NNPC Seeks to End Oil Theft in Eight Months Using Drones

Vandalism claims 350 lives in three years Warri refinery remains shut Crude prices drop over 4% on China worries

The Nigerian National Petroleum Corporation (NNPC) has announced its intention to end crude oil theft in Nigeria within eight months using drones to monitor the movement of crude oil bearing vessels.

The NNPC in a statement from its Group General Manager Public Affairs, Ohi Alegbe yesterday in Abuja stated that the new initiative to stem oil theft and pipeline vandalism was unveiled by its Group Managing Director, Dr. Ibe Kachikwu in a presentation at the special conference on security in the Gulf of Guinea organised by the Gusau Institute.

Ibe, according to the statement, said the corporation was working towards the

deployment of drones across

the nation’s territorial waters to monitor the inward and outward movement of oil bearing vessels.

He stated that the NNPC was working on a range of far reaching options designed to end crude oil and petroleum products theft within the next eight months.

Ibe said that in executing the campaign, adequate support will be sought from the international community, especially from countries that have become host nations to the stolen cargoes.

”We are launching an armada of approaches, which will include incorporation of drones to check movements of vessels within our territorial waters.

“We are looking at the current logistical nightmares of changing staffing at the loading bay of crude oil export terminals virtually every 90 days.

“We are trying to equip the navy sufficiently, though they are very well equipped in terms of skills set but not in terms of arsenal for patrols within the maritime area,” Kachikwu was quoted to have said.

He said on the issue of pipeline protection, though the corporation was working assiduously with the law enforcement agencies to increase the presence of military personnel in the area, the ultimate security for critical oil and gas assets lies squarely with the host communities.

“The best security for these pipelines lies with the communities. We are trying to create enough incentives for them to see these pipelines as their own,” Kachikwu noted.

He equally spoke on the impact of oil theft on the smooth operations of the nation’s refineries, warning that if left unchecked, the menace could invariably make it impossible for NNPC to operate the refineries.

He said: “Most of our product pipelines are ruptured and attacked frequently. For instance between June 2014 and June 2015, we recorded about 3,500 to 4,000 attempts at the various products pipelines across the country. In addition to that, the pipelines that are supposed to convey crude to the refineries are perpetually hacked.”

Kachikwu noted that the use of marine vessels to convey crude to the refineries comes at heavy cost.

“What this means is that no matter what we do with the refineries today, unless that is solved, we really are going nowhere, we cannot operate the refineries,” he said.

He explained that beyond the loss of crude oil and products, incidents of oil theft have also claimed a huge number of human lives, disclosing that in the last three years a total of 350 persons including NNPC staff, police officers and community members have been killed as a result of activities of oil thieves.

“Today, I ask all of you to join us in this campaign, it is not just a campaign for NNPC but it is a campaign for every Nigerian.

“So it is war time, it is business time, it is focus time and there is a lot to do. Everybody is being called to the table and everybody is being called on the state of alert but in eight months we must be able to deliver an environment that is free of the vices of oil theft,” Kachikwu said.

The statement said the Prime Minister of Sao Tome and Principe, Patrice Emery Travolta also called on the countries in the Gulf of Guinea to forge a broad-based collaborative effort to stem the tide of insecurity on all their waterways.

It also emerged yesterday that NNPC’s Warri refinery had not yet reopened after last week’s temporary closure because crude oil was still being loaded into the plant.

Alegbe was quoted by Reuters as stating that the refinery would only restart when it had enough crude to keep it going for at least 25 days.

“Once we have supplied sufficient crude ... we can restart the production process,” Alegbe said.

He added that crude was being supplied to the refinery in batches carried by marine vessels, because most of the pipelines supplying it had been compromised by vandalism.

Nigeria imports most of the fuel used by its 170 million inhabitants because of the age and inefficiency of its refineries in Warri, Kaduna and Port Harcourt.

NNPC said last Thursday that the decision to shut the Warri refinery was taken because there was insufficient crude in the system, adding it expected to resume by Tuesday.

The 125,000 barrels per day (bpd) Warri refinery resumed operations two months ago after maintenance that began in November 2014. It is expected to run at 60,000 bpd.

Meanwhile, the prices of crude oil in the international market retreated yesterday, eroding some of the gains recorded in the previous three consecutive days, as worries about China’s economy resurfaced.

The crash in prices fuelled the demand for crude storage in the Caribbean, one of the world’s most important oil hubs, as producers and traders try to ride out the worst price crash in six years by storing more crude or making blends that can be sold for premiums.

The Wall Street Journal reported that light, sweet crude for October delivery fell $2.10, or 4.3 per cent, to $47.10 a barrel on the New York Mercantile Exchange, while Brent, the global benchmark, declined $2.26, or 4.2 per cent, to $51.89 a barrel on ICE Futures Europe.

This fall was prompted by concerns that petroleum demand in China, the second-largest oilconsuming nation, is set to slow, as the country’s sluggish economy continues to contract.

Both oil benchmarks rose by more that 25 per cent in the previous day, posting their largest three-day gains on a percentage basis since Iraq invaded Kuwait in 1990.

The rally was helped by a Monday report from the Organisation of the Petroleum Exporting Countries (OPEC) that sparked speculation that the cartel would consider cutting output to shore up oil prices, as well as the downward revisions to US oil-production data.

Most analysts were unmoved by the OPEC announcement, as the 12-nation oil cartel has so far refused to slash production in the face of a severe price rout.

Reuters reported that the demand for crude storage in the Caribbean is rising as producers and traders try to ride out the worst price crash in six years by holding onto more barrels or making blends that can be sold for premiums.

The last time tanks in the logistically-important islands were this full, was during the price collapse of 2009, when companies started leasing vessels to use as floating storage.

That is not yet happening now, but the only way to get tank space at the moment is to sublease it, said one tank broker with decades of experience.

According to Reuters, since June, the firm alone has received requests to lease up to 7.5 million barrels of tankage in a region with some 100 million barrels of capacity.

That is much more than in previous months, though no official statistics were available.

A bigger amount of those inventories in the Caribbean have arrived in the United States since the middle of the year, attracted by low freights costs.

In July, the United States received 8.37 million barrels of crude from the Caribbean, a 37 per cent rise from May, according to Thomson Reuters trade flows data.

Brazilian crude exports from the Caribbean to the United States more than tripled in that period.

At the same time, Colombian, Angolan, Trinidadian and even rare Belize grades arrived on US Gulf, East and West Coasts, the data showed.

Trading firms Vitol, Gunvor and Petro-China have also actively been moving Latin American and African oil to and from the islands, the data showed.