By Kabir Kabo Usman
Nigeria’s aspiration to achieve a crude oil production target of two million barrels per day is hindered by the persistent menace of pipeline vandalism and crude oil theft, presenting a formidable challenge for the Nigerian National Petroleum Company Ltd (NNPC). These criminal activities not only jeopardize Nigeria’s economic prospects but also pose significant threats to national security and environmental sustainability.
Challenges of Pipeline Vandalism and Crude Oil Theft:
Chellenges are glaring and easy to see, for example Over the period from 2017 to 2021, Nigeria suffered a staggering loss of 208.639 million barrels of crude oil, valued at N4.325 trillion, due to pipeline vandalism and oil theft. These brazen acts of sabotage consistently impede Nigeria’s compliance with its OPEC quota, resulting in substantial revenue shortfalls for the government and NNPC.
in terms of Environmental Damage and Security Concerns: Pipeline vandalism and oil theft not only lead to economic losses but also cause severe environmental damage and pose security risks. Oil spills from sabotaged pipelines devastate ecosystems, harm local communities’ livelihoods, and undermine public safety. The persistence of these illicit activities threatens Nigeria’s reputation and investor confidence in its oil sector.
Impact on Infrastructure: Beyond economic and environmental consequences, pipeline vandalism leads to significant damage to oil infrastructure, requiring costly repairs and maintenance. The repeated disruptions to pipeline operations hinder the efficiency of oil production and transportation, exacerbating logistical challenges and delaying revenue generation for NNPC and the government.
Social Unrest and Conflict: Pipeline vandalism and crude oil theft often contribute to social unrest and conflicts in oil-producing regions. Competing interests among various stakeholders, including communities, militants, and criminal syndicates, escalate tensions and lead to violence. The resulting instability undermines governance, disrupts socio-economic development, and further exacerbates the cycle of poverty in affected areas, with all that, NNPC’s Efforts to Tackle Pipeline Vandalism and Oil Theft is equally praiseworthy to mention a few.
Revamping Domestic Refineries: Mallam Mele Kyari, upon his appointment as NNPC GMD in 2019, prioritized the complete revamping of Nigeria’s domestic refineries, which had been non-operational for three decades. Kyari recognized that a significant amount of resources was being wasted on importing crude oil products, and he identified the reduction of crude oil exports as a potential solution to curbing crude oil theft.
By March 2024, Kyari boasted before a Senate ad hoc committee investigating the turnaround maintenance of the refineries, stating that production at the Port Harcourt Refinery was set to commence within two weeks. Mechanical completion had been achieved in December 2023, with 450 thousand barrels of crude oil already stocked, undergoing regulatory compliance tests before restarting. Similar progress was reported for the Warri Refinery, with mechanical work completed and regulatory compliance processes underway. The Kaduna Refinery was projected to be ready by December of the same year, contributing to the overall goal of reducing the need for crude oil imports and mitigating the risk of theft associated with exports.
Single Train Approach in New Frontier Assets: In a strategic move to further combat crude oil theft, NNPC adopted a single train approach in developing new frontier assets. For instance, in September 2021, the Nigerian Petroleum Development Company (NPDC) initiated the process of seeking financial and technical service partners for the development of Oil Prospecting Licenses (OPL) 809 and 810 in the Kolmani area of the Gongola Basin. This upstream development project includes plans for a midstream refinery and power plant, aiming to eliminate the cost of evacuation and the risk of oil theft associated with traditional export routes. By integrating production, refining, and power generation in a single operation, NNPC aims to maximize efficiency and security while minimizing vulnerabilities to theft and sabotage.
Expansion of Offshore Exploration: To further strengthen Nigeria’s upstream capabilities and reduce reliance on crude oil exports, the Nigerian Upstream Petroleum Regulatory Commission announced plans to offer new bids for 12 offshore blocks. This initiative, disclosed during engagements with industry stakeholders, including the Oil Producers Trade Section (OPTS) and the Independent Petroleum Producers Group (IPPG), underscores Nigeria’s commitment to expanding its exploration and production activities. By increasing the number of offshore exploration blocks available for development, NNPC aims to attract investment, diversify its oil production portfolio, and mitigate the risk of theft associated with onshore assets.
Focus on Gas Assets and Cleaner Energy: Dr. Kabir Kabo Usman, a distinguished policy analyst and oil business consultant, emphasizes NNPC LTD’s focus on gas assets as perfectly aligned with the global call for cleaner energy and Nigeria’s efforts to curb oil theft. He underscores the importance of replicating the Kolmani model of refinery development in all regions where oil and gas are proven in commercial quantities. By expanding the presence of refineries similar to the Kolmani model, NNPC can further reduce the need for pms imports, enhance energy security, and mitigate the risk of theft associated with export activities.
The fight against pipeline vandalism and crude oil theft requires a multi-faceted approach involving domestic and international stakeholders. Collaboration among community leaders, security agencies, the judiciary, and international refineries is crucial for effectively curbing these illicit activities. As NNPC endeavors to achieve ambitious production targets, addressing pipeline vandalism and oil theft remains paramount. Only through collective action and comprehensive strategies can Nigeria safeguard its oil resources, protect its economy, and realize its full potential in the global oil market. Therefore the fight on these criminal acts goes on even at unprecedented level.
Kabir Kabo Usman PhD
23/03/24
