Annually, Nigeria loses 6.132 billion gallons of crude oil to theft, according to analysts

By Adeleye Kunle

According to the most recent analysis, Nigeria loses a whopping 6.132 billion gallons of crude oil annually to oil thieves, with a barrel of oil containing 42 gallons.

Furthermore, the country is losing approximately 16.8 million gallons of crude oil, which is equivalent to 67 million litres of refined petroleum products, to oil thieves.

Mr. Bala Zaka, a public affairs analyst, revealed these.

The figures came from a calculation of 400,000 barrels per day and 146 million barrels per year lost to oil thieves, a situation that has become a nightmare for oil companies, the government, and other stakeholders.

Zaka, an energy consultant, said yesterday on national television (TVC) that the movement of the stolen crude involved 2000 petroleum tankers of 33,000 litres each and possibly a ship stationed for the illegal purpose.

Nigeria has been dealing with oil losses caused by oil thieves and pipeline vandals, as well as other factors such as international oil companies withdrawing funding for oil exploration and production projects (IOCs).

Others include the inability of the national oil company and the many independent companies springing up to replicate the capacity demonstrated by the existing oil IOCs, as well as the non-restart of shut-in oil wells, ageing facilities, and the inability of the national oil company and the many independent companies springing up to replicate the capacity demonstrated by the existing oil IOCs.

As a result, Nigeria has consistently failed to meet its monthly production quotas set by the Organization of Petroleum Exporting Countries (OPEC), depriving the country of the benefits of the current high oil price.

Nigeria’s crude production deficit against OPEC’s 1.8 million barrels per day July production quota was approximately 700,000 barrels as of the last count, as the country only managed to produce approximately one million bpd in the month under review.

The aforementioned challenges have made the government’s goal of achieving three million barrels per day of oil production and 40 billion barrels of reserves nearly impossible, with reserves remaining stuck between 36 and 37 billion barrels for years.

“We should carry out a conversion because technically, a barrel is 42 gallons,” Zaka explained. We’ll see what happens when you multiply 400,000 barrels by 42 gallons, and we know that a gallon is four litres. So, multiply that by four litres to get the litres in millions.

“We know these 33000 litre tankers, so if you take that 60 million litres of crude oil and divide it by 33000, you get 2000.” So, imagine moving 2000 crude oil tankers.

“As a result, I believe I will agree that they must have a method of evacuating them through illegal bunkering.” And I believe a large ship will be present where you will place the quantity. In this case, the best way to describe it is as a well-crafted and well-syndicated crime. It is criminal behavior.

“You know, there’s crude criminality and well-crafted criminality. They are not the same thing. When you encounter petty thieves, you are dealing with crude criminality. So it is well-crafted in this case.

“As I previously stated, all you have to do is multiply 400,000 by 42.” Then multiply that figure by four again, and when you get that figure, divide it by 33,000. This will give you approximately 2000. So that is the daily theft. Then, if you want to get it per year, multiply that figure per day by 365, and you’ll get some crazy figures that will make Nigerians nervous.”

Outside of the huge volumes of oil lost daily and yearly to theft, he said the damage such criminality does to the country’s image is concerning, and that this has huge implications for the nation’s investment expectations.

He contended that, while there are concerns with oil companies about licensing and extortion, the issue of theft was the most serious because it involved oil companies’ investments and the need to secure the funds and resources they had invested in.

He stated that the totality of business climate hostility, which includes theft, insecurity, and such criminalities, has become unbearable to the oil companies, claiming that the losses have impacted their capital, profit, shareholder dividends, and creditors’ interest.

According to Zaka, the majority of investments in the Nigerian oil and gas industry have relied on funds from shareholders and creditors, pointing out that if the oil firms, both majors and independents, are receiving funds from shareholders, they will be expected to report the correct volume of production and ensure shareholders receive dividends.

“How can dividends come from such criminality?” And if they receive funds from financial institutions or creditors, they will be required to pay what is known as interest or cost of capital.

“How can you break even if you are investing money from financial institutions, creditors, or shareholders, and you are experiencing this level of product theft?” Will your profit margin ever improve? How will your profit before taxes look? Everything indicates that it will be a disaster. “It’s truly shameful,” he added.