Oil Exports slump: Team Tompolo 'saves' Nigeria's economy
Oil rig


An alarm bell rang last week over Nigeria’s dwindling fortunes in the oil and gas sector which has, in recent time, assumed catastrophic dimensions, especially since the Russia invasion of Ukraine on February 23, 2022. This followed report by the Central Bank of Nigeria that the country lost an estimated $3.2 billion to oil theft at an average rate of 200,000 barrels per day from the country official OPEC production quota of 1.7 mbpd.

This has also had serious effect on foreign exchange earning capacity of the country.
Following this disclosure President Buhari dispatched three key officials led by minister of state for petroleum resources, Mr. Timipre Silva to the Niger Delta to seek ways of ending this existential threat to the economic and environmental survival of the nation and region respectively. Other member of the delegation were Chief of Defence staff, Gen. Lucky Irabor and Group managing director of NNPC Ltd, Mr. Mele Kyari.

Oil theft and illegal bunkering have become such a huge and thriving business in the Niger Delta particularly in Rivers and Bayelsa states, in spite of the presence of Joint military task force deployed to the region to curb the menace. The activities of the oil thieves have also created the booming business of illegal refining of crude in the creeks with its uncontrollable pollution of both air, land and sea.

Consequently, Rivers state has been victim of smoke soothe and ash rain, which forced the government of Governor Nyeson Wike to declare war on oil theft. But it appears his effort has made little different and the vandals continue to perpetrate the nefarious activities regardless.

Nigeria has been at the receiving end of the economy both in domestic and global sectors, especially after the Russia invasion, which has pushed oil price to an eight year high of over $120 per barrel. Solely depending on importation for its petroleum products, which is also subsidised the country has seen its subsidy bill suddenly doubled this year.

The government had planned to remove subsidy in June 2022 according to the Petroleum Industry Act, PIA, and consequently made a budget provision of N1.3 trillion. But in the wake worsening economic conditions in the country characterized by hyperinflation and collapsed exchange rate, government made a volte face on subsidy removal fearing political backlash by pushing it forward to June 2023, necessitating further adjustment in the budget to N2.5 trillion.

But experts believe that the sudden spike in crude oil price may pushed the subsidy to over N4 trillion. However, oil theft has constrained the country’s capacity to produce more and meet its quota of 1.8 mbpd, which could have enabled it cushion the negative effects of rising oil price.

Nigeria’s production output has generally plateaued at 1.5 mbd in the past few years worsened by growing divestment by the International oil companies, IOCs, from the country’s onshore and offshore fields as a result of activities of oil communities, which constitute brand and legal threats in their parent or mother countries.

But observers believe that the current hysteria by government over the issue is mere panic reaction as it lacks the political will to deal with the problem, stressing that government knows the perpetrators, especially security agencies, as it is unlikely for such activities to continue unabated without the involvement and active connivance of security agencies and powerful people in government.

Mr. Fyneface Fyneface , Director, Project Artisanal Refinery, in an interview said there is a cartel involved in the oil theft business and it must be stopped to save the economy and environment. But the sad thing is that security agencies and some people in government are involved, so it is difficult to deal with the problem.

“They (government) know the people doing this; the problem is the political will to take action to stop those behind it. Niger Delta is the most militarized region in the world. How can the barges and ships come in to lift oil without the security agencies knowing those behind it.
“The environment is dying and unless we do something, Nigeria in the next 10 years may not be able to raise revenue from oil and the region will be without its people, as the environment would have been totally destroyed”.

Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, had on lamented the unprecedented rate of oil theft recorded in recent times and its debilitating effect on government revenue and accretion to reserves. Emefiele said this while briefing journalists at the end of the Monetary Policy Committee (MPC) meeting in Abuja.

But Emefiele urged the Nigerian National Petroleum Company (NNPC) to take urgent steps to ensure adequate supply of petroleum products in the country to reduce the rate of arbitrary increase in price of these petroleum products by oil marketers.

Co-founder and former Chief Executive Officer of Seplat Energy Plc, Mr. Austin Avuru, had earlier called for a state of emergency in the Nigerian oil and gas sector, revealing that up to 80 per cent of oil pumped in the country, particularly in the East, is stolen. Avuru spoke few days after a businessman and Chairman Heirs Holdings, Mr. Tony Elumelu, also bemoaned the worsening state of the industry, stressing that about 95 per cent of oil production does not get to the terminal.

Elumelu has his oil assets in the Niger Delta.
Just about a week ago, Aiteo Eastern Exploration and Production Company (AEEPCO), operators of the Nembe Creek Trunk Line (NCTL) pipeline, threatened to exit the facility due to incessant vandalism, perennial sabotage and outright theft.

The company sated, AEEPCO remains gravely concerned about the persistent heightened attack on our production facilities and the NCTL. These attacks appear to have escalated in intensity and effect.

All our current efforts to sustain and increase crude production are being aggressively undermined, even wiped out by the activities of economic saboteurs whose audacity continues to be growing by the day.

Aiteo disclosed that its NCTL had been targeted, with considerable success, for the sole and devastating objective of aiding crude theft.

The company stated that given the level of losses, occasioned by massive oil theft, it was experiencing, as joint operator of the NNPC/AITEO JV, it was now left with the unavoidable option of actualising a total exit from the NCTL.

“We are giving active and urgent consideration to this course of action because the consequences of continuing to operate in this manner now represents an existential threat to our survival, the firm stated.

Emefiele, who read the committees communiqué, however expressed worry that whereas global oil prices had gone up, this had been compounded by shortage of supply of petroleum products. The CBN also expressed optimism that in the medium term, the proposed take-off of the Dangote refinery this year, would help to improve the supply of petroleum products in the country.

Emefiele said the CBN remained optimistic that food prices would trend downwards in 2022 as security agencies sustain efforts to subdue the activities of bandits so as to allow farmers back to their farmers.

Members noted that the on-going war and the resultant sanctions against Russia will continue to have a considerable impact on the global supply chain as both countries are major players in the global commodities market.



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