A Review of the Nigerian Energy Industry

Crude oil theft poses ‘major headache’ for firms in Nigeria – Minister

Oil theft, oil thief18 March 2014, Abuja – Theft from Nigeria’s crude oil pipelines has grown into a major problem for the country, which derives some 80% of government revenue from the oil industry, the country’s oil minister saidTuesday.

“Oil theft remains a major headache to government and companies,” Diezania Alison-Madueke told delegates at an industry event in Abuja.

Besides robbing the country of an estimated $6 billion a year in revenue, it causes pipeline shutdowns since thieves often sabotage the lines before tapping the crude.

“The Trans-Forcados, Nembe Creek, Bonny and Escravos pipelines have consistently come under vandalization, which creates significant losses. We experienced 300,000 b/d in deferred production in 2013,” the minister said.

Shell said Sunday it had halted crude oil exports at the Forcados terminal because of a leak in a supply pipeline.

With a capacity of 400,000 b/d Forcados is one of Nigeria’s key export terminals. Last month, the company shut the Nembe Creek trunkline which carries about 150,000 b/d to the Bonny export terminal, because of a leak.

Oil companies including Shell, Chevron, Total and ExxonMobil, which pump about 90% of Nigeria’s crude, have repeatedly called on the government to do more to stop the unprecedented level of theft from the pipelines.

The minister said Nigerian authorities are clamping down on the illegal trade.

“The federal government has taken measures to tackle the scourge and we are hopeful that with these measures, we can reach a production target of 3 million b/d capacity next year,” she said.

The head of state-owned Nigerian National Petroleum Corporation (NNPC), Andrew Yakubu said the government had set aside Naira 15 billion ($94 million) this year to equip security agencies in the fight against crude theft.

“It has become imperative in view of the enormity of the shut-ins as a result of vandalism on the pipelines connected to three major export terminals namely Forcados, Brass and Bonny to maintain and protect these lines,” Yakubu told delegates.

The Navy, in collaboration with security agencies, have arrested and prosecuted many oil thieves in the past year but stakeholders still say more needs to be done by the government before the problem can be brought under control.

The repeated closures of pipelines have also affected gas supply through the West African Gas Pipeline (WAGP) project supplying gas from Nigeria’s Escravos region to Benin, Togo and Ghana, NNPC’s head of gas and power, David Ige said.

“The challenge there is that of supply. Most of the pipelines and other production facilities have been vandalized,” Ige said on the sidelines of the conference.

“What affects Nigeria now in terms of gas supply problems to the power plants also applies to supply to the WAGP,” Ige said.

Ghana receives about 120 million cubic feet of gas from Nigeria through the 656 km pipeline but is currently experiencing acute power shortages because of gas shortages at its electricity plants.

Ghana’s own gas input into power plants is not expected until later this year, when the Ghana Gas Company will have laid the pipelines to carry gas onshore from the Tullow-operated Jubilee oil field.

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