Mutiu-SunmonuNigeria’s aspiration to increase crude oil production to four million barrels per day (mbpd) and grow the reserves to 40 billion barrels by 2020 may be hindered as the activities of oil thieves have continued to retard the country’s oil output.

Managing Director/Country Chair of Shell companies in Nigeria, Mr. Mutiu Sunmonu, disclosed this during a presentation at the 38th Society of Petroleum Engineers’ annual conference and exhibition, which kicked off in Lagos Tuesday.

Sumonu said  currently, Nigeria depended on the oil industry for approximately 95 per cent of export earning and 80 per cent of government revenue and hoped to earn as much revenue from gas as oil by 2020. He expressed fears that the set ambitious targets might not be accomplished due to heightened activities of oil thieves in the country.

The Shell MD noted that the impacts of activities of crude oil thieves were extremely damaging to the environment and the economy, stating that the perpetrators of the crimes “need to be arrested and prosecuted” to serve as a deterrent to others.

He insisted that oil thieft, which had assumed an alarming dimension, must be tackled for Nigeria to be able to achieve her set targets and objectives.

Sunmonu said: “The government aspires to increase oil production to four mbpd, grow reserves to 40 billion barrels and earn as much revenue from gas as oil by 2020. But in order to do this, we must tackle oil theft. The impact of the activities of crude oil thieves and illegal refineries on the environment in the Niger Delta and the Nigerian economy is now a crisis situation. At some point this year, over 60,000 barrels of crude were being stolen from the Shell Petroleum Development and Production Company (SPDC) lines every day.”

The Shell country chair noted that the complexity of the problem had gone beyond the control of one company, positing that the country has to adopt genuine ways that can help stop the problem.

“Personally, I believe the perpetrators of these crimes need to be arrested and prosecuted. Until there is a deterrent, the industry does not stand a chance against illegal bunkering of the scale we are see today,” the Shell chief argued.

The activities oil thieves, which hamper the amount of barrels  of oil available for export and insufficient investments in the upstream sector of the Nigerian oil and gas industry have remained major impediment to economic growth.

In 2000, the federal government had set ambitious targets to grow oil production and reserves to  four mbpd and 40 billion barrels respectively by 2010, but the target were not met due to illegal oil activities in the oil-rich Niger Delta, which reduce oil production to only about  1.3mbpd in 2009.

The Nigeria Extractive Industries Transparency Initiative (NEITI) on Monday raised the alarm on the effects of oil theft on the Nigerian economy, saying the nation lost over 136 million barrels of crude oil estimated at $10.9 billion through pilfering and sabotage from 2009 to 2011.

The organisation, which reeled out the figures from its 2009 to 2011 audit report of operations in the Nigeria’s oil and gas industry, which it presented in Abuja, said in addition to the total amount of products and revenue lost to crude oil theft by the country in the upstream sector, about 10 million barrels of products, valued at $894 million, were also lost to pipeline vandalism in the downstream sector within the period under consideration.

It stated that the figure of losses in crude oil theft in the country represented about 7.7 per cent of the total revenue accrued to the federation within the period.

Chairman of the National Stakeholder Working Group (NSWG) of NEITI, Mr. Ledum Mitee, who made the presentation, stated that the document also made salient findings on reasons for the decline in government crude oil production, crude lifting and revenues accruable to the federation.

One of such reasons identified in the report for the decline in crude oil production is the issue of inadequate funding of Joint Venture (JV) operations.

According to the report, over 136 million barrels of oil, which are estimated at $10.9 billion, were either stolen or sabotaged within the period under review.

Giving a breakdown of crude oil production figures, Mitee said: “Nigeria recorded a total crude oil production of over 2.5 billion barrels, an increase of 4.8 per cent over 2006-2008 period.  This is made up of 780.9 million barrels in 2009.

“This figure rose to 894.5 million barrels in 2010 and slightly declined to 866.2 million barrels in 2011.  From this production, the federation earned a total revenue of $143.5 billion from equity crude sales, royalty, signature bonuses and taxes.”

“The report also disclosed that Nigeria made total subsidy payments of N3 trillion to importers of refined petroleum products. This is made up of N1.4 trillion fuel subsidy claims by the Nigerian National Petroleum Corporation (NNPC) for the period 2009-2011 and a total of N1.60 trillion paid to other marketers during the same period.”


Information from This Day was used in this report.