The Nigerian National Petroleum Corporation (NNPC) has disclosed that the country has, so far, lost about $48 million or N17 billion (using N360/$1) to oil theft in 2020.
The Group Managing Director of NNPC, Mallam Mele Kyari, stated this at 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).
Shut Kaduna refinery down now, Nigerians react to NNPC financial statements He, however, said the number is lower when compared to the past. In 2018 and 2019, he put the lost at $825 million and $725 million respectively.
The reduction, he said, was because of the increased surveillance by the security agencies. He said oil pipelines were being destroyed within townships, not in the bush, with the connivance of security agents, security contractors and community leaders.
He said the Group had decided to hand over the pipeline security completely to the security agencies. “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 that they are designed for, you cannot guarantee required crude oil supply except they are replaced.”
He blamed the problem on the failure to carry out proper turn around maintenance. “We have not done proper maintenance in the last 30 years, and the cumulative effect is that even when you start it today, it can not be run optimally.
“You can not 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% of their capacity when they were running in 2018. He said N64 billion was spent to resuscitate Kaduna refinery without any meaningful result.
He, however, said the NNPC is working with partners 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.