FT: “Nigeria is facing its worst oil crisis in five years, with output dropping below the key 2m barrels a day mark for six consecutive months, significantly below historic levels.”
““Theft and sabotage continue to undermine the country’s output,” the International Energy Agency (IEA), the oil watchdog, says in a report.
Criminal gangs are stealing anything between 100,000 b/d and 400,000 b/d from wells and pipelines in the Niger Delta, reselling the crude – worth several billion US dollars – to buyers as far afield as Latin America.
The theft – and the sabotage often associated with it – is forcing major oil companies, including ExxonMobil, Royal Dutch Shell, Eni of Italy, Chevron of the US and Total of France, to shut down wells too.
The crime wave adds distance to the official target of lifting Nigerian oil production to 4m b/d by 2020.
Foreign industry executives have long warned that, even in normal circumstances, the objective was ambitious. Now, it appears unachievable.
The production drop comes as the country’s oil sector is under unprecedented scrutiny. Lamido Sanusi, the highly respected governor of the central bank, revealed this year that there was a hole in the country’s oil account. Shortly after, he was suspended, but the authorities have yet to explain the mystery of the $20bn shortfall in oil revenues.
Nigeria has promised a forensic audit of its accounts, including those of the opaque state-owned petroleum company. But weeks after the scandal engulfed the country, the work has yet to begin.
….Chatham House, the London-based think-tank, last year said in a report that Nigerian crude was “being stolen on an industrial scale”. The “Criminal Crude” report, the most detailed so far to probe the murky world of Nigerian oil, stated that the $3bn-$8bn a year in proceeds “were laundered through world financial centres”.
….Oil production in Nigeria reached a high of almost 2.5m b/d a decade ago, but since then it has languished because of theft and violence in the delta. In 2008-09 the crisis reached its peak, with production falling 25 percentage points to 1.8m b/d during a wave of attacks by the militant Movement for the Emancipation of the Niger Delta. The government drastically cut the number of attacks in 2009 after it persuaded more than 26,000 militants to disarm in exchange for monthly cash payments.”
Future Today
