The Strategist

Criminals in Nigeria take away 650 th. barrels of oil every day


04/28/2016 - 15:10



Falling oil prices, rampant corruption and constant attacks on oil pipelines are only a bit of Nigeria's oil sector problems. Sea raiders attacking tankers grab around 400 thousand barrels of oil every day.



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This is equivalent to the export potential of Forçados oil terminal.

The total damage from piracy, theft and fraud for the largest oil exporter in Africa is estimated at about 1.5 billion per month, said the deputy US ambassador to the UN, referring to the report of Chatham House.

Local governments and the UN have made relatively successful attempts to put an end to piracy. Yet, the raiders simply change location of their bases and adapt quickly to new security measures. As a result, the UN Security Council is calling for stricter actions aimed at eliminating the problem.

Starting from 2014, the frequency of pirate attacks has increased at an alarming rate.

Just two pirate attacks on April 11 did harm to seven countries. The ships were under the Maltese and Liberian flags; the goods were sent from Nigeria, Turkey and Greece; the eighth crew members were citizens of Egypt, the Philippines and Turkey.

Six attacks and six attempted attacks have been reported in the Gulf of Guinea in I quarter of this year. Nine attacks occurred off the Nigerian coast, one - near Côte d'Ivoire, and two others - in the territorial waters of the Democratic Republic of the Congo. The number of such incidents in the Gulf of Guinea was about 100 in the past year.

Dealing with the raiders requires international efforts and, in particular, coordinated efforts of the countries in the Gulf of Guinea.

Nigeria alone is unlikely to cope with the threat. Therefore, the piracy will only intensify. In addition, these attacks significantly increase the country’s loss due to falling oil prices and other economic problems. In March, Nigeria produced 1.677 million barrels of crude oil. The figure was 1.755 million barrels in the previous month. According to Financial Times’ analysis, the decline will continue in the coming years, largely because all the decisions on reform produced no tangible results. It was planned that the oil company NNPC will receive a new impulse after changing production conditions, agreements with investors and other oil companies operating in the country. Yet, the big oil companies say that such a step will only deter investment by exerting a negative impact on oil sales revenues. Even new price rally will not save Nigeria since its production continues to decline. In June, the country plans to sell 1.57 million barrels of crude oil, what is less than 1.6 million barrels in May. Moreover, the budget for 2016 forecasted an average of 2.2 million barrels, and this can hardly be achieved in the short term. 

The continuing dispute between NNPC and international operators hinder the normal production. In addition, companies do not trust the authorities, which promised to ensure the stable production and distribution of income. Vandals, exploding or damaging the oil infrastructure day to day, reduce the volume of deliveries to 250 th. barrels. The raiders seize about 400 th. barrels per day. Overall, Nigeria founds itself short of 650 th. barrels each day.

source: ft.com