A Review of the Nigerian Energy Industry

Pipeline vandalism: Nigeria may lose $10tr capital investment

Pipeline vandalism in NigeriaKUNLE KALEJAYE 28 August 2014, Sweetcrude, Lagos – The nefarious activities of pipeline vandals may cause Nigeria to lose about $10 trillion in capital investment in its oil and gas sector between now and the next 11 years.

This loss of global investment in the oil and gas business for Nigeria from 2015 to 2025 will be the result of its inability to compete regionally, continentally and globally in the oil space as the activities of pipeline vandals and the resultant loss of huge volumes of crude as well as loss of funds to repair works on damaged facilities continue to make the contrry less attractive to existing players and potential investors.

More over, several other African countries have made entry into the oil and gas business, presenting stiff competition to Nigeria as preferred investor-destination. Also, Nigeria is ranked above Mexico, Iraq, Russia and Indonesia as the most oil theft-plagued country in the world.

These are the submissions from the 2014 annual conference of the National Association of Energy Correspondents last week in Lagos.

Managing Director of Energia, Engr. Felix Amieyeotori, who hinted of the possible loss of about $10 trillion by Nigeria within the next 11 years, stated, for instance, that his company, with three other Kwale Cluster Marginal Field operators, lose 25-30 percent of crude injection to theft daily.

“We suffer 10,000 bopd (barrels of oil per day) defered production behind pipe due to pipeline vandalism and crude theft. We lost about $200 million to crude theft in 2012 -2013,” he said.

This amount may be minimal compared to losses by bigger industry players and the mulinational oil companies, including Shell, Chevron and Agip, which have separately reported huge losses.

A recent investigation by SweetcrudeReports, for instance, showed that the eastern operations of the Shell Petroleum Development Company of Nigeria, SPDC, suffers an average of six cases of vandalism of its pipelnes per week and that vandals have resorted to setting the vandalised lines ablaze.

Indications are that the volume lost to the incidence of crude oil theft and shut-ins suffered by the company’s operations in the area now exceeds 300,000 barrels per day and continues to mount.

“On average, around 32,000 bopd were stolen from SPDC JV pipelines and other facilities, whilst the joint venture lost production of around 174,000 bopd due to shutdowns related to theft and other third-party interference,” Mr Precious Okolobo, Shell Nigeria’s Corporate Media Relations Manager said.

The Nigerian government estimated crude oil theft and associated deferred production at over 300,000 barrels of oil per day, bopd, in 2013, although industry sources said this might have been much more.

According to a study by the UK-based Chatham House, Nigeria lost between $10 and 12 billion to crude oil theft between 2009 and 2011.

The Nigerian National Petroleum Corporation, NNPC, on its part, reported last week that from the first recorded case of pipeline vandalism and rupture in 1999 within Nigeria, there have been 34,041 other cases in five major states in the country since then.



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