Nigeria JTF Impounds 20 Barges, 1,348 Barrels of Crude Oil in Bayelsa

Oil tanks

The Joint military Task Force (JTF) in the Niger Delta Monday said it had impounded 20 barges and five boats laden with 1,348 barrel of crude oil suspected to have been stolen in Bayelsa State.

The JTF said this in a statement signed by the the Media Coordinator, Col. Onyema Nwachukwu, in Yenagoa.

It said the barges and boats were arrested between January 9 and 19 by the anti-illegal oil bunkering patrol squads.
Nwachukwu said the boats were intercepted in Bodo West River and Azagbene creek in Ekeremor Local Government Area of the state.

According to the News Agency of Nigeria (NAN), he said the troops also discovered two illegal oil refining sites concealed in Biara farmland in Akpor Gokana Local Government Area of Rivers State and at Ajudaigbo in Warri South Local Government Area of Delta State.

He said the illegal refineries were destroyed by the patrol team, adding that 18 surface tanks, 11 drums, four plastic tanks, two pumping machines and hoses were also recovered in the clamp down.

Nwachukwu also disclosed that troops of 222 Battalion of Sector 1 of the task force , deployed in Kokori flow station in Delta, had arrested three suspects for allegedly syphoning crude oil from a flow station.

He said the suspects had already loaded the stolen crude in 20 drums into a truck before they were intercepted.

“The suspects are currently in the custody of 222 Battalion assisting in preliminary investigations before they will be transferred to a relevant agency for prosecution,” he said.
He said the task force also carried out cordon and search operation at the hideouts of suspected illegal oil bunkering camps in Igbematoru community in Southern Ijaw Local Government Area of Bayelsa following intelligent reports.

“The cordon and search operation which was successfully executed has so far yielded positive results as our troops have recovered several tools used for illegal bunkering.
“The items include 103 pumping machines, 32 hoses of various lengths and diameters, 17 hard saw machines and eight adjustable spanners.

“The troops also destroyed three illegal refineries and recovered a large wooden boat, 178 drums, 86 Jerry cans and several polythene bags concealed in sacks, all laden with stolen crude oil.
“Four suspects arrested in the cordon and search operation are currently being processed for handing over to appropriate prosecuting agency,” he said.

Ukraine and Libya Crisis Effect on Crude Oil

By Ben Sharples

Brent is poised for a second monthly advance amid separatist violence in Ukraine that erupted after Russia annexed the Black Sea peninsula of Crimea in March. Ukrainian President-elect Petro Poroshenko has vowed to wipe out the rebels after winning office on May 25. Ukraine is a conduit for Russian oil and natural gas supplies to Europe.

Troops killed “dozens” of fighters in Donetsk without suffering any losses, Ukraine’s Interior Minister Arsen Avakov said yesterday, while the mayor’s office in the eastern city said 40 people died and 31 were wounded.

The U.S. State Department “warns U.S. citizens against all travel to Libya and recommends that U.S. citizens currently in Libya depart immediately,” it said by e-mail. Turmoil has reduced the nation to the smallest producer in the Organization of Petroleum Exporting Countries.

Protesters in the east of the country shut the recently re-opened oil terminal of Hariga, Oil Ministry Director of Measurement Ibrahim Al Awami said by phone from Tripoli yesterday. Petroleum Facilities Guards members aligned with federalist rebels stopped loadings to protest the appointment of Ahmed Maiteg as the new prime minister, he said.

Credit: Bloomberg.com

UNREMITTED OIL MONEY:SENATE PANEL INDICTS NNPC

Nigerian Senate in Session

‘Corporation spent billions illegally’

The Senate Committee on Finance has found that the Nigerian National Petroleum Corporation had engaged in illegal withholding and spending of billions of naira between January 2012 and July 2013.

In its long-awaited report on the alleged non-remittance of oil money by the NNPC, the panel also said the corporation illegally used N544 billion to pay kerosene subsidies within the period.

