Uche Cecil Izuora
Sustained military strike on oil thieves which has significantly reduced criminal activities in the Niger Delta region is bringing back some idle assets into operations.
Following a more clement environment, Belemaoil Producing, Nigerian independent producer, has resumed operations at Oil Mining Lease (OML) 55 in Nigeria after a three-year pause.
The company acquired OML 55 from Chevron in 2015, but persistent oil theft forced the company to suspend operations in 2021. OML 55, located about 40 km west of the Bonny oil export terminal, contains five oil fields with a production capacity of around 14,000 barrels of oil per day (bpd) and over 70 million standard cubic feet of gas per day.
The Nigerian National Petroleum Company Limited (NNPCL) and the Ministry of Petroleum estimating that the country loses 200,000 to 400,000 barrels of crude oil per day due to theft.
This represents a substantial portion of Nigeria’s total crude production, which averaged 1.35 million bpd in August 2023, below its OPEC quota of 1.5 million bpd. Given the current price of Bonny Light crude oil at $78.62 per barrel, Nigeria is losing billions of dollars annually to oil theft.
Theft has also driven numerous international oil companies (IOCs) to exit the Nigerian market.
Despite the implementation of the Petroleum Industry Act (PIA) in 2021, which was intended to improve the regulatory environment and encourage investment in the oil and gas sector, majors such as Equinor have sold off their Nigerian assets. Equinor, for instance, finalized the sale of its Nigerian subsidiary, Equinor Nigeria Energy Company, to Chappal Energy in late 2023.
This trend highlights the challenges that continue to face Nigeria’s oil industry despite reforms.