Moves by the Federal Government to tackle the menace of crude oil theft through the option of crude transportation by marine vessel has increased Nigeria’s cost of refining hydro-carbons to a whopping N620 million daily, Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke has said.
The Minister stated this in Lagos yesterday at the opening ceremony of the Nigeria Annual International Conference and Exhibition (NAICE) of the Society of Petroleum Engineers (SPE).
She regretted that the oil and gas industry had been plagued with a plethora of challenges that have negatively impacted on the ability to meet national crude oil production target as well as loss of revenue to investors, environmental degradation and sometimes loss of lives and property.
And to mitigate the anomaly, she said the option of crude transportation by marine vessel had been deployed thereby increasing the daily operating cost of refining by an additional sum of $7.52/ per barrel
By implication, Nigeria at the moment is on an average crude oil and condensate refining of 500,000 barrels per day (mbpd). When this is multiplied by $7.52, the figure amounts to N620 million daily.
“The most prominent among these is theft-related vandalism leading to significant production deferments, theft and decline in revenue to the investors (the nation and international oil companies), said Allison-Madueke. Due to theft-related vandalism, crude oil supply to our domestic refineries remain constrained,” she said.
The development, according to her, though not completely new, has metamorphosed to the current trend and scale of community agitation for resource control, pipeline sabotage to attract contracts for remediation, militant activism and theft of condensate and refined products.
She also rolled out government’s strategic focus for the industry towards achieving the next level of development to include sustaining crude oil and condensate production at 2.388 million barrels per day and growing natural gas production to 80 billion cubic feet per day.
She said the government was also determined to reduce gas flare from current level of about 12 per cent to 7 per cent with the implementation of key gas monetisation projects.
Also critical to the industry, according to her, is the expansion of gas supply with additional 500 mcfpd to support about 2000MW of power generation.
“Nigeria needs to recognise and declare the pipelines as national assets. The next step is to organise and harmonise its institutions responsible for pipeline infrastructure protection and invest appropriately in this light for effectiveness,” she added.