The committee did not clearly state the total amount confirmed to be unremitted by the NNPC within the period, but a review of the report indicate that about $10.632 billion due the Federation Account was withheld and spent by the corporation.

Committee chairman Ahmed Makarfi yesterday submitted the 73-page report to the Senate, following investigations of the allegation by suspended Central Bank Governor Sanusi Lamido Sanusi that $49.8 billion oil money was not remitted by the NNPC from January 2012 to July 2013.

Sanusi first made the allegation in a September 2013 letter to Jonathan which leaked in December. He later said the total unremitted money was $20 billion. It was this allegation, as well the leak of the letter, that cost Sanusi his job. 

NNPC has consistently denied any wrong doing, saying much of the  alleged unremitted funds were spent on its operations.

The Makarfi-committee report made several other findings indicting the NNPC, including overspending on budgeted funds, overstating staff salaries and curious increase in pipeline surveillance cost without corresponding decrease in crude oil theft.

NNPC had said part of the money it was accused of not remitting was actually spent on protecting the oil pipelines.

“Pipeline surveillance cost increased from $2.23 in 2012 to $11.15 million 2013 without corresponding decrease in pipeline oil losses,” the Senate report said.

On the overstated salaries, the report said, “Actual PPMC’s staff salaries and upfront benefit claimed in NNPC submission were overstated by $7.58 million and $29.35 million for the year 2012 and 2013 respectively.”

The report said the monies NNPC is withholding include about $218 million from the $2.4 billion that was due to accrue to the Federation Account from the third-party financing oil lifting.

Royalties and taxes from the Nigerian Petroleum Development Company (NPDC) deal not remitted amounted to about $448 million, it said.

The panel therefore asked NPDC, which is a subsidiary of the NNPC, “to remit to the Federation Account $447.8 million being balance of royalty and petroleum profit tax.”

The panel also asked NNPC to furnish it with details on $200 million it expended in respect of holding strategic stock, crude oil losses and maintenance of installations and pipelines.

“NNPC should refund and remit to the Federation Account the sum of $262 million being expenses it could not satisfactorily defend in respect of Holding Strategic Stock Reserve; Pipeline Maintenance and Management Cost and Capital Expenditure,” the report added.

It went on to recommend that since the president allowed unbudgeted spending to be made on kerosene subsidy, he should submit a supplementary appropriation bill to cover those sums.

“The President should prepare and present to the National Assembly supplementary budget to cover the expenditure in the sum of N90.693 billion ($585 million) for PMS subsidy for 2012 and the sum of N685.910 billion ($4.430 billion) for kerosene subsidy expended without appropriation by the National Assembly in 2012 and 2013,” the committee said.

“The Senate should however note that the proportionate expenditure January 2012 to July 2013 was N813.8 billion ($5.254 billion) for PMS, while DPK was N486.57 billion ($3.512 billion). It is for the National Assembly to approve or not approve such request or take any other measures it deems necessary.”

The committee said NNPC should not pay operational expenditures direct from the Federation funds without appropriation by the National Assembly.

The panel further observed that “there was poor record keeping and non-challant work attitude by the NNPC by not rendering returns on subsidy claims on monthly basis from January 2012 to date which contributed largely to creation of the problem in hand.”

The committee called for the scrap of the fuel subsidy regime as it was found to be mired in fraud. “There is the need for the subsidy regime to be totally discontinued,” it said.

The report, according to Makarfi committee, was without prejudice to the forensic audit of the NNPC instituted by the Federal Government.

The Senate has not fixed a date for the consideration of the report.

