Oil & Energy

Crude Theft, A Rape On Nigeria’s Economy

Published

13 years ago

October 29, 2012

It is mostly referred to as oil bunkering while at other times the adjective “illegal” is added to make it explicit. But what aptly describes this act is “Theft” though still on a mild note considering how dastardly the act is.

Crude oil theft in Nigeria has been on the increase as it is estimated to have caused the country to lose about $7 billion (N1.13 trillion) annually. An average of about 150,000 barrels of crude oil per day is said to be stolen through pipelines hacking at different locations and varying sizes of ships are used to convey it to international market and sold there at a rather cheaper rate.

Journalists were earlier this year taken on a helicopter overfly across the Tora Mainfold, Santa Barbara River, SEGO Bille, Cawthorne Channel and Alakiri all in Rivers and Bayelsa States to confirm the thriving crude oil theft activities taking place at these locations.

“It is difficult to sustain production in the circumstances as we to have to shut down when a facility trips and fix the cause before restart. This happened three times just between the 26th and 30th of January”, an operator of the line explained to newsmen during the overfly.

Buttressing the number of barrels lost to these organised criminals, Shell’s Executive Vice President, Sub-Saharan Africa, Ian Craig told his audience during a technical session at the last Nigerian Oil and Gas Conference (NOG) that this incidence is at present costing Nigeria about 150,000 barrels of crude oil daily. This calls for concern as the neighbouring Ghana with its 120,000 barrels daily per day is making robust plans towards national development with enthusiasm while Nigeria is losing well over 120,000 barrels to oil thieves and no drastic action is taken.

In the same vein, Mrs Diezani Allison-Madueke, the Minister of Petroleum Resources, had at a stakeholders’ meeting in Lagos raised an alarm saying about $5 billion (N810 billion) was spent in the last one year on pipeline repairs culminating to about $12 billion (N1.9 trillion) lost to oil thieves. A whooping amount such as this would have gone along way to address the pressing infrastructural development challenges that are affecting the growth of the economy if the menace is given the required attention.

It was reported recently that over 200 vessels were transacting illegal business on our territorial waters.

According to a top security official the report said these 200 vessels engaged in oil bunkering, illegal fishing, piracy and sea robbery among other vices.

And of course this nefarious activities are perpetrated by some unscrupulous Nigerians in connivance with some foreigners who infiltrate our territorial water ways.

In this colossal loss, the worst hit among the multinationals operating in the country is Shell, the nation’s largest upstream operator. The firm’s footprints traverse all parts of the Niger Delta region being the first oil major to begin exploration and exploitation of crude in the region.

Addressing media Executives in Port Harcourt Shell’s manager, Government & Community Relations, Fufeyin Funkakpo explained that the firm’s operations were divided into two regions; East and West using a river in the middle to dissect the operational regions.

According to Funkakpo the first is the Trans Niger Pipeline (TNP) which begins from Bonny Island cutting across Rumuekpe, Bayelsa, Egbema, Ebubu to Ogoni areas to Bomu and back to Bonny like a loop.

The second, he explained further is the Nembe Creek Coastal Trunkline (NCTL) that connects the flow stations in the Nembe areas through the famous Cawthorne Channel and ends in Bonny. The crude oil that accounts for 95 per cent of foreign earning which sustains 80 per cent of the national budget is mostly carried by the two pipelines.

These pipelines are regarded as the nation’s economic arteries as they help Nigeria to generate a GDP of $415 billion positioning it as the world’s 31st largest economy.

The nation’s foreign reserves which grew to $36 billion in the past year is attributed to these pipelines. This two livewires of the nation’s economy are the ones that are constantly under the attacks of oil thieves and whenever this rape was brought before the public domain government seems to turn deaf ear to it.

It is gathered that it has taken numerous steps to save these economic livewires of the country including the decision of the federal government to set up the JTF to the firm’s mulling the idea of technical solutions through pipeline alerts.

This, however, seems not to have yielded the desired fruits, as the Anglo-Datuch group, said last week that it may not meet the contractual obligations on certain exports from Nigeria because of theft and damage to key pipelines in the Niger Delta region.

