3mbpd target, N49.7tr budget rest on new FIDs, secure oil assets

•  ‘Navy’s plan to extract oil from locals will increase tension’
• Despite security spending, NNPC reports 1,528 thefts in two months
• Fawibe: Cost of security jeopardising viability of oil production

Nigeria’s plan to increase oil production to three million barrels per day (bpd) this year rests on its capacity to further check crude oil theft, with incidents hovering around 1,528 in less than two months, divestments and high cost of oil production.

Whereas the government is hoping to partly fund the 2025 budget with two million bpd production, the Ministry of Petroleum Resources and National Nigerian Petroleum Company Limited (NNPCL) are eying a three million bpd production target in the year even as they are working with the Nigerian Navy to rein in the historical oil theft crisis.

This comes amid fresh tension over the rise in militarisation of the Niger Delta. Stakeholders, yesterday, raised concern over the new threat as well as the environmental crisis just as the Ministry of Petroleum Resources and the Nigerian Navy have teamed up to push up the country’s oil production by more than 100 per cent.

Although over $5.9 billion divestment was sealed in the industry last year while a major final investment decision (FID) was taken on Bonga by Shell, stakeholders who spoke with The Guardian said the country may need to do more if oil production, which is critical to pulling the economy from doldrums and fixing the foreign exchange crisis, must improve.

The fresh apprehension comes ahead of the resumption of the National Assembly on deliberation on the 2025 budget, which is premised on a production target of 2.06 million bpd and $75 per barrel price index.

Already, the Donald Trump Presidency casts shadow on the prospect of the international oil price outlook. President Bola Tinubu is looking to partly finance the N49.7 trillion 2025 budget with N19.6 trillion. That’s about 56 per cent of the budget.

Nigeria struggled with oil production last year and has faced a similar situation in the last decade. The country’s crude oil production was 1.42 million barrels a day (bpd) in January 2024, according to the Organisation of Production Exporting Countries (OPEC).

In February, the production was 1.32 million bpd. In March, the average production was 1.23 million bpd. The average production was 1.25 million bpd in May 2024 and improved to 1. 276 million bpd in June 2024; rose to 1.307 million bpd and was 1.4 million bpd in July and August.

In September, the average daily crude oil production fell to 1.32 million bpd only to rise to N1.53 million bpd in October 2024. Though production increased modestly last year, it is still far from this year’s target.

In November, the NUPRC reported Nigeria’s highest level of oil production which stood at 1.7 million bpd crude oil plus condensate. OPEC reported 1.5 million bpd while the NNPCL reported 1.8 million bpd.

Shell has divested its assets worth $2.4 billion to Renaissance Africa Energy; TotalEnergies had divested over $900 million to Chappal Energies while Eni divested over $800 million worth of assets to Oando.

ExxonMobil also handed over a $1.3 billion asset to Seplat Energy. The recoverable oil from the reserves stands at about 2.33 billion barrels of crude oil, showing that the about 100 years of international oil companies’ (IOCs’) dominance on the country is near its end and the sector is moving towards a $2 trillion value opportunity for national players and investors.

From 2nd to 8th of November, over 198 oil theft incidents were reported as 15 illegal pipeline connections while 68 illegal refineries were uncovered. Within the period, three vandalism incidents occurred while 32 wooden boats, 18 vehicles were arrested. Cases of oil spill also stood at seven.

From the 9th to the 15th of November, 20 illegal pipeline connections and 100 illegal refineries were uncovered as 272 incidents were reported by the NNPCL. Within the period, vandalism rose to eight, 68 wooden boats and 32 vehicles arrayed while four oil spills were reported, and 10 illegal crude oil storage locations were discovered.

From the 16th to the 22nd of November, 2024, there were 145 incidents with about 18 illegal pipeline connections and 48 illegal refineries being discovered.

Within the period, cases of vandalism occurred at eight different times; 23 illegal wooden boats and seven vehicles arrested were recorded, while four oil spills occurred and five illegal crude oil storage locations were discovered.

In the week of 23rd to 29th November 2024, there were 301 incidents of crude oil theft in the Niger Delta region with 65 cases being illegal pipeline connections and 86 cases of illegal refineries uncovered.

In just a week, there were 68 cases of vandalism as 30 wooden boats and five vehicles were arrested while three oil spill cases were reported. There were 13 illegal storage sites and 31 vessel infractions.

Oando recorded the highest number of cases standing at 133 while Maton followed with 31 incidents, New-Guard Security and Consultancy Services Ltd (PMO) documented 20 cases and PINL recorded 15 incidents.  The NNPC Command and Control Centre reported seven cases, Tantita Security Services and Shell Petroleum Development Company (SPDC) each accounted for three incidents.

