The Nigeria Extractive Industries Transparency Initiative (NEITI) has released a report disclosing that Nigeria suffered a significant loss of 362.28 million barrels of crude oil between 2014 and 2023. This loss stems from various factors including measurement errors, sabotage, and production adjustments. Over the span of ten years, this equates to an approximate daily loss of 992,547 barrels of crude oil, indicating a serious inefficiency within Nigeria’s oil sector. The comprehensive report titled “Oil & Gas Industry Audit 2023” evaluates the physical, process, and financial flows within the country’s oil and gas industry, utilizing data from multiple credible sources such as the Nigerian Upstream Petroleum Regulatory Commission and the Nigerian National Petroleum Company Limited.
The report also highlights a total crude oil production deferment of 110.66 million barrels within the same period. NEITI defines deferment as any interruption in production, which may arise from necessary repairs, maintenance, pipeline leaks, or inadequate equipment performance. The management of Nigeria’s oil and gas potential has faced persistent challenges, demonstrating an inability to address such problems effectively. Of particular concern is the reliance on outdated and corroded pipelines for crude oil transportation, further complicating oil recovery efforts.
Over the years, the data revealed a troubling trend of increasing crude oil losses, peaking at 101.05 million barrels in 2016. For context, Nigeria’s crude oil losses began at just one million barrels in 2014, escalating dramatically by 2,612 percent to 27.12 million in 2015. In 2016 alone, the country lost 101.6 million barrels, suggesting a daily loss rate that cost Nigeria an estimated $4.6 billion, given that crude oil averaged only $46.07 per barrel that year. Subsequent years, like 2017 and 2018, recorded losses of 36.46 million and 53.28 million barrels, respectively, leading to losses of approximately $1.9 billion and $3.8 billion, indicating not only the scale of the production shortfall but the significant economic impact these losses had on the country.
The situation seemed to improve starting in 2023, with total losses reported at 7.68 million barrels. This figure represents an 79 percent decrease compared to the 36.69 million barrels lost in 2022. This notable decline, attributed to governmental measures aimed at curtailing oil losses and improving operational efficiency, illustrates some success in addressing previous challenges. The NEITI report detailed that the complexities surrounding crude losses in the year 2023 included 2.91 million barrels due to measurement errors, 5.25 million attributable to theft and sabotage, and 486,746 barrels related to production and terminal adjustments. Despite these improvements, the report still highlighted that such losses represented 3.33 percent of the total metered production at the impacted flow stations.
Looking forward, NEITI stresses the need for Nigeria to enhance production capacity to align more closely with its established proven reserves, potentially aiming for a return to the annual average of 800 million barrels recorded in 2013. To achieve this, the agency recommends conducting forensic audits of the wellheads and production platforms, ensuring that production issues are comprehensively addressed. Additionally, there are calls for establishing public-private partnerships to foster the use of advanced digital solutions that can help to monetize the savings from crude oil losses, ultimately improving the financial viability of the sector.
Moreover, NEITI recommends establishing a special fund and dedicated committee focused on the prevention of crude losses and safeguarding the integrity of oil and gas assets. The Federal Government, alongside relevant stakeholders, is encouraged to expedite the development of a centralized database capable of aggregating instances of resource loss. This measure seeks to facilitate greater transparency and accountability, essential for optimizing the availability of petroleum products. Collectively, these insights and recommendations underscore both the challenges inherent in Nigeria’s oil and gas sector and the critical steps necessary to rectify the ongoing issues of theft, sabotage, and inefficiency that have historically plagued its operations.
