Stakeholders express cautious optimism as NNPC transits
*Experts insist FG unserious over ending oil theft
*As NNPC quietly approved N179/litre PMS price hike
*‘Crude oil theft, an organized crime that should be differentiated completely from host community issues’
Stakeholders have expressed cautious optimism as the Nigerian National Petroleum Company Limited (NNPC) transits earlier today, insisting that most of the entities under the companies are still loss-making sub-subsidiaries.
Going by the provisions of the Petroleum Industry Act (PIA), NNPC had on July 1, 2022, legally transformed into a company that will be regulated under the Companies and Allied Matters Act (CAMA).
At the official unveiling, which was presided over by President Muhammadu Buhari, stakeholders maintained that the move should bring an end to arbitrariness, heavy-handed government control and wasteful practices.
An energy expert, Henry Adigun, is worried that the company is currently keeping thousands of redundant staff, especially those in the refineries. He stated that though the company is transiting, months of transition mode did not address the loss-making entities in the company.
An economist, Prof. Segun Ajibola, said it is now important for the NNPC to take courage to imbibe the culture and ethos of a private sector-led business, focusing on the primary objective of profit.
He equally advised the company to allow good corporate governance principles to influence its decisions and actions, adding that sub-optimal decisions, which is often influenced by primordial considerations must give way.
“By so doing, we are likely to see NNPC transformed to a more efficiently run company, playing its critical roles of regulating the oil and gas sector that goes to the very heart of the Nigeria’s economy,” Ajibola said.
Executive Director of Order Paper Nigeria, Oke Epia, said: “I’d like to see how the new company deals with the moribund refineries on which taxpayers monies are expended in billions of naira. I’d like to also see how it commits and abides by Environmental, Social and Corporate Governance (ESG) principles and global best practices relating to energy transition.”
Epia is, however, worried over how the company would deal with a board that is perceived to be politically heavy in composition and inclination.
The Chairman/CEO of the International Energy Services Limited (IESL), Dr Diran Fawibe, noted that the new development remained a positive step. According to him, himself and those who saw the creation of the national oil company would be delighted to see the company perform at its best.
ON how to deal with crude oil theft and low production, which have caused Nigeria to lose first place on the continent to Angola, most stakeholders, who commented on the development, insisted that the situation might persist, as current approaches being taken by government agencies are only cosmetic.
While stakeholders are calling for national emergency, being a development that has stopped most operators from pumping crude and deterred prospective investors, they insisted that worsening foreign exchange challenges, budget deficits, borrowing, poverty, inflation and unemployment rate are imminent due to the development.
Organized criminals may have succeeded in stealing crude oil worth $26.4 billion from the country, as the nation’s security architecture, NNPC and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) foot drags on a development that now holds the economy to ransom.
This is coming as Nigeria lost its position as the largest oil producer in Africa to Angola in June after failing to boost crude oil output, currently hitting record low in terms of production.
Nigeria, in June, produced 1.158 million barrels per day (bpd) and 1.024 million bpd in May, while Angola produced 1.175 million bpd last month and 1.162 million bpd in May.
Group Managing Director of NNPC, Mele Kyari, had stated that Nigeria is daily losing nothing less than 200,000 barrels of crude to oil thieves. In the last four years, the daily losses have totaled 292 million barrels. With oil price averaging about $90 per barrel within the period, it has brought possible losses to $26.4 billion.
In the first four months of this year, data from NNPC showed that Nigeria lost about 250,000 barrels per day of crude oil to theft.
Even the Managing Director of Chevron Nigeria/Mid-Africa Business Unit, Richard Kennedy, at a panel session held in Abuja during the recent NOG Conference, described crude oil theft in Nigeria as organized crime that should be differentiated completely from host community issues.
“From my experience, the issue with crude oil theft should not be confused with host community issues. It is much bigger than that. Quite frankly, it is organized crime.”
He also revealed that the level of theft is costing Nigeria millions of dollars daily in revenue that could have helped solve the nation’s fiscal challenges.
“The volume of crude that is being stolen is well beyond comprehension. You can see some of the figures in the press, maybe it’s about 100,000 barrels per day at $100 per barrel and that’s $10 million per day that is being stolen. NNPC owns 60 per cent while taxes of 85 per cent are paid, so, it’s a huge loss for the country.”
AN Organization of Petroleum Exporting Countries (OPEC) report has shown that Nigeria’s oil production crashed by about 14.94 million barrels in Q2 of 2022. The report was for June 2022. The figures said the average cost of crude in the second quarter of 2022 shows that Nigeria’s earnings fell by about N703.76 billion which is the price of 14.94 barrels of crude oil in the period under review.
OPEC’s crude oil analysis was based on direct communication from its 13 member countries, stating that in the first quarter of 2022, Nigeria produced N1.299 million barrels of oil per day. Nigeria’s OPEC daily quota is 1.799 million bpd. However, the country’s oil production dropped to 1.133 million bpd in the second quarter, showing a decline of 166,000 barrels per day. This shows that for the estimated three-month period of the second quarter of this year, Nigeria lost more than 14 million barrels of crude oil.
Crude oil sold for $104.58, $113.34 and 122.71 per barrel respectively in April, May and June. This shows that in the period under review, crude oil sold mostly for $113.54 per barrel, meaning that the loss of 14.94 million barrels in the second quarter amounted to about N703.96 billion.
For a country heavily indebted, with the current administration surviving mainly on loans to finance budgetary provisions, the worth of stolen crude by vandals in four years is about 30 per cent of the Nigeria’s total public debt public debt stock, which now stands at N41.60 trillion or $100.07 billion as at March 31, 2022, according to data from Nigeria Debt Management Office (DMO).
Some operators had told The Guardian that oil is no longer stolen at the wellheads, as vandals have become innovative, bypassing the anti-ballistic pipelines to disrupt production.
Indeed, they have raised concerns about the culpability of the nation’s security agencies, noting that barges of oil could not have been stolen and moved on the coastal waters without collaboration of some powerful Nigerians.
Earlier, the Chairman of Independent Petroleum Producers Group (IPPG), Abdurazaq Isa, said over 90 per cent of crude being produced by the operators are stolen.
“In 2021 alone, producers in certain parts of the Niger Delta suffered losses between 15 per cent to as high as 90 per cent. Such monumental losses attributable to theft are a major threat to our business, revenues to government as well as to national security.
“The huge cost incurred on security is also adversely affecting Unit Operating Cost (UOC) targets of $10 per barrel. The escalating security and repair costs due to vandalization of key oil and gas assets is a major concern,” Isa said.
NNPC GMD, Kyari once said a few Nigerians were stealing the nation’s crude. This few Nigerians he described as elite.