of Russian oil on Dec. 5.
Nigeria Loses $2bn to Oil Theft in Eight Months — Senate Ad Hoc Committee
Oil theft across the country reported that Nigeria lost $2 billion to oil theft in eight months.
An ad hoc committee set up by the Nigerian senate to investigate the scale of oil theft across the country reported that Nigeria lost $2 billion to oil theft in eight months.
The committee which submitted its report on Tuesday noted that the period was between January to August 2022.
According to the Chairman of the Ad Hoc Committee, Senator Albert Bassey Akpan, the scale of oil theft going on in the Niger Delta region is hurting the country’s economy.
“Oil theft wrecked the country’s oil production capacity and had resulted in the loss of about $2bn this year alone,” he said.
The Akwa Ibom state-born lawmaker added that major export facilities, the Bonny and Forcados Terminals, were shut down for over seven months due to pipeline vandalism and oil theft.
Investors King earlier reported that oil theft in the Niger Delta region dropped the country’s oil production capacity below the one million mark in August 2022.
This made Nigeria relinquish its prestigious pride as Africa’s largest oil producer.
At the moment, while Angola has replaced Nigeria as Africa’s largest oil producer, Nigeria trails Angola, Libya and Algeria to the fourth position.
While making his presentation at the flow of the senate, Senator Akpan recommends that curtailing crude oil theft in Nigeria should be a collective responsibility.
“Well-meaning members of the public must be encouraged to report illegal activities and transactions in stolen crude oil that may come to their knowledge from any part of the country,” he said.
He added that Nigeria should seek the collaboration of the international community to check the “illegal letter of credit” used to fund the sale and purchase of Nigerian stolen crude.
He argued that there is no way such level of transactions could be conducted without the knowledge of the world financial system.
Additionally, he commended the efforts of the joint task force which include the army, navy and civilian security network to curb oil theft in Nigeria.
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