Crude oil theft may crash crude output - Operators

There are strong indications that increasing crude oil theft may drastically reduce crude oil output thereby reducing revenues accruable to the Federal Government.

Operators of marginal fields made the insinuation on Monday in Lagos at the ongoing oil and gas conference organised by the  National Association of Petroleum Explorationists (NAPE).

Crude oil theft in the Niger Delta region has been on the increase while the Federal Government seems helpless about the situation.

Chief Executive Officer of Walter Smith, one of the operators, Abdulrasaq Isa-Kutepa, said in a paper at the pre-conference that his small company had lost $50 million between January and November, 2013 due to crude theft.

“Our production figures are hampered by crude oil theft. We had production shut down of 120 days in 2012 due to this challenge. In this 2013 we already lost 120 days.

“As I am talking to you, we are not producing due to the shut down of TNP. We lost almost $50million this year to this persistent shutdown of TNP,” he said.

Chief Executive Officer, Brittania U, operator of Oil Mining Lease (OML) 90, Uju Ifejika, who corroborated Isa-Kutepa’s view, maintained that banks are holding back funding for the marginal field development, blaming this for being partly responsible for the poor performance of marginal fields operation.

“It is a thing of shame that out of the 24 fields that are marginal, only six to seven (onshore) are producing. The worse scenario is the bid round of 2007. Out of this, no one single marginal field awarded in 2007 is producing.”

However, the Chief Executive Officer of First City Monument Bank (FCMB), Ladi Balogun, stated that banks’ difficulty to finance oil and gas projects stemmed from the fact that there is nothing to prove in terms of exploration.

This, according to Balogun, who was represented by Akeem Adedeji, is “because it is only the 10 per cent equity in the loan assets that is being owned by the bank, the remaining 90 per cent is owned by the depositors who you, as a bank, must pay back their deposits at the end of the year with interests.”

Meanwhile, the former Managing Director, Nigerian National Petroleum Corporation (NNPC), Funso Kupolokun, has tasked the marginal field operators to make major marks in Nigeria’s oil and gas industry with serious commitment to excellence.

He said: “Despite some challenges for independent to grow you will agree with me that it requires this commitment to make headway. Independents can play a major part in the country’s plan to augment its reserves base.”

Eighteen of the 24 marginal fields awarded before 2007 are not producing as at today, and operators of these fields who are indigenous players said at the pre-conference workshop of NAPE that some of the six fields currently producing are being seriously hit by crude theft