Nigeria: Crude Oil Theft - Illegal Connections Hit 4,800- - Mele Kyari

9 December 2023

·Warns crude oil theft could frustrate oil projections by FG

ABUJA- The Group Chief Executive Officer of the the Nigerian National Petroleum Company Limited, NNPCL, Mr Mele Kyari yesterday described oil theft and vandalism in the Niger Delta region as a calamity saying there are over 4,800 illegal connections on crude oil pipelines in the area and warned that this could frustrate the projections of the Federal Government.

Speaking yesterday in Abuja when he appeared before the Senate Committee on Appropriation on the proposed budget for 2024, Kyari said that the daily oil production would depend greatly on the security situation in the oil rich Niger -Delta region, describing the act of vandalism and oil theft going on there as a calamity and completely abnormal.

He said, ''The situation we have in Niger Delta in terms of security is a calamity. We don't have that anywhere in the world. To engage non state actors as last resort as solution is abnormal. But we have to respond abnormally.

You have over 4,800 illegal connections on our pipelines. That means, within every kilometer, you have an insertion. Even if you seal all the insertions, you can't get what you want in terms of production. In the Niger Delta, people are coming from all parts of the country to do illegal refining. That's why we engage locals to deal with it. We will contain this challenge. We are doing everything possible to restore sanity. What is happening is a colossal damage to the environment and the host communities.''

Meanwhile, there was a sharp disagreement yesterday between the Senate and the NNPCL over plans to increase the crude oil production benchmark in the 2024 Appropriation Bill from 1.7million barrels per day to 1.8mp/d.

While the Chairman, Senate Committee on Appropriations, Senator Olamilekan Adeola, APC, Ogun West wa pushing for the increase, Kyari rejected the move, saying that the NNPCL would stick to the benchmark approved by President Bola Ahmed Tinubu in the Appropriation Bill.

He told members of the Committee that the crude oil price and production benchmarks were based on dynamics in the global oil market.

Kyari welcomed the projection of daily crude oil production of 1.78 million barrels at $77 per barrel of crude, explaining to lawmakers that OPEC restriction to a daily production of 1.5 million barrel does not affect condensates which he says fetches Nigeria plenty of money.

He said that the Port Harcourt refineries would come on stream in December while Warri Refinery would resume production in first quarter of 2024. The NNPCL GCEO gave December 2024 as production target of the Kaduna Refinery.

Senator Adeola had dropped the suggestion of plans to increase the benchmark, just as federal government in the Appropriation Bill gave average crude oil production benchmark of 1.78m b/d, and crude oil price benchmark of $77.96.

Mele Kyari who also told the Senators that the entity would have liquidated if not for the quick and bold intervention of President Bola Tinubu to terminate the fuel subsidy regime, said that the company's cash flow could no longer sustain the burden of the subsidy regime and would have collapsed. He said:''I will advise that we stick to the submission of Mr. President on the quota

''There is no way we will get crude oil less than $70. ''Once economies are growing, there will be sustained demands for crude oil in our country and other countries. ''The estimates supplied by Mr. President is realistic. When we say production, we mean total production of crude oil and condensates. So we combine condensates and crude oil as total marginal production. So we know our estimates is realistic. There is no curtailment on condensates from OPEC.''

Kyari also gave an update on the Turn Around Maintenance of the nation's four refineries.

Perhaps the toughest question posed to the NNPCL boss was the issue of fuel subsidy removal and the benefits that have come with the painful decision. But Kyari was blunt when he told the lawmakers that the company would have completely come under if President Bola Tinubu had not terminated the suffocating regime, just as he denied payment of any form of subsidy by the company, stressing that the removal has now placed the company in good good stead, collecting its taxes and royalties and in good financial standing.

Senators frowned at the N406 billion to Federation Account as dividend between July to November from the NNPCL as they dismissed it as nothing to cheer about. The lawmakers tasked the management of the oil giant to strive to be like its global peers, citing the Saudi Aramco and the Petrobas of Brazil.

In his defence, Kyari declared that until the passage of the Petroleum Industry Bill into law, the company was not run like a profit driven enterprise.

Vanguard News

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