Key findings by Senate Committee

1. The total crude oil liftings January 2012 to July 2013 was US$67billion and not US$65billion as the CBN Governor had presented;

2. There was never any unremitted US$49.8 billion.

3. All the agencies CBN, NNPC, Ministry of Finance, and Ministry of Petroleum Resources had agreed after reconciliation meeting that US$47billion out of the US$67billion had been credited to the Federation Account, amount to be accounted for, therefore was US$20biliion;

4. The sum of US$5.254billion PMS subsidy certified by PPPRA part of the US$20billion to be accounted for was adequately covered by the Appropriation Acts 2012 and 2013;

5. The sum of US$3.512 billion DPK subsidy certified by PPPRA for the period January 2012-July. 2013 being part of the US$20 billion to be accounted for was not appropriated by the National Assembly;

6. The total sum  certified by PPPRA for kerosene (DPK) subsidy not appropriated for by National Assembly was N353.370 billion (US$2.282 billion) for the year 2012 and N332.539 billion (US$2.148 billion) for 2013 respectively making total for the two years N685.91 billion (US$4.430 billion);

7. CBN Governor posited that part of the US$6 billion out of the US$20 billion to be accounted for; representing liftings by NNPC on behalf of NPDC should belong to the Federation Account. The amount determined as share of Federation Account was US$2.175,635,436;

8. CBN Governor only demanded for PPPRA certification of N180 billion by NNPC (US$1.2 billion) being fourth quarter 2011 subsidy withheld by NNPC. This was part of the US$20 billion to be accounted for;

9. The National Assembly had appropriated the sums of N888.101 billion and N971.138 billion in 2012 and 2013 for petroleum subsidy;

10. CBN Governor only asked for details and evidences supporting the US$2billion Third Party Financing liftings. This is also part of the US$20biilion to be accounted for;

11. The Honourable minister for Finance and Coordinating Minister for the Economy recommended further forensic audit of the subsidy’ deductions by NNPC and the certification by PPPRA;

12. The Auditor - General for the Federation in conjunction with PWC are currently’conducting forensic checks on NNPC accounts in relation to the issues under consideration and their report will be forwarded to the Senate Committee;

13. This Committee report only covers accounting for US$67billion crude oil revenue between January 2012 – July 2013.

Credit: Daily Trust

Menace Of Nigerian Crude Oil Theft

Minister of Petroleum, Dizeani Allison Madueke

Crude oil theft is fast becoming an intractable problem in Nigeria. Last November, the international energy agency reported that nigeria was losing about $7 billion annually to oil theft. Just like previous regimes, the Goodluck Jonathan administration has taken a number of steps to curb the daily theft, but with little or no result to show for it. Yemi Adebowale x-rays the crude oil theft challenges, steps so far taken to tackle the menace and the lack of result

A report last year by the International Energy Agency on crude oil theft in Nigeria was frightening. It said, “Oil theft, costs the Nigerian government an estimated $7 billion in lost revenue per year.” According to the report, theft and sabotage often lead to pipeline damage, causing oil firms to cut output.

The IEA said further: “Flooding and large-scale theft of crude drove Nigerian oil output to the lowest level for more than two years in October 2012. Oil production in the country fell to 1.95 million barrels per day in October, with production in recent months hovering between two million and 2.5 million barrels per day. The drop from September to October was around 110,000 bpd, leaving Nigerian production at the lowest level in around two and half years.

“By early November 2012, production levels were recovering, with export schedules showing increased volumes for December. It was enough to keep the country as Africa’s top producer ahead of Angola at 1.79 million bpd, but the drop comes amid growing warnings that the country must take action to avoid stagnant output in the future.” Theses are frightening facts and figures. No doubt, the Jonathan administration has been equally worried about the mounting incidents of crude oil theft in the Niger Delta. The swearing in of new service chiefs in November last year provided the President another opportunity to reiterate his commitment to ending the menace. At the ceremony, he specifically charged the service chiefs to put the problem to an end. The President Said: “The unacceptable rising incidences of crude oil theft must be tackled frontally. Considering the direct adverse implication of the activities of crude oil theft on our national economy, I expect the Chief of Naval Staff and other service chiefs to immediately go to work to urgently bring the issue of crude oil theft to an end.”

