Oil Theft: Kyari Raises the Alarm, Alleges Threat to Life
•Says NNPCL engaged private security contractors to curb theft
•Declares two trunk lines restored, national oil company open to forensic auditing
•Country earned $741bn from oil, gas in 21 years, says NEITI
•N’Assembly, EFCC, ICPC seek transparency in petroleum industry to boost revenue
•Daily oil production records two-months high, above one million barrels in October
Udora Orizu in Abuja and Peter Uzoho in Lagos
The Group Chief Executive Officer (GCEO) of the Nigerian National Petroleum Company Limited (NNPCL), Mr. Mele Kyari yesterday said he has received several death threats from people who are not happy with efforts being made by the federal government to ensure increased transparency, accountability as well as an end to crude oil theft which has seen country recording severe revenue losses.
The revelation by Kyari came just as Nigeria’s oil production has started rebounding as production rose above one million barrels per day (bpd) for the first time since July this year, with daily output for October standing at an average of 1,014,485bpd.
Kyari who made this known while delivering his keynote address in Abuja, at a special summit on legislative transparency and accountability organised by the House of Representatives Committee on Anti-corruption, lamented that Nigeria was losing up to 700,000 barrels of crude daily to oil thieves.
The GCEO at the event which had as its theme: “Enhancing transparency and accountability in the oil and gas sector,” spoke on several key issues bedeviling the petroleum industry.
On crude oil theft, Kyari lamented that the scale of theft was enormous and that the NNPCL had taken down thousands of illegal refineries in the past 45 months.
“Lastly, this industry is in shortfall of a change. I have several death threats to myself. This is the cost of change, when people walk away from things they are used to, to something that’s new, something that will take away value and benefit from them, they will react,” he said.
He, however, said they have been able to restore two trunk lines and have also involved private security contractors who are complementing government security agencies to curb the menace.
On the NNPCL returning to profitability, Kyari explained that in 2018, the company made a loss of N803 billion, which was reduced to N1.3 billion by 2021 and a profit of N687 billion same year.
He said, “The issue of crude oil theft, what we discovered, was not expected; we didn’t know that this is happening. But the scale is enormous, we have seen pipelines taken from our main trunk lines to abandon platforms.
“We have thousands of illegal refineries that we have taken down in the past 45 months. We have seen over 295 illegal connections to our pipelines. Many of them have been there for years. That you have a situation where your production came down to 1.1 million barrels, from 1.8, the reason is that not all of them are stolen.
“Let me clear the misconception that the remaining balance is stolen. Companies will stop injecting oil into the pipeline the moment they discover it can’t get to the terminal. Therefore, at the peak of production, you lose over 200,000 barrels per day.
“But once companies discover this production won’t get to the terminal they will terminate it. So we are losing up to 700,000 barrels of opportunity. Its opportunity lost,” Kyari added.
“Can government companies make profit? Yes, I can share data with you, also published in our statement of account. Dealing with multinational oil companies, the strength of any agreement is the capacity of active members who negotiate these contracts.
“Partners do take advantage of their partners, it happens. But there’s a common rule in the oil and gas industry that when you take advantage of your partner, you will come to realise it years later and it pay back at you.”
On why fuel subsidy payment was necessary, the GCEO said, “We need to understand what this subsidy means, today. When petrol comes into this country, we transfer to the marketers at N113 for us to realise the price of N165 per litre. This is reality. So, that means whatever is the cost, anything after that value is subsidy. So, someone has to pay for it. So every difference between 113 and that value is subsidy.”
Kyari also said the NNPCL was open to forensic auditing. This, he said would enable Nigerians know what the national oil company was doing.
“Revenues not delivered to the federation account, why won’t institutions deliver revenue to federation account? You cannot eat your cake and have it. NNPCL by law is required to ensure energy security particularly making sure petroleum products are available to the country. “When I give you an invoice you cannot settle it; therefore, you have no way of settling this except through fiscal obligations. What fiscal obligation does NNPCL have? Taxes, royalties, dividends. You cannot deliver these fiscal obligations and be able to deliver import products and sell at sub-market price.
“What we are doing now is that we will give credit loan to Federal Inland Revenue Service, upstream, downstream regulators. But the fiscal obligation we can’t do it. Also submit a debit note to the Ministry of Finance so that they will settle us. So we are open to forensic auditing, we are inviting it so that Nigerians will know what we are doing.
“Some developed countries are taking out taxes on PMS, that’s another name for subsidy. No matter how they try to put it it’s subsidy. Countries are doing something to bring down the cost of energy. These common conversations you’re seeing in the media – NNPCL has not gone to FAAC since January – it is a misplaced expectation because our value should go to the tax authority and therefore Nigerians must get used to seeing NNPCL off those transactions.
“We are not able to meet our fiscal obligation of tax reality because of the subsidy regime,” Kyari declared.
