Govt lost N191bn to oil theft in Q1 –NNPC

Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke
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Nigeria lost N191bn ($1.23bn) to oil theft and vandalism in the first quarter of the year as crude theft continued to threaten the country’s revenue base.

The Nigerian National Petroleum Corporation, in a statement on Wednesday, also said there had been a significant drop in crude oil production for the first quarter of 2013.

The corporation said in the statement by the Acting Group General Manager, Public Affairs Division, NNPC, Ms.  Tumini Green, that incessant crude oil theft and vandalism along the major pipelines within the Niger Delta had been responsible for the drop in oil production.

The NNPC said daily crude oil production during the period fluctuated between 2.1 million and 2.3 million barrels per day compared with the projected estimate of 2.48mbpd.

“Expectedly, this fall between actual production and forecast in first quarter 2013 has resulted in a drop in crude oil revenue of about $1.23bn (N191bn) that should have accrued to the Federation Account,” Green said.

She further explained that the NNPC/Shell Petroleum Development Company Joint Venture recently declared a force majeure on Bonny Crude due to incessant crude oil theft, which had resulted in the shutting in of 150,000bpd.

She said, “Investigations showed that 53 break points were discovered along the 97-kilometre Nembe Creek Trunkline. Repair work is expected to last about six weeks.

“This will further reduce our April and May monthly average to about 2.2mbpd and further decrease crude oil revenue by about $554m (equivalent to N83bn) that should have accrued to the Federation Account.”

Green, however, assured that the maintenance work would have minimal effect on gas supply to the domestic market.

“We shall continue to work with relevant government agencies, both at the federal and state levels, to end this incessant crude oil theft and pipeline vandalism. We have the potential to meet the national target of 2.48mbpd if this menace is eliminated,” she said.

The NNPC spokesperson maintained that crude theft and pipeline vandalism would continue to degrade the environment, increase operational costs, impact negatively on the image of the country and reduce revenue accruable to the nation.

She appealed to all stakeholders to cooperate with the corporation as it strived to eliminate the menace.

Meanwhile, SPDC said it had since Monday, April 15, 2013, shut down the NCTL to remove crude oil theft connections and investigate suspected leaks.

The Managing Director, SPDC and Country Chair, Shell Nigeria, Mr. Mutiu Sunmonu, said, “We’re concerned that the NCTL has been targeted by crude oil thieves repeatedly since we installed the new line in 2010 at a cost of $1.1bn.

“The current exercise aims to remove a significant number of oil theft connections and repair any leaks on the pipeline. We recognise efforts by the security forces to contain the crime, and SPDC will work with them during the shutdown to clear illegal connections on the NCTL.”

The 97-kilometre NCTL has been closed several times as a result of crude oil theft leaks and fires between December 2011 and May 2012.

“Crude theft continues to affect people, the environment and the economy, and urgent action is needed by all stakeholders to tackle the problem,” Sunmonu added.

The International Energy Agency had, last year, said that Nigeria was losing about $7bn annually to oil theft.

“Oil bunkering, or theft, costs the government an estimated $7bn in lost revenue per year,” the agency had said, adding that theft and sabotage often led to pipeline damage, causing oil firms to cut output.

The Federal Government had been said to be jittery over the possibility of not meeting its N11.34tn revenue target for the 2013 fiscal year due to crude oil theft by pipeline vandals, failure of revenue generating agencies to fully remit what they generate into the Federation Account and inefficiency in tax collection.

The Director-General, Budget Office of the Federation, Dr. Bright Okogu, confirmed the government’s anxiety about the likely revenue shortfall.

Okogu, in a document entitled, ‘FGN 2013 budget: Fiscal consolidation with inclusive growth,’ a copy of which was obtained by our correspondent, highlighted the challenges as well as other growth-promoting initiatives of the budget.

“Revenue challenges facing the budget are independent revenue non-full remittance by revenue generating agencies; taxes collection efficiency issues (Federal Inland Revenue Service, Nigerian Custom Service); pipeline vandalism and oil theft,” he said.