Shell’s Nigerian joint venture (SPDCJV) declared force majeure on Bonny and forecados according to a statement by the company.

“Bonny loadings are affected as a result of production deferment caused by the fire incident on bunkering ship on the Bomu – Bonny Trunkline and production deferment from a third party producer because of flooding”, the statement said.

The firm noted that export from forcados were affected by damage caused by suspected bunkering on the trans forcados pipeline and the Brass creek trunkline.

Beside illegal bunkering, there is the official theft where it is alleged that Expert clearance Permit are fabricated.

According to a report, crude oil worth $1.6 billion with fabricated Export Clearance Permit was reported to be allegedly exported by the Nigeria National Petroleum Company (NNPC).

A letter to the President which was attributed to Dr. Olusegun Aganga said a forged crude oil and gas Export Clearance Permit, No: CO/28/Vol.V111/09 that was purportedly issued by the Federal Ministry of trade and Investment to NNPC for shipment of 24 million barrels of crude oil and gas in the third quarter (July to September) 2012 was discovered.

The Minister explained that the matter was officially reported to the office of the Economic and Financial crimes commission (EFCC) for investigation and it was revealed during investigation that one of the permits was forged as it was not issued from his office and did not bear the security features that were built into the original permit forms.

Although, the management of NNPC dissociated itself from the allegation and described it as false and baseless.

NNPC said in a statement signed by the acting Group General Manager Public Affairs of the Corporation, Mr. Fidel Pepple, that all crude oil and gas exports by it follow a rigid and established guideline.

“We have always and continued to follow existing requirements for exporting crude oil and gas from the country. The process is complex and involves the Ministry of trade and Investment, the Ministry of Petroleum Resources, the DPR, and the Nigerian Customs Service”, Pepple noted.

Also worrisome is the high level of frauds going on in the oil and gas industry.

A recent report by the Petroleum Revenue Special Task Force headed by Nuhu Ribadu revealed that Nigeria has lost out on tens of billions of dollars in oil and gas revenues over the last decades from cut price deals struck between multi-national oil companies and government officials.

The committee which was set up by the Minister of Petroleum Resources, Mrs Diezani Allison-Madueke in a confidential 146 – page report provided new revelation on the long history of corruption in the industry and highlighted that ; “Nigeria loses out on $29 bn on cut-price gas deals; state-oil company sells itself cheap oil and gas; oil ministers hand out discretionary oil licences; hundreds of millions in missing bonuses, royalties; traders buy crude oil without formal contracts.”

The report concluded that oil majors, Shell, Total and Eni made bumper profits from cut-price gas, while Nigerian oil Ministers handed out licences at their own discretion. This, while not illegal, did not follow best practice of using open bids.

Hundreds of millions of dollars in signature bonuses on those deals were also missing, the report said.