In his remarks, the Executive Secretary of Nigeria Extractive Industries Transparency Initiative (NEITI), Ogbonnaya Orji, disclosed that between 1999 and 2020, Nigeria has earned $741.74 billion from oil and gas alone.
He, however, lamented that the data was not being properly used, urging the National Assembly to debate the report laid before the parliament at plenary.
This, he said would, “help in forum like this to be speaking from data and from a point of knowledge.”
Orji said, “NEITI annually, engage the companies to establish what exactly have they paid the government in terms of taxes, royalties, rents, concessions.
“We look at the agreements and purposes that underpinned those transactions. We also look at how much oil is Nigeria produced in a given year, and we design a template that suits those who received the revenue and those who pay. The companies declare what they have paid, and the government agencies declare what they have received.
“From our records, between 1999 and 2020, Nigeria has earned $741.74 billion from oil and gas alone. From the solid mineral sector, we have already counted in Naira, N624 billion has been earned. In forum like this should be strengthened with data and that is where NEITI will continue to insist that we work with the National Assembly. The National Assembly needs information on what is paid, what is received and what the money is used for, and NEITI has that data.”
Also, the Chairman of Economic and Financial Crimes Commission, (EFCC), Abdulrasheed Bawa, who was represented by the Commission’s Head of Operations, Michael Wetcas, lamented that the complexities in the operations of the oil and gas industry renderers it vulnerable and highly susceptible to money laundering.
According to him, the petroleum industry is characterised by several players and dealers in the supply chain, thus creating avenue for fraud and distortions.
The EFCC Chairman while urging the National Assembly to extend oversight function on the increasing crude oil theft, said the commission was engrossed in the investigation of allegations of crude oil theft in addition to fighting corruption.
He urged government on instituted measures aimed at enhancing transparency in the oil include full disclosures of NNPC Joint Venture arrangements and established clear institutional responsibilities for revenue assessment, collection and report.
On his part, the Chairman, Independent Corrupt Practices and Other Related Offences Commission (ICPC) Prof. Bolaji Owasanoye, was of the view that poor governance structure in the sector has over the years fuelled many anomalies including the menace of Illicit Financial Flows in the sector.
He therefore recommended, “consistent and transparent audits, review and update of contract negotiation practice. More importantly we must discard completely confidential clauses that forbid operators or government from disclosing terms negotiated with parties.
“Given the fact that these agreements are about natural resources being public patrimony and assets confidential clauses that fuel corruption and abuse should be totally outlawed and to strengthen transparency we need legislation for statistical reporting for all oil, gas, and mining companies to publicly disclose revenue received and paid.”
Earlier, in his opening remarks, the President of the Senate, Ahmed Lawan said the initiative by the House committee on Anti-Corruption was a welcome development in the light of recent experience where revenues from oil have been declining because of the lack of transparency
Lawan, who was represented by Chairman Senate Committee on Anti-Corruption and Financial Crimes, Suleiman Kwari added that it has become even more worrisome given the place of oil and gas in the nation’s revenue earnings; theft of oil has been alarming, resulting in inability to meet our production quota.
On his part, the Speaker of the House of Representatives, Hon. Femi Gbajabiamila said due to theft and various acts of economic sabotage, the country has been victim of bad actors determined to achieve great personal wealth at collective expense.
Gbajabiamila therefore said the summit is particularly important for legislators and policymakers to gain valuable insights into the issues and achieve clarity on the actions to take to achieve greater transparency and accountability in the oil and gas industry.
Nigeria’s Daily Oil Production Records Two-months High, Rose Above One Million Barrels in October
Meanwhile, the expected rebound in Nigeria’s oil production has started coming to pass as production rose above one million barrels per day (bpd) for the first time since July this year, with daily output for October standing at an average of 1,014,485bpd.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) disclosed this in its October Crude Oil Production Report.
The last time Nigeria’s crude oil production output averaged more than one million bpd was in July, when production recorded at the time stood 1,083,899bpd.
According to the report, daily production for October was 1,014,485 compared to 972,000bpd in August, and 937,000 in September.
The NUPRC had earlier stated that the production output from 13 out of Nigeria’s 29 crude oil terminals declined drastically between July and September 2022, which contributed to the falling numbers.
The declining production output was due to the massive oil theft in the Niger Delta, resulting to many of the oil companies shutting down production.
The NUPRC data explained that the worst-hit crude terminals were Bonny, Brass and Forcados, which saw production output decline by 79 per cent, 40.5 per cent, and 96.5 per cent during the period under review.
Of the three terminals, Forcados terminal recorded the highest loss from over three million barrels in July to a little over 100, 000 barrels in September.
Similarly, crude oil output from Bonny was 799,294 in July before declining to 749,463 in August and then 167,582 in September.
For the Brass terminal, the output was 290,227 in July, 270,932 in August and 172,814 in September. In the same vein, the production output from Forcados was 3,858,188 in July, 208,430 in August and 134,437 in September.
