The Federal Government may have lost over N3.8 trillion to shortfall in the nation’s oil production due to the continued increase in theft and pipeline vandalism, estimated to have gulped 73 million barrels a year.
According to an investigative report published at the weekend, despite the rise in crude oil prices in the international market, Nigeria’s economy may not reap the benefits as the country loses about $7.3 billion a year to oil thieves and vandals.
The situation is made worse by the country’s inability to meet the Organisation of Petroleum Exporting Countries, (OPEC)’s production quota of 1.8 million barrels per day (bpd), which resulted in the Federal Government recently announcing a reduction in its export target to 1.6 million bpd, while other countries in the cartel are striving to exceed their quota.
According to the Group Managing Director, (GMD), Nigerian National Petroleum Company Ltd, (NNPC), Mele Kyari, the country loses an average of 200,000 barrels of crude per day to oil thieves, translating to 73million barrels in a year. Using an average crude oil price of $100 per barrel, Nigeria is losing over $7.3 billion in a year (or in five years – between 2016 and 2020 – an estimated $14.65 billion) considering the cost of oil per barrel during the years under review.
The amount, when converted using the official N416.25 to the US dollar exchange rate, translates to N3.038trn loss in a year. Data from the latest report by the Nigeria Extractive Industries Transparency Initiative (NEITI), showed that 272.2 million barrels of crude were lost to oil theft and other forms of criminalities in the nation’s midstream sector.
The issue of crude oil theft and sabotage has become endemic despite several initiatives and recommendations made by oil and gas experts to curb the menace.
A report released last month during a meeting on crude oil theft between the Nigerian Upstream Petroleum Regulatory Commission and Oil Producers Trade Section, as well as the Independent Petroleum Producers Group, shows that between January 2021 and February 2022, Nigeria lost $3.2bn to crude oil theft.
The report reveals that oil theft rose significantly between 2021 and 2022, with over 90% of total crude produced at the Bonny Terminal stolen in January 2022.
Meanwhile, critics have faulted these figures, saying it is an attempt to cart away the country’s crude under the guise of oil theft.