Oil & Energy

Reps Launches Probe Into N200bn CBN Loan To DISCOs

Published

15 hours ago

May 12, 2025

The Tide

The House of Representatives has launched an investigation into the disbursement and utilisation of the N200billion Central Bank of Nigeria (CBN) loan allocated for the National Mass Metering Programme (NMMP) to Electricity Distribution Companies (DISCOs).
Chairman, House Committee on Public Assets, Rep. Uchenna Okonkwo, disclosed this in a statement in Abuja.
He confirmed that a 19-member sub-committee had been inaugurated to probe the matter thoroughly.
Okonkwo recalled that the NMMP, initiated in 2020, was designed to provide free electricity meters to Nigerian consumers through the Licensed Electricity Distribution Companies (DISCOs).
He said the programme was a joint initiative of the CBN, the Nigerian Electricity Regulatory Commission (NERC), and other stakeholders in the Nigerian Electricity Supply Industry (NESI), aimed at eliminating estimated billing, improve transparency in energy usage, and enhance customer satisfaction.
Speaking on the launch of the NMMP, the Rep said the programme was to be implemented in three phases to ensure the reduction of collection losses and improve market remittances in the industry.
“Under the pilot phase of the programme’s implementation, CBN commenced with the sum of N59.280 billion for procurement and installation of one million meters in 2020 at an interest rate of 9 per cent after a two year moratorium.
“Preliminary research on the NMMP has shown that instead of the pronounced amount of N59.280 billion naira for the phase 0, what was released was N55.4 billion for procurement and installation of 962,832 meters instead of one million meters pronounced by CBN”, he noted.
Okonkwo stated futher that concerns have been raised regarding repayment, with the committee noting discrepancies in the repayment of the funds by the DISCOs.
According to Okonkwo, “Research has also shown that the eleven Electricity Distribution Companies who received the loan have paid back to CBN as refund for the N54.4 billion they received in 2020 without mentioning the 9 per cent interest on the loan.”
The lawmaker, however, said the subsequent phases of the programme, which were expected to significantly expand metering across the country, have stalled, explaining that Phase 1, which was to be funded by the CBN and Deposit Money Banks (DMBs) for 1.5 million meters, and Phase 2, expected to be financed by the World Bank for four million meters, are yet to take off.
He said the House, exercising its constitutional powers under Sections 88(1) and (2) of the 1999 Constitution, resolved to investigate the matter with a view to safeguarding public interest.
According to him, the sub-committee is expected to scrutinise all aspects of the NMMP funding, from disbursement and meter procurement to distribution and repayment mechanisms.
The 19-member committee comprises Reps. Obed Shehu, Ali Shettima, Abel Fuah, Salisu Koko, Ahmed Munir, Sani Umar Bala, Gbefwi Jonathan, Abdulmaleek Danga, Chinedu Obika, and Okunlola Lanre.
Others include Reps. Abass Adekunle, Akinosi Akanni, Obuzor Victor, Peter Akpanke, Ngozi Lawrence, Ogah Amobi Godwin and Ikeagwuonu Onyinye.
It would be noted that the NMMP was expected to be a game-changer in Nigeria’s power sector by reducing estimated billing, enhancing energy accountability, and restoring consumer trust.
However, the current revelations point to implementation failures and possible mismanagement of public funds.
Analysts believe that the outcome of the House probe could lead to reforms in electricity metering policy and strengthen regulatory oversight of loan disbursements to DISCOs.

Oil & Energy

“Renaissance Energy, NNPC JV Donate ICU Equipment To RSUTH

Published

15 hours ago

May 12, 2025

The Tide

Renaissance Africa Energy Company Limited and its joint venture partners, including the Nigerian National Petroleum Company Limited (NNPC), have donated vital medical equipment and essential drugs to the Intensive Care Unit (ICU) of the Rivers State University Teaching Hospital (RSUTH).
Among the equipment are three ventilators, a laser therapy machine, as well as significant supply of seed stock drugs targeted at enhancing the hospital’s capacity to provide critical care and ensuring consistent drug availability.
Speaking at the Handover Ceremony at Renaissance Energy Headquarters, in Port Harcourt, the General Manager, Relations and Sustainable Development, Renaissance Africa Energy, Igo Weli, said, “The gesture by Renaissance and our partners is to enhance the capacity of the hospital to provide critical care to patients in need; improve the training of upcoming healthcare personnel; and provide support to dedicated healthcare professionals in their mission to save lives and improve patient outcomes.”
The Chief Upstream Investment Officer, NNPC, Oluwaseyi Omotowa, noted that the donations were part of a broader social intervention strategy of the Renaissance-operated joint venture.
Omotowa, who was represented by the Lead, Stakeholder Relations, NNPC Upstream Investment Management Services, Mrs. Uzo Ejidoh, further said “the JV has a deliberate corporate social responsibility strategy to serve the people.
“This is an unchanging commitment, hence our steadfast support and investment in social impact projects for the healthcare sector to continue to transform lives”.
Recieving the donations, the Chief Medical Director, RSUTH, Professor Chizindu Alikor, stated that the hospital was committed to the delivery of excellent healthcare along with research and training.
Alikor said, “The teaching hospital is on an upward trajectory. The ICU facilities were over stretched, and we are excited that our request to Renaissance and its partners for assistance was granted.
The CMD expressed the hospital’s confidence in Renaissance’s capacity and people-centric interventions, especially as it concerns Corporate Social Responsibility (CSR) in the health space.