Unfortunately, the President has not marched his words with action. As most analysts would say, his statement in November 2012 was a mere rhetoric. Many readily point to an earlier meeting with the service chiefs in May 2012 in Lagos, which was called to work out strategies for tackling crude oil theft. Nigerians are still waiting for the actualisation of the master plan from the meeting.
At the said “high-powered security meeting” held at the Civic Centre, Victoria Island, Lagos, the Federal Government, represented by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke discussed how crude oil theft would become history in Nigeria, using a special task force.

Alison-Madueke stressed that the task force would include both indigenous and international oil chiefs and added that over 180 million barrels of crude oil were lost on daily basis in the country. “In the last six months, the number of oil theft on Nigerian water had been on the high side. The meeting with stakeholders in the industry and service chiefs was to address the security lapses in the oil and gas industry. About $5 billion was spent in the last one year on pipeline repairs.”                 

The minister told the media at the end of the meeting that the service chiefs had been working with the petroleum ministry aggressively in the past to address the problem, “but there is need to discuss how to come up with a solution to improve safety of our oil assets. There is need to discuss the short term, medium term and the long term plans. We have had a successful meeting with the Senior Service Chiefs and have agreed to set up task force to address the issues.” 

The security chiefs on their part said that senior army personnel and other security agencies would be included in the planned task force and that all the security agencies will ensure adequate monitoring of the country’s oil pipelines. That was where the story ended. Crude oil thieves are still having a field day in the Niger Delta.

On many occasions, oil companies in the country shut in production for weeks due to pipelines damaged by oil thieves. The menace had become a major deterrent to exploring for new fields in the country. Last year, Shell said sabotage and crude oil theft was the cause of 11,806 barrels spilled from SPDC facilities in 118 incidents. “This is a serious attack on the state – the people, the economy, and the environment. Since, we calculate crude theft quantities based on volumes produced from flow stations and what is received at terminals, it is true that additional oil is stolen between wellheads and flow stations,” said a top official of SPDC last year.

The latest step to be taken by the Jonathan administration to curb oil theft was the decision to contract out the protection of the country’s vast coastline to ex-militant leaders. They are expected to use their experience to monitor and prevent crude oil theft. The arrangement took off briefly but suddenly ran into stormy waters. There are speculations that the contract had since been revoked.

Foreigners, mainly from Asia and Eastern Europe are the major buyers of stolen Nigeria crude oil. Such vessels are often arrested in Nigeria waters for buying stolen crude. Late last year, a ship loaded with 1.3 million barrels of stolen crude oil was arrested and destroyed by the JTF in the Niger Delta. The stolen crude oil was siphoned from a Manifold belonging to the SPDC in Abonnema, Rivers State.

Following the consistent failure of previous steps taken to address the menace, there are fears that the theft of Nigerian crude oil will continue for many more years to come. Powerful and highly placed Nigerians are speculated to be behind the nefarious business. Security agents are also alleged to have compromised because of the huge amount of money passed down to them by the oil thieves. The government on its part has displayed more of words than action.

Tackling The Scourge Of Oil Theft In Nigeria

Nigeria Petroleum Minister

By Benjamin Umuteme

In October 2009, Shell Petroleum Development Corporation (SPDC) declared force majeure on its operations, in 2010; it declared another one, followed by another in 2011 and also in 2012.

All this, according to Shell, is due to the activities of oil thieves who had damage its pipeline thus disrupting production.

This situation is not peculiar to Shell alone; as ENI has not also been spared by oil thieves who are bent on 'having their own share of the national cake'.

When the problem of oil theft started, not much attention was paid to it but over the years, it has become a multi-billion naira business that is undertaken by both the high and the mighty in the society.

Sadly, with the country's inability to get the exact amount of crude that is produced daily, it has had to rely on data from oil companies or at the most rely on projections about production figures.

For instance, Shell Petroleum Development Company (SPDC) Limited, a subsidiary of Shell Companies in Nigeria as far back as 2009 disclosed that Nigeria lost about $1.5 billion annually to crude oil theft.

