Before the lull in the price of crude in the international market, the story around Nigeria’s oil exploration has been dogged by a number of vices such as oil bunkering, vandalism, gas flaring, all contributing to huge losses in revenue to the country. With the present low in the price of the commodity, Nigeria’s dilemma only becomes worst, MUSA ADAMU writes
At $57 per barrel, the free fall of the international crude price is already below this year’s budgetary benchmark, put at $65, with experts forecast saying it would go further down before recovering in the beginning of the second quarter of the year.
This is the lowest since the return of democracy in 1999. From the frantic moves seen in the various governments’ quarters, there is no gainsaying that the fact that the country frittered away the rainy day and failed to save for periods such as this.
This is evident with government turning to the Excess Crude Account (ECA) to rev up its funds, bringing it down to about $3billion already.
As if this is not enough a dilemma for a nation that depends on revenues from oil to drive both its capital and recurrent expenditures, the screaming headline last week credited to the Nigerian National Petroleum Corporation (NNPC) data that Nigeria lost about $1billion (about N170billion) to gas flaring only serves to remind us of how deep Nigeria is in the soup.
The report said the oil companies flared a big chunk of the gas produced from January to September 2014.
According to the said data from the NNPC, about 296 billion standard cubic feet of natural gas was flared in the nine-month period.
The staggering amount was arrived at because with natural gas price now about $3.30 per 1,000 scf, 296 billion scf of gas amounts to about $1billion.
It further said both international and indigenous oil companies burnt a total of 43.7 billion scf in January (19.17 per cent of total production), 50.1 billion scf in February (23.20 per cent of production) and 38.3 billion scf in March (17.77 per cent of output).
“In April, 22.3 billion scf of gas was flared; 19.7 billion scf in May and 23 billion scfwas wasted in June. In July, 29.1 billion scf was flared; 39.1 billion scf in August; and 29.5 billion in September, the NNPC data showed,” it disclosed.
Besides this menace in the nation’s oil industry, there is also the seaming intractable evil of oil bunkering which has resulted to the loss of billions of dollars.
Federal government and some operators of the oil industry have put out what the nation loses at over $1billion monthly to activities of oil thieves in the Niger delta region.
Experts have also estimated the volume of oil theft at between 100,000 and 250,000 barrels per day (bpd) or as much as 91 million barrels per annum or billions of dollars in lost revenue.
The menace of oil theft is so serious that highly placed Nigerians and industry players have had cause to call on the international community to designate stolen oil from Nigeria as “blood oil” reminiscent of the Sierra Leon’s “blood diamond” but the call has gone unheeded, giving vent to the belief among many Nigerians that the theft has an international backing.
Also adding her voice in the past, the Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Mrs. Zainab Ahmed, had urged government to declare a national emergency to tackle the menace of illegal bunkering in the sector.
She had said her call was necessitated by the “mind-boggling theft of petroleum products,” she experienced after touring the Shell petroleum development company (SPDC).
Faced with these challenges, experts have called for drastic efforts on the part of government and other well-meaning Nigerians to stave off the grim economic reality confronting the nation this year.
They contended that since Nigeria is Africa’s top oil producer and largest holder of natural gas reserves on the continent, with about 187 trillion cubic feet of proven gas reserves and 600 Tcf of unproven gas reserves, government must take deliberate efforts to at least minimise the rate of gas flaring.
They said government should take steps at turning the tide of low investment in gas infrastructure, which has stunted the growth of natural gas development over the years for domestic consumption, particularly for power generation.
On the challenge of the oil bunkering, some industry analysts said government must intensify its diplomatic efforts to make the product unmarketable in the international market.
They argued that despite the fact that the country’s past calls for the labelling of the stolen crude oil as blood oil, didn’t receive much audience it cannot afford to rest on its oars as blocking the market for the commodity remains the only potent attack on the illicit trade.
Similarly, they also called for urgent cancellation of contracts for the coastline security to private citizens, arguing that apart from frittering away the much needed resources on the contracts which have failed to yield any positive result, it had over the years, proven to be a cover for the oil thieves to perpetrate their trade without any challenge.
They hinged their argument on the statistics that says oil theft only became worst after the award of the contracts to the private citizens.