By: Lady Godknows Ogbulu

Oil & Energy

Tight Now, Loose Later: Oil Futures Flash Warning

Published

15 hours ago

May 12, 2025

The Tide

Last week, OPEC+ announced it will once again accelerate the pace of unwinding of production cuts, with output targets for June increasing by 411,000 barrels per day, equivalent to three monthly increments.
This follows a similar move in April, with the organization appearing willing to stay the course amid low oil prices and fears of weakening demand.
We reported that global crude inventories remain low enough, thus giving OPEC+ a window to scale back its voluntary cuts until the market surplus finally arrives.
Saudi Arabia appears intent on “punishing” OPEC+ rascals such as Kazakhstan and Iran for repeatedly violating their quotas.
Commodity analysts at Standard Chartered have reported that the latest OPEC survey of secondary sources reveals that Kazakhstan’s crude oil output clocked in at 1.852 mb/d in March, 384 kb/d above its OPEC+ quota.
Further, the country also failed to keep its promise to cut 38 kb/d in compensation for overproduction in March, bringing its total overproduction to 422 kb/d.
The same scenario is expected to unfold in the coming months. Kazakhstan produced 240 kb/d more y/y in March, a sharp contrast from the other eight OPEC+ members who produced a combined 612 kb/d less.
And now, the oil futures markets are sending a dire warning that oil bulls could find themselves in trouble quite soon due to a combination of the OPEC+ output hike and Trump’s tariffs.
Oil futures curve has formed a rare “smile” shape, a structure Morgan Stanley says was last seen briefly in February 2020 just before the infamous oil price crash.
On Wednesday, Brent futures’ July contract was trading at a premium of 74 cents to the October contract, a market structure known as backwardation, foreshadowing immediate tight supply.
However, prompt prices from November have formed a contango, with forward prices flipping to a discount, indicating oversupply as traders predict Trump’s tariffs will eventually weaken oil demand. Having backwardation and contango together leads to the rare “smile” shaped curve.
According to the latest available data by the International Energy Agency (IEA), global oil inventories stood at 7.647 billion barrels in February, down from 7.709 billion barrels for last year’s corresponding period and close to the bottom of their historical five-year range.
Meanwhile, refiners’ appetite for crude is climbing ahead of the peak driving season in July and August, “Refinery maintenance in the Atlantic basin will start to taper off, increasing oil demand (for refining)… Summer driving should provide some support,” BNP Paribas analyst told Reuters.
Global oil demand is expected to rise by 1.3 million barrels per day in the third quarter of the current year, up from an average of 104.51 million bpd in the second quarter, the IEA has predicted.
The 1 million bpd output increases announced by OPEC+ so far, coupled with another 400 kb/d increase in July, almost matches the predicted demand increase, implying oil markets will not face a surplus till late in the year.
Meanwhile, oil prices jumped in Thursday’s session after the Trump administration announced it has struck a trade deal with the UK. Brent crude for July delivery was up 2.7% to trade at $62.75/bbl at 12.50 pm ET while WTI crude contract for June delivery added 3.0% to change hands at $59.86 per barrel. However, terms of the deal appear to fall well short of the “comprehensive” package Trump earlier touted.
According to Trump, UK Prime Minister, Keir Starmer, will further reduce non-tariff barriers and fast-track U.S. goods into his country.
Meanwhile, another solid week of jobless claims underscored the Federal Reserve’s ongoing unwillingness to cut rates. U.S. jobless claims fell 13,000 to 228,000 for the period ending on May 3.
Continued claims, however, clocked in at just over 1.9 million, near the highest levels since 2021, suggesting workers are still finding it difficult to secure new jobs as the economy stalls.
That said, commodity analysts at Standard Chartered have predicted that path of least resistance for oil prices is lower in the coming months, with oil prices to remain low before beginning a gradual recovery later in the year as U.S. oil output declines.
StanChart, however, says there’s some technical support in the short-term, with fundamentals remaining fairly positive. Recently, StanChart cut its 2025 oil price forecast to $61/bbl from $76 and also lowered its 2026 forecast to USD 78/bbl from $85 citing Trump’s tariffs.