LAGOS, Nigeria (VOICE OF NAIJA)- A recent report from the Nigeria Extractive Industries Transparency Initiative (NEITI) reveals that Nigeria lost 362.28 million barrels of crude oil between 2014 and 2023 due to measurement errors, sabotage, and production adjustments.
This translates to a daily loss of approximately 992,547 barrels of crude oil over the 10-year period.
NEITI shared these findings in its latest publication titled, ‘Oil & Gas Industry Audit 2023: An independent report assessing and reconciling physical, process, and financial flows within Nigeria’s oil & gas industry’.
The agency further highlighted that crude oil production deferments during the review period totaled 110.66 million barrels.
The report on crude oil losses was compiled from various sources, including submissions from the Nigerian Upstream Petroleum Regulatory Commission during the NEITI audit period and signed reports from companies like Nigerian National Petroleum Company Limited.
NEITI defines deferment as a halt in production caused by scheduled or unscheduled repairs and maintenance, pipeline breaks or leaks, or poor equipment performance.
Nigeria, as an oil-producing nation, continues to face ongoing management challenges in fully utilizing its oil and gas potential.
The situation is exacerbated by the use of outdated and corroded pipelines for crude oil transportation.
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The report details a consistent rise in crude oil losses, with the highest loss of 101.05 million barrels recorded in 2016.
In 2014, the loss was one million barrels, which surged by 2,612 percent to 27.12 million barrels in 2015.
The peak loss in 2016 amounted to 101.6 million barrels, meaning the country lost 278,356 barrels daily to theft and sabotage, leading to an estimated revenue loss of $4.6 billion. In 2016, crude oil prices averaged $46.07 per barrel.
In 2017, losses amounted to 36.46 million barrels of crude oil, translating to an average daily loss of 99,890 barrels. With crude oil prices averaging $54.32 per barrel that year, Nigeria lost approximately $1.9 billion to theft and sabotage.
In 2018, the country saw a loss of 53.28 million barrels, or a daily average of 145,972 barrels. At an average price of $72.58 per barrel, this equated to a loss of $3.8 billion.
The 2019 losses dropped to 42.25 million barrels, with a daily average loss of 115,753 barrels. With crude prices averaging $65.49 per barrel, Nigeria lost $2.7 billion that year.
Losses further decreased to 39.08 million barrels in 2020, 17.57 million in 2021, and 36.69 million in 2022.
By 2023, the total loss stood at 7.68 million barrels, averaging a daily loss of 21,041 barrels marking a significant 79 percent reduction from the 36.69 million barrels lost in 2022.
The report read, “Crude oil loss was 7.68 million barrels which was 3.33 per cent of the total metered production at the flow station (7.675 million barrels) for the affected companies and crude type. The losses resulted from 2.910m million barrels measurement error (1.3 per cent), 5.252 million barrels theft and sabotage (2.3 per cent) and 486.746 thousand barrels production/terminal adjustment (0.21 per cent).
“Crude losses were 7.68 million barrels in 2023, compared to 36.69 million barrels in 2022. This dropped by 79 per cent (29.02 million barrels). This underscores the positive impact of government initiatives aimed at reducing crude oil losses, enhancing operational efficiency, and improving accountability within the sector.
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“However, considering the proven crude oil reserves in the country, there is a need to ramp up production capacity to 2013 annual average of 800 million barrels through forensic audit of the wellheads and production platforms.”
In its recommendations to curb these losses, the agency encouraged the government to explore effective public-private partnerships to implement advanced digital solutions aimed at monetizing the savings from reduced crude losses.
It also suggested establishing a comprehensive database to track instances of petroleum product losses that could hinder optimal product availability.
It said, “The Federal Government through the NUPRC should consider viable public-private partnerships arrangement on the deployment of an advanced digital solution for the monetization of savings from crude losses.
“Also set up a special fund and a standby committee on crude loss prevention and security of oil and gas assets for a more coordinated response and intervention. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and stakeholders should accelerate actions to deploy a database and platform for aggregating cases of resource petroleum product losses that could disrupt the optimal availability of products.”