In the week of 30th November to 6th December, there were 94 reported cases with 17 illegal pipeline connections and 34 illegal refineries uncovered.  Within the period, six vandalism occurred as NNPC reported the arrests of 16 wooden boats and six vehicles while an oil spill occurred in one location. There were four illegal storage locations and 10 vessel infractions.

Analysis of the sources of the incidents shows that SPDC recorded two, PINL (15), Maton (nine), Oando (12). New-Guard Security and Consultancy Services reported seven incidents while NNPC Command and Control Centre had three incidents.

Crude oil theft incidents between 7th and 13th December showed that there were 212 cases of theft with 42 being illegal pipeline connections and 83 being illegal refineries.

While there were seven cases of vandalism, 45 wooden boats and 19 vehicles were arrested even as there were five cases of oil spill, four cases of illegal storage locations and seven cases of vessel infractions.

The crude oil theft incidents were recorded from various sources, as highlighted by NNPCL, which disclosed that Pipeline Infrastructure Nigeria Limited (PINL) and Oando emerged as the entities with the highest number of incidents, each reporting 29 cases. Maton followed with 26 incidents.   Meanwhile, Tantita Security Services and Shell Petroleum Development Company (SPDC) reported two incidents each. The NNPC Limited Command and Control Center recorded 15 incidents and Liquefied Natural Gas Nigeria (LNGN) accounted for one incident. GSAs recorded 44 incidents.

Between 14th and 20th of December 2024, there were 180 cases of crude oil theft. During the period, 20 illegal pipeline connections and 74 illegal refineries were uncovered, while seven cases of vandalism were recorded. During the period, 32 wooden fibre boats and 10 vehicles were arrested. There were two cases of oil spills, 20 illegal storage locations and 15 vessel infractions.

The incidents, attributed to various sources, showed that Pipeline Infrastructure Nigeria Limited (PINL) and Oando had the highest reported figures, with 29 incidents each. Maton followed closely with 26 incidents. The NNPC Limited Command and Control Center recorded 15 incidents, Tantita Security Services and Shell Petroleum Development Company (SPDC) each reported two incidents, while Liquefied Natural Gas Nigeria (LNGN) reported one incident.

From 21st to 27th December 2024, Nigeria reported 126 incidents of oil theft as 23 were illegal pipeline connections and 34 were illegal refineries. Within the period, three vandalism cases occurred, 20 wooden boats and 10 vehicles were arrested and spill stood at two.  A renowned energy expert, Ademola Adigun, said the government may need to do more if Nigeria would push production volume to over three million barrels per day.

“The key issue includes facilitating investments into exploration. That is only when the three million target is feasible. Can it happen this year? I don’t think so,” Adigun said.

The energy scholar and Director of the Centre for Democracy and Development noted that Nigeria’s push for more oil is coming amidst various challenges and threats in the Niger Delta. According to him, beyond oil theft and infrastructure decay in the oil sector over time, there has been a long under-investment in the oil sector that makes the deal unrealisable.

“I don’t see Nigeria achieving this for obvious reasons,” he noted.  The Federal Government had, on December 30, announced a plan to collaborate with the Nigerian Navy to achieve its target of three million barrels per day (bpd) in crude oil production by 2025.

The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, while launching the second phase of Operation Delta Sanity II (OPDS II) in Port Harcourt, said: “Our target is to reach three million bpd by 2025. And we are confident that the second phase of OPDS will play a key role in achieving this milestone.”

Renowned environmentalist and Niger Delta stakeholder, Nnimno Bassey, said the partnership with the Navy to intensify oil extraction in the area is an unacceptable move to intensify an assault on an already traumatised people and territory.

“Furthermore, in a situation where oil extraction is not adequately metered and the nation does not know how much oil is being extracted daily, this move is another guise to criminalise the impoverished people while ignoring the fundamental problems in the sector,” he noted.

He said the Niger Delta has been a territory occupied by military forces at the pleasure of international oil companies for decades, stressing that the development is fueling impunity and unmitigated socio-ecological devastation.

Bassey described the situation as an undeniable ecocide, which has wreaked havoc in the area despite outcry by the Environmental Assessment of Ogoniland by UNEP of August 2021 and the report titled Environmental Genocide by the Bayelsa State Oil and Environment Commission of May 2023.

With the cost of producing a barrel of oil ranging towards $48 barrels per for some operators, the NNPCL spent a whopping N267.98 billion on security going by its 2023 audited statement.

The Chairman of International Energy Services Limited, Dr Diran Fawibe, who insisted that the projection is elusive, said profitability in the oil sector in Nigeria has waned.

Although Fawibe commended the level of efforts being made by the current administration in pushing for more investment in the oil sector in the country noted that the burden of insecurity is killing the country.

Fawibe noted that three million barrels per day of oil production remained a mirage, stressing that the cost of security in Nigeria’s oil industry has become so high that it is jeopardising the viability of oil production.  He noted that the level of divestment and investment decisions from the IOCs must be sustained soon to improve the company’s oil production.