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Crude Nicking Nigeria's Threat: Industry

FILE: View shows an oil stained polluted mangrove in Bakana ii, Okrika local government area, Rivers state, Nigeria. 1.28.2022

Crude oil theft in Nigeria poses an existential threat to the country's oil industry, the local head of Shell told an energy conference on Wednesday, adding this has resulted in the shutdown of two of its major pipelines.

Osagie Okunbor, managing director and country chair for Shell Petroleum Development Company of Nigeria Limited and Shell Companies in Nigeria, said oil theft was one of the reasons that Nigeria could not meet its OPEC quota of 1.8 million barrels a day.

"Two of our most important pipelines in this country today are shut down with hundreds of thousands of barrels a day shut-in," Okunbor said without giving details.

"It is a fact that the issue of theft, whether as a standalone or as the basis for us to meet our OPEC quota is an existential threat for this industry."

Nigeria lost $1 billion in revenue during the first quarter of this year due to oil theft, the petroleum regulator said last week.

Shell has operated for decades in Nigeria and together with other oil majors, is selling onshore assets to focus on deep water drilling.

Okunbor said local companies which won licences to develop marginal fields would face challenges to transport their crude once they start production.

Marginal fields are smaller oil blocks located onshore or in shallow waters and are typically developed by local companies.

Oil theft has resulted in the declaration of force majeure at Bonny Oil & Gas Terminal, a pipeline transporting crude from the oil-rich Niger Delta to export vessels, among others, creating a hostile environment and disincentive to investors.

Along with the economic loss of oil theft is the specter of pollution. Tapped pipelines result in oil spills that seep through the environment causing both water and land damage that is expensive to repair.