Shell Petroleum Development Company (SPDC) has said that crude oil theft has led to the company’s loss of its major pipelines.
The company also said it was for the same reason of crude oil theft that Nigeria has been unable to meet its OPEC quota of 1.8 million barrels a day.
Managing director of Shell and chairman of Shell companies in Nigeria, Mr. Osagie Okubor, said this at an energy conference on Wednesday that the rising cases of crude oil theft in the country is the major reason many international oil companies and losing their investments in Nigeria.
Okunbor said, “Two of our most important pipelines in this country today are shut down with hundreds of thousands of barrels a day shut-in.
“It is a fact that the issue of theft, whether as a standalone or as the basis for us to meet our OPEC quota is an existential threat for this industry.”
Reuters reported that according to the Nigerian petroleum regulatory agency, the country lost $1 billion in revenue during the first quarter of this year due to oil theft.
It is unfortunate that Shell which has operated in Nigeria for decades has shut down its two pipelines due to oil theft while it is also selling its onshore assets to focus on deep water drilling.
According to Okunbor, local companies which won licences to develop marginal fields would face challenges to transport their crude once they start production, because marginal fields are smaller oil blocks located onshore or in shallow waters and are typically developed by local companies.
Recall that crude oil theft has resulted in the declaration of force majeure at Bonny Oil & Gas Terminal, a pipeline transporting crude from the oil-rich Niger Delta to export vessels, among others, creating a hostile environment and disincentive to investors and thereby affecting more on the country’s oil production output.