Minister of Finance, Dr Ngozi Okonjo-Iweala, in an interview with the Financial Times of London in May, disclosed that Nigeria lost about $14 billion in 2011 to oil theft and fraud in the allocation of a controversial fuel subsidy.

In the last quarter of 2012, Nigeria lost about $2.7 billion or N426 billion from a slide in crude oil production.

According to the Central Bank of Nigeria’s Fourth Quarter Economic Report, “Nigeria’s oil revenue in the fourth quarter of last year slumped by N112.6 billion, as gross oil receipts in the Federation Account was N1.824 trillion– a 5.8 percent reduction from N1.936 trillion that was the figure recorded in the third quarter of the same year.”

The activities of oil thieves has not helped the cause of the government as it tries to woo investors to the sector without success as many have decided to assume the ‘wait and see stance’.

Thus, oil companies made edgy by the spate of oil theft and pipeline damage have been holding back investments in billions of dollars with Nigeria estimated to have to have lost about $40 billion or N6.3 trillion in projected investments in the last two years.

Even the Senate Committee on the Upstream Sector of the oil industry, in their own estimation said about $28 billion that would have accrued to the sector has been partially lost or deferred since 2010 due partly to the activities of oil thieves.

Also, SPDC is holding back on a $30billion investment in two offshore deep water projects in Nigeria. This is even as the company says they would rather observe the current trend for a while before making any further huge commitment.

Already, a loss of N191 billion ($1.23 billion) has been recorded by the country in the first quarter of 2013, due to drop in crude oil production, arising from incessant crude oil theft and vandalism along the major pipelines within the Niger Delta.

Also, the country is expected to lose N83 billion ($554.0 million) in the months of April and May, as the NNPC and Shell Petroleum Development Company of Nigeria Limited, SPDC, had earlier last month declared a force majeure on its 150,000 barrels of oil per day Bonny Light export, with the shutdown of its $1.1 billion (N174.9 billion) Nembe Creek Trunkline, NCTL.

Acting Group General Manager Public Affairs Division, NNPC, Tumini Green, was quoted to have said that daily crude oil production during the period fluctuated between 2.1 and 2.3 million barrels per day compared with projected estimate of 2.48mbpd.

“Expectedly, this fall between actual production and forecast in first quarter 2013 have resulted in a drop in crude oil revenue of about $1.23 billion (N191 billion) that should have accrued to the Federation Account,” the NNPC spokesperson had said.

Last year alone, pirates attacked 966 sailors and stole oil worth between $25 million and $75 million euros (N33 million and N100 million) with most of the stolen crude oil coming from Nigeria.

All this, is despite, the over N17billion security contract awarded to ex-militants to safeguard the country’s pipeline against the activities of unrelenting oil thieves.

And only recently, the Presidency lamented that an estimated N7billion is been lost by the country on daily basis all due to the devastating effect of people who have continued to sabotage the economy by their actions.

But it seems the Nigerian Government has woken from its slumber as the Minister of Foreign Affairs, Mr. Gbenga Ashiru earlier last week had warned that Nigeria would no longer listen to plea from foreign missions to release crew or ships involved in illegal activities on Nigeria’s territorial waters.

The Minister said, “The Nigerian Navy and NIMASA have been directed to take firm measures against any ship caught in unwholesome activities, including oil theft on Nigeria’s territorial waters. In the past, ambassadors have come to me or my permanent secretary to plead for the release of either their ships or the crew members caught in illegal activities. This is to serve as a warning that henceforth, I will not be able to grant audience to people coming to plead for the release of their ships or crew members”.

Disturbed by the loss of about 400,000 barrels (of which in monetary terms totals about N7billion) daily to crude oil theft, government has approved the establishment of a legal task force to commence prosecution of proven cases. At the moment, there are over 500 oil theft cases nationwide.

