The oil giant said yesterday that Nigeria, which pumps 2.4 million barrels of oil a day, could produce four million barrels daily, if theft is eliminated and the industry is better managed.
Ian Craig, Shell’s director for sub-Saharan Africa, told an oil and gas conference in Abuja that thieves were stealing about 150,000 barrels per day by bunkering, or cutting right into pipelines to steal oil.
Craig also blamed the state-run Nigerian National Petroleum Corporation (NNPC) - which partners with all foreign oil firms - for chronically under funding projects.
Shell is the dominant oil company in Nigeria, which is Africa’s largest oil producer.
Craig spoke while delivering his paper entitled: Nigeria – Challenges and opportunities.
Craig said the greatest challenge faced by the company is the massive organised oil theft ring and the criminality, and corruption which it fosters. This, he said, drives away talent, increases costs, reduces revenues to both investors and the government and results in major environmental impacts.
He said in December, last year, a spill caused by two failed bunkering connections occured and the repairs took a month, with a total production deferment of over four million barrels.
He said thieves used the one-month programme pipe-line depressurisation as a window to install even more bunkering points, adding that since the restart of production in January, there have been multiple trips caused by pressure drops resulting from illegal off-take. “We have found over 50 bunkering points on the line and associated industrial scale illegal refining with major environmental impacts. These are, of course, now being removed,” he said.
He said Shell has been able to bring production back but it is still below pre-militancy levels.
“The challenges I have described in the onshore, shallow water, deep water and gas sectors have held back development and have unfortunately led to a reduced appetite for exploration.” This in turn, I believe, results in Nigeria’s reserves probably being materially understated,” Craig added.
But NNPC Managing Director Austin Oniwon, said corruption within NNPC was overblown, casting doubt on whether the firm intends to tackle what several reports have highlighted as a major problem.
Numerous reports and audits have said graft is rife within NNPC. Transparency International and Revenue Watch last year ranked it as the least transparent oil company in the world.
“I think NNPC’s corruption is blown out of proportion. Corruption in NNPC is in the imagination of some people.” He also spoke at the oil and gas conference.
