…indicts security agents, contractors, community leaders
Nigerian National Petroleum Corporation says the country has so far lost about $48 million or N17 billion (using N360/$1) to oil theft in 2020.
NNPC Group Managing Director, Mallam Mele Kyari, disclosed this during an interactive hearing on “Exiting Petroleum Subsidy: Ensuring Self-Sufficiency in Domestic Refining of Petroleum Products” by the Senate Joint Committee on Petroleum Resources (Upstream and Downstream).
Kyari, however, said the figure was lower when compared to the past.
He said the loss in 2018 and 2019 was $825 million and $725 million, respectively, adding that the reduction was because of increased surveillance by the security agencies.
The NNPC boss said oil pipelines were being destroyed within townships, not in the bush, with the connivance of security agents, security contractors and community leaders.
Kyari said the NNPC had decided to hand over the pipeline security completely to the security agencies.
He said, “It is their work to secure government property.”
On the state of the country’s refineries, Kyari said NNPC “deliberately” shut down the Kaduna, Warri and Port Harcourt refineries.
He said, “We deliberately shut down the three refineries for two reasons. One is business decision. There is such a condition that we can only extract 70 to 80 percent of the value of a crude.
“It is needless to operate when you know you will lose 20% of the value. Second is that we cannot even guarantee crude oil supply to these lines.
“From Excravos to Warri and then to Kaduna; Bonny to Okrika, the pipelines are very old – some are 30 to 40 years old – and have not been replaced, and all the activities of the vandals that happens every day, if you put them under pressure than they are designed for, you cannot guarantee required crude oil supply except they are replaced.”
Kyari blamed the problem on the failure to carry out proper turn around maintenance.
He said, “We have not done proper maintenance in the last 30 years, and the cumulative effect is that even when you start it today, it cannot be run optimally.
“You cannot do anything except you replace the pipeline and the cost of replacement is very high.
“To replace pipeline from Excravos to Kaduna, you need at least $2 billion, and we don’t have that kind of money.”
He said the country’s best two refineries, Warri and Port Harcourt, were only producing a little above 25 per cent of their capacity when they were running in 2018, adding that N64 billion was spent to resuscitate Kaduna refinery without any meaningful result.
He, however, said the NNPC was partnering with some stakeholders to fix the refineries. He said except for Port Harcourt refinery, which will be partly funded by government money because there is provision for it in the 2020 budget, the two others will be fixed completely by third party financing.