The task force which will be headed by the Attorney-General of the Federation, Mohammed Adoke, is expected to use relevant laws, particularly the Miscellaneous Offences Act, which carries a sentence of 21 years without option of fine to prosecute oil theft offenders.
The legal task force will be made up of representatives from the NNPC, the Armed Forces, Civil Defence, Police, SSS and other related agencies and it is expected to be operational for one year starting July, 2013.

The good thing about the taskforce is that it would continue the prosecution of established cases and all convictions given wide publicity.

But analysts have faulted its establishment saying that what the government lacks is the political will to ‘go after the sponsors of these activities’.

According to Mr. Evans Adesina, “there are laws already in our statues book to deal with issues of oil theft but somehow; the government has refused to act in the process turning a blind eye to the activities of these economic saboteurs.
“What is needed is to strengthen the law enforcement agencies to carry out their primary responsibility.”

National Industrial Relations Officer of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Mr. Chika Onuegbu, reiterated that although the Section 8 of the Miscellaneous Offences Act, provides for life imprisonment for anyone stealing crude oil or petroleum products or vandalizing the pipelines, hardly is anyone caught or prosecuted. “It is obvious the oil thieves have powerful allies in government.”

“It is also clear that the security agencies are complicit in this menace of our national resource, and government needs to step up to the plate and summon the required will to fight this patent threat to our nation. The truth is that the continued unabated theft of crude oil will obviously lead to divestment by the oil and gas companies, and the attendant socio-economic crises and significant job losses as a result.

Over time, there have been allegations that top government functionaries are neck deep in the business with fingers particularly pointing to past defense and security chiefs, who according to a Niger Delta source who spoke to FrontiersNews on condition of anonymity, have had to use their extensive security connections to facilitate the perpetuation of the “this illegal oil theft business.”

There is a story of a Naval personnel with a couple of years to retire from the service had to work his transfer from Lagos to Port Harcourt so he can make money to sustain life after retirement.

According to the source who spoke to frontiersNews in pidgin English, “you know the money when all these navy people dey make for here. Na Ghana must go dem take they carry their money.”

Mr. Adesina posited that if the government can summon the courage to go after the big fish then the small ones will have no choice than to stop knowing that their sponsors have been arrested and are facing prosecution.

And it seems the National Assembly is thinking in the same direction with the Executive when recently, Speaker of the country’s House of Representatives, Mr. Aminu Tambuwal wa quoted to have said that to deal decisively with the matter, there is need for collaboration between African, Caribbean, Pacific and European Union (ACP-EU).

However, Organised Labour has called on the National Assembly to use the opportunity provided by the ongoing debate of the Petroleum Industry Bill (PIB) to order the genetic fingerprinting of Nigeria’s Petroleum assets to check the massive theft of the nation’s crude oil, warning that Nigeria is bleeding and needs help.

Analysts and industry experts are of the opinion that with the new posturing of government the once booming business of oil theft would be a thing of the past and Nigeria and Nigerians would be the better for it.

Rather than appealing to the international community to help curb the menace of oil thieves, Nigeria should take their destiny in their own hands.

Credit: Frontiers News

Diezani, Shell in Fresh Probe Over Sale Of OML 29

Minister of Petroleum, Mrs Diezani Allison-Madueke

Minister of Petroleum, Mrs Diezani Allison-Madueke

By Muhammad Bello

In a fresh bid likely to kick start a new row, the House of Representatives is set to investigate the role of the Minister of Petroleum, Mrs Diezani Allison-Madueke,  in the  alleged illegal sale of Oil Mining Licence (OML 29).

The House, which set up an ad-hoc committee for the purpose of investigating and establishing the validity of the transaction by the  oil giant, Shell Petroleum Development Company (SPDC), has two weeks to submit its report.

Its composition was announced.

Shell was not the only oil company fingered. Other Oil majors too were alleged to  have hidden under the cover of waivers usually granted by the petroleum minister to embark on the sale of OML 29 and others.

