As oil-producing companies in the country and even in Nigeria continue to lose out on the rising international price of crude, Wood McKenzie, a global mining research and consultancy, said the challenge of oil theft in the country had gone beyond a crisis indicate.

The company, in its latest report titled: “Nigeria Suffers Record Levels of Oil Theft”, while noting that the problem scared investors in the sector, noted that, for example, Shell reported about 107 incidents of sabotage nothing only in 2021.

Stating that the Bonny pipeline remains the hardest hit by theft and vandalism, the research body pointed out that Heirs Oil and Gas, owned by Tony Elumelu, for example, suffered average losses of 66% from oil exploitation license (OML) 17 in 2021, before peaking at 97% in December.

Describing the Imo River and Rumukpe in more detail as threat hotspots, the document showed that the Nembe Creek main line, operated by Aiteo, experienced 40% downtime during the period.

Woodmac added that while improved security and surveillance reduced losses at Forcados, the lack of pumping capacity at Ughelli had a major impact on oil production in the West Delta.

According to the document, ND Western reported 300 points of theft on a 12 kilometer section of pipeline during the period around OML 34, while Shell declared force majeure at Forcados in August and December of the year. ‘last year.

He revealed that Eni Brass pipelines in the northern regions are now the most affected, while local security officials are dealing with an unprecedented number of incidents.

Although Chevron’s Excravos network is mostly offshore and not that vulnerable, it noted that the southern marsh community dispute died out at 8.8 kpd in December 2021, while 50% of liquids production now comes from offshore, which offers some form of protection.

“Oil theft is past crisis point and is discouraging onshore investment. Gross theft and sabotage have long been problems in Nigeria, but 2021 has seen record levels of theft.

“Thefts combined with closures of export terminals and pipelines limit Nigeria’s ability to increase production and take advantage of high prices. Onshore operators are spending to secure current production rather than to expand it. This represents a huge opportunity cost.

“The Bonny and Brass pipelines in the eastern delta are the most affected, Forcados much less. Barging can be profitable, but only on a small scale, longer term solutions are needed,” he said.

Explaining that “Nigeria was already here in 2016,” Woodmac said alternative pipelines are coming far too slowly to materialize. He added that investors and the state were paying the price.

“Nigeria’s production is expected to improve in 2022, but underperformance against the OPEC+ quota remains a key risk. NNPC reports that crude flights in 2021 reached 200,000 barrels per day, or a quarter of onshore production.

“Prolonged closures of Forcados and Qua Iboe export terminals have also hampered production. There has been little improvement in 2022, with Brass and Bonny terminals closing in March,” he noted.

The report reiterated recently released data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) that the stolen volumes are costing Nigeria up to $3.27 billion in oil shutdowns and impacting production and associated gas sales on the domestic market.

“Some onshore investments are on hold while operators attempt to secure production via alternative export routes. The scale and sophistication of crude thefts suggest an organized industrial-scale operation,” he pointed out. .

He noted that attempts to find alternatives have cost more, as barge costs, for example, typically range between $15 and $20 a barrel.

“The barge becomes profitable when losses exceed 20%, provided that oil prices are high enough to cover the additional cost. Logistics may limit barge volumes to a maximum of 20,000 bpd.

“Producers need access to a navigable river and barge jetty, as well as an agreement with an offshore vessel to export crude. Large producers only see barges as a short-term solution and usually return to mainline mainlines once performance improves,” he said.

The company said there had been a failure to build alternative pipelines since 2016 as many producers transport crude oil off Warri as it offers safer exports, but at prohibitive costs.