August 8, 2022

Product Theft And Vandalism; Putting NNPC At A Disadvantaged Competitive Position

3 min read

Pipeline vandalism refers to the willful or deliberate act of damaging petroleum pipelines with the sole aim of stealing crude oil and associated petroleum products.

Nigeria spends billions of Naira annually to maintain pipelines used to transport oil products, with hundreds of such pipelines vandalised annually.

The Monthly Financial and Operations Report (MFOR) of the Nigerian National Petroleum Corporation (NNPC) has revealed increase in activities of oil pipeline vandals in March 2021.

Pipeline vandalism has been a major act of sabotage in the nation’s oil industry. From January 2019 to January 2021, as much as 1,400 pipeline points across the country were vandalised. Repairing and maintain the vandalised points costs the country about N60 billion yearly.

NNPC had earlier said that an average of 200,000 barrels per day of crude oil were usually lost to vandals.

The MFOR released, yesterday, showed that cases of vandalism increased by 29.63% across the country in March 2021.

According to the report, the Corporation recorded 70 vandalized points across its pipeline network in the period under review, representing 29.63% increase from the 54 points recorded in the previous month.

NNPC, which said it was working in collaboration with local communities and other stakeholders to reduce and eventually eliminate the menace, revealed that the Port Harcourt area accounted for 63% of the vandalized points, the Mosimi area accounted for 21% and the Gombe area accounted for the remaining 16%.

The vandalism happened across five pipeline axes nationwide. The Port Harcourt axis of the pipelines recorded the largest share of the “pulverized points” within this period with 538 points being damaged.

This is followed by the Mosimi-Ibadan axis with 535 points being damaged. Other oil pipelines in Gombe (46), Kaduna (32) and Warri-River Niger (10) accounted for the remaining oil pipelines theft in almost two years.

The highest monthly damages recorded in any of the five axes in the period under review were recorded in 2019, with the highest case being in January 2019 with 230 cases of vandalism.

The second-highest was in July of that year with 228 cases. This is trailed by the 186 theft cases in September 2019 and the 159 cases in August of the same year.

“Product theft and vandalism have continued to destroy value and put NNPC at a disadvantaged competitive position,” NNPC said in one of the reports.

Although the vandalism has ebbed in recent months, it continues to take a huge financial toll on the nation’s lean purse.

From January 2019 to January this year alone, repairs of the pipelines and other facilities came at an outlay of about N15 billion.

Over a third of that amount was expended within two months. Last May saw NNPC spending about N3.2 billion on repairs. Prior to that, March 2020 gulped N2.6 billion for the same purpose.

In February, NNPC said the country is losing an average of 200,000 barrel per day of its crude oil production to saboteurs and illegal pilfering by criminals, a quantum leap from the 70,000 b/d of crude output lost to theft as of August 2020.

“We have two sets of losses, one coming from our products and the other coming from crude oil. In terms of crude losses, it is still going on. On average, we are losing 200,000 b/d,” NNPC Group Managing Director, Mele Kyari, said in a statement at the time.

In 2019, the Nigeria Extractive Industries Transparency Initiative (NEITI), the nation’s oil auditing agency, said in a report that OPEC members lost about 138,000 b/d of crude oil to theft over the past 10 years worth $40.06 billion.

The Nigerian National Petroleum Corporation (NNPC) should not relent in engaging stakeholders- the government, community and all manner of people that have direct impact on the pipeline.

The corporation should also apply technology like the defiled optic system.

Government has to set up a system to guide the pipeline because it is a national asset. It is a very strategic national asset and anywhere in the world, you guide your pipelines. Either by using technology, engaging the communities around there and/or putting up a proper security, including military, but you have to guide your pipelines.

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