The House was prompted by a motion sponsored by Hon. Irona Alphonsus Gerald. According to the lawmakers, OML 29 has been in the custody of Shell for more than 52 years and one-half of the area of lease has not been relinquished to the federal government as stipulated by the Petroleum Act.

“How 10 % Of Nigeria’s Daily Crude Oil Production Gets Stolen!”- Ribadu Report

While Nigerians are aware that the country makes the bulk of its revenue from oil, it has been found out that a sizeable percentage of the crude oil being produced in the country on a daily basis eventually ends up being stolen thus making Nigeria lose as much as N 2 Trillion every day. The revelation was contained in the report of the Petroleum Revenue Special Task Force chaired by Malam Nuhu Ribadu. The report which was submitted to the Minister of Petroleum Resources also revealed that some of the legislations concerning the oil industry have become outdated while some of those trading in crude oil are not on the approved list of customers. The Ribadu-led Task Force stated that it received reports suggesting that “volumes stolen have risen dramatically in the past 12-18 months. The Royal Dutch Shell Company, Shell in its presentation to the Task Force stated that an estimated 150,000 barrels of crude oil are stolen per day (about 6% of Nigeria’s total annual production) causing a revenue loss of $13.5 million per day (at $100 per barrel) which amounts to $5billion per year of lost revenue.

On the other hand, high ranking Officials and Executives in the Federal Government tasked with the management of the nation’s strategic Oil and Gas assets have several times stated the existence of large-scale on-going theft of Nigeria’s crude oil. This represents government acknowledgment of the magnitude of the loss. Mr. Leke Oyewole, a Senior Special Adviser to President Goodluck Jonathan on Maritime Affairs, disclosed to the media in March, 2012 that Nigeria loses about 40 million metric tonnes of petroleum products amounting to about $20 billion (N3 trillion) to crude oil theft and illegal bunkering; while NNPC has publicly stated that it spent $1.2billion in the last ten years on pipeline repairs”.

Incidentally, the theft is not limited to crude petroleum alone. Findings of the Task Force revealed that “organized theft of products has also spread far beyond the Niger Delta. PPMC recorded sizable losses on its Mosinmi-Ibadan-Lokoja line in 2011. The Jos-Gombe-Maiduguri line also saw theft, and pipeline sabotage around Atlas Cove in Lagos is chronic”.
According to the report, “legislation governing the industry and agreements with third parties are outdated, do not reflect current economic or legal realities; or include ambiguous clauses. Also, there are some provisions within the legislation that could significantly improve government’s revenue that the government is yet to take advantage of. Examples include a provision to ensure that the share of the Government of the Federation in the additional revenue shall be adjusted under the Production Sharing Contracts if the price of crude oil at any time exceeds $20 per barrel; and the requirement for a periodic review of provisions in specified time frames.

It was also observed that some traders lifted crude oil although they were not listed on the approved master list of customers who had a valid contract and were selected through an annual bidding process. The Task Force research also found that quite a number of traders did not demonstrate renowned expertise in the business of crude oil trading. Furthermore, the Task Force found that the use of crude oil traders was contrary to the global trend wherein national oil companies develop their own trading arms, such as the various NNPC trading subsidiaries which currently have limited capacity. The Task Force identified various concerns in this area with Nigeria being the world’s only major oil producer that sells 100 percent of its crude to private commodities traders, rather than directly to refineries.”

The Task Force’s report also indicated that Nigeria loses revenue through the granting of pioneer oil exploration status to some companies. “The Task Force was informed that at least five companies: Allied Energy, Midwestern Oil & Gas, Brittania Oil Nigeria Limited, Suntrust Oil Company Nigeria Limited; and Niger Delta Petroleum Resources Limited have been granted pioneer status by the Nigerian Investment Promotion Commission (with others pending or undetected) for their exploration and production activities. The Task Force finds that the granting of pioneer status to oil operators for an activity that is well established for over 40 years inappropriate. The loss of revenue from the grant of pioneer status to oil operators is an avoidable loss and it is recommended that any such further consideration be stopped forthwith and the current ones set aside and or revoked”, the report stated.

