Nigeria has missed out on the opportunity to produce and sell approximately 65,700,000 barrels of oil in the last year due to pipeline vandalism and the resulting oil theft.
This translates to about N2.3tn loss in oil revenue if the prevailing exchange rate and average oil price are used.
At the recently concluded Nigerian International Energy Summit held in Abuja, the Chairman of Shell Companies in Nigeria, Dr. Osagie Okubor, stated that the 180 000 barrels per day Trans Niger Pipeline had been closed for more than a year—from March 2022 to March 2023.
The total shut in/loss from March of last year to March of this year is approximately 65, 700,000 barrels. Between March 2022 and March 2023, the price of Brent crude averaged about $83 per barrel, which means that the country could have lost up to N2.3tr to the threat.
A significant pipeline with a capacity of 180,000 barrels of crude per day to the Bonny export terminal is the TNP, a Joint Venture run by SPDC.
The TNP was closed for a year as a result of the extensive crude oil theft on the pipeline, according to Okunbor, who was speaking at the NIES.
The pipeline, according to Shell, is part of the gas liquids evacuation infrastructure, critical for continued domestic power generation and liquefied gas exports.
He said, “What keeps me awake today as regards my onshore business in Shell is the fact that we cannot operate a pipeline, and that’s what is responsible for the 60 percent capacity. I think today that is almost just how much gas we can supply,” he said.
“And this is because one of our key gas infrastructures — the TNP — was shut down for one year; we removed 460 illegal connections on that line. We just reopened that line. Today we are struggling to catch up with our first programme.”
Okunbor said the loss was often viewed as affecting Nigeria’s oil production quota to the Organisation of Petroleum Exporting Countries.
He stressed that the situation was also having devastating implications on the supply of gas to the Nigeria Liquefied Natural Gas.
“So, if you ask me what the number one issue has to be for the incoming administration, it has to be the security of oil and gas infrastructure. If you don’t fix it, then we have a huge problem on our hands,” Okunbor said.
Okunbor advised the incoming administration to prioritised the security of oil infrastructure.
There were reports that the Federal Government was planning to reopen the pipeline last October.
However, talks with the Bodo community in the Gokana Local Government Area of Rivers State appear to have collapsed.
Okunbor however said Nigeria was not short of frameworks and written documents on how to tackle the various challenges in the oil sector.
He noted that the decade of gas document, for example, included steps to deepen gas use, but implementation remained a challenge.
On his part, Managing Director of Nigerian Liquefied Natural Gas Limited, Philip Mshelbila, pointed out that 40 per cent of globally renowned gas firms’ capacity had been lying fallow due to theft.
He added that the lack of power to execute the recommendations and policies in the various documents and laws of the oil sector remained a challenge to the industry.
Last year, the Nigerian National Petroleum Company said it detected an illegal connection on the Trans Escravos pipeline looped to the four-kilometre Afremo test line.