The Federal Government as well as local and international oil companies (IOCs) operating in the country lose an estimated $7 billion (N1.05 trillion) to oil theft annually, the International Energy Agency (IEA), an energy policy advisor to the industrialised countries, has said.
In a report published Tuesday , the 28-member agency said Nigeria's crude oil production had dropped to the lowest level for more than two years in October 2012, due to the recent flooding in some parts of the country and widespread theft of crude oil.
The IEA report noted that Nigeria's crude oil output fell to 1.95 million barrels per day (mnbpd) in October, after production in recent months ranged between 2 mnbpd and 2.5 mnbpd.
According to the report, the drop from September 2012 to October 2012 was around 110,000 barrels per day, with the country's output falling to "the lowest level in around two-and-a-half years".
The report however stated that by early November, production levels were recovering, with export loading schedules showing increased volumes for December.
Though the new production level is enough for Nigeria to retain its influential position as Africa's top producer ahead of Angola, the drop is coming at a time when the non-passage of the Petroleum Industry Bill (PIB) has stalled new investments with the threat of stagnant production in the future.
Heavy flooding, which hit the oil-producing communities, as well as large-scale and organised theft by powerful syndicates were cited in the IEA's report.
The report noted that "oil bunkering, or theft, costs the government an estimated $7 billion in lost revenue per year."
However, while an air of uncertainty looms over Nigeria's oil industry, the IEA noted that with the current boost in production in the United States, the US will become the world's top oil producer by 2020.
This, according to energy analysts, is expected to force Nigeria to hunt for new markets, as the US has been a major buyer of Nigerian oil.
IEA said in the New Policies Scenario, the World Energy Outlook (WEO's) central scenario, the US will become a net exporter of natural gas by 2020 and will almost be self-sufficient in energy, in net terms, by 2035.
The report noted that global oil demand would grow by seven million barrels per day in 2020 and exceeds 99 mbpd in 2035, by which time oil prices would reach $125 per barrel in real terms and over $215 per barrel in nominal terms.
The return of peace in the Niger Delta after the amnesty programme for repentant militants ensured that oil production was ramped up from the 1.3 mbpd to which it fell at the height of hostilities to about 2.5 mbpd.
The amnesty programme ended years of militant attacks on oil workers and installations but production has increasingly dwindled due to oil theft, with Shell Petroleum Development Company (SPDC) being the worst hit.
SPDC at the weekend shut down the Imo River Trunkline in its eastern operations after it found several crude theft points on the pipeline, deferring production of some 25,000 barrels of oil per day.
There have been 26 spills in the Imo River area so far this year; 25 have been due to sabotage, spilling nearly 3,000 barrels into the environment.
Shell's Vice-President for Health Safety Environment (HSE) and Corporate Affairs, Sub-Saharan Africa, Mr. Tony Attah, said: "The evidence is clear for all to see, that crude theft is bad for Nigeria, bad for the people, bad for the environment and bad for our business."
The Imo River trunkline is part of the Trans Niger pipeline, which suffered a similar fate at Mogho when unknown persons installed two crude valves barely 24 hours after the last of such leaks was repaired at Biara, also in Ogoni land in Rivers State.