The report also revealed that within ten years, Nigeria was shortchanged by about N 86.6 billion which should have accrued to it as payments from the sale of crude oil. It was noted in the report that “The Federal Government of Nigeria (FGN) allocates (on behalf of Nigeria) 445,000 barrels of crude oil to NNPC daily, out of the total crude oil production of the country for the purpose of domestic consumption, hence, the term Domestic Crude Oil. The allocation of 445,000 barrels represents the installed capacity of the four (4) local refineries situated at Port Harcourt, Warri and Kaduna. Liftings for domestic crude are made mainly from the Escravos and Forcados terminals, which produce mainly Bonny Light and Forcados type of crude oil.
The NNPC is required to pay the Federation for this allocation on the basis of quantities lifted in any particular month and at international market prices. A 3-month credit period is granted to NNPC to make the payment to the FGN.

In practice, payments for domestic crude oil are made subsequent to the conclusion of the monthly Federation Accounts Allocation Committee (FAAC) meetings.”

The Task Force chose a 10-year sample starting from 2001. The report also stated that “NNPC has acknowledged N450b worth of debt for unremitted domestic crude proceeds through end of 2009. It claims this sum represents a series of Presidential reprieves, but that it is now agreed a 32 installment repayment plan as a result of the FGNs inability to fully finance its share of JV costs”.

It was also contained in the report that as at December 31, 2011, the debt owed the NNPC by major marketers of petroleum in Nigeria stood at N 27 billion which included current debt, total overdue, disputed debt and total debt outstanding. See table:

Marketer	Current Debt  N millions	Total Overdue  N millions	Disputed Debt  N millions	Total Debt  Outstanding M millions
CONOIL  MOBIL	865.06  620.51	3,208.47  753.76	177.65  3.61	4,251.18  1,277.88
TOTAL  MRS	1,097.02  348.95	1,650.07  4,960.27	373.71  169.20	3,020.80  6,478.43
OANDO  FORTE OTHERS GRAND TOTAL	822.89  528.40 – 4,282. 83	3,452.62  3,303.86 –	332.74  200.64 –	4,608.25  4,032.89 3,746.13
		17,329.04	1,275.55	27,415.56

One other anomaly that was noted in the report is the considerable weakening of government returns in the petroleum industry, especially regarding oil blocs. A particular instance was given where a “acreage which in 2005 attracted signature bonuses of over $100mn, but saw bidders default, fetched less than $20mn whenre-offered in 2006 and 2007. One OPL netting government $76mn went for $6.5mn two years later. Compare this with Angola, which in the same period captured record-breaking bonuses through open, well-managed bid rounds.

To put things back in order, he Task Force made a number of recommendations including the passage of “an oil sector transparency law that requires all oil companies active in Nigeria to report all payments, costs and earnings for each license or transaction and to publish all contracts and licenses.”

It also recommended the implementation of “an aggressive debt collection process for outstanding signature bonus payments; revoke blocks from non-paying firms; sanction those agencies that failed to collect”.

To combat the theft of crude oil and petroleum, the Task Force recommended the arrest and prosecution of barons and financiers and of illegal bunkering rings.

It also urged the Presidency to “introduce an amendment to 2007 Fiscal Responsibility Act that would criminalize withholding payment of petroleum revenue after due date and assessment and a notice of demand.”

It was also stated in the report that “the oil blocks in litigation are currently inactive and of no benefit to the FGN in their current state. The FGN should expedite action with respect to the blocks in dispute in order to ensure that the
$321million outstanding is collected.

Also, the DPR should take further actions against the concessionaires that are yet to pay the amounts due ($167million) within the remit of the law. Proposed actions would be to charge interest on the amounts outstanding, revoke the company’s license etc”.