For those who have doubted and are still doubting the resolve of the current leadership of the Nigerian National Petroleum Company Ltd to stop the menace of crude oil theft and pipeline vandalism in the country, then the time to have a rethink has finally come because it will no longer be business as usual.
This is because the NNPC Ltd is currently using a state-of-the-art technology to gather the much-needed intelligence that would assist security agencies to go after crude oil thieves and pipeline vandals.
Nigeria sits atop 36 billion barrels of crude oil reserves and 206 trillion cubic feet of proven gas reserves but has seen a massive drop in its crude oil earnings.
But the country had in recent times not been able to harness the potentials of this resources because of oil theft and losses caused by the illegal siphoning of crude oil from oil facilities.
The quantity of oil delivered into the various crude oil terminals in the country have been limited by the activities of pipelines vandals and organized groups.
How Crude Oil Is Stolen In Nigeria
Oil theft in Nigeria is considered to be the illegal appropriation of crude or refined oil products from the pipelines of multinational oil companies. Oil theft in Nigeria is facilitated by the pragmatic cooperation between security forces, militia organizations, the local population, and oil company employees who use a variety of methods to steal oil from flow stations.
The stealing of crude oil requires frequent collaboration between a variety of random players depending on the level of oil theft being committed.
Each group maintains a specific role in the oil theft trade in Nigeria. These key players use methods such as hot-tapping and cold-tapping to perform oil bunkering and steal thousands of barrels of oil per day from established oil pipelines.
In addition to stealing oil from the pipelines, oil theft can also occur during the transportation of the crude oil product to the oil shipping terminals for export.
Hot-tapping and cold-tapping are extremely sophisticated methods of oil theft and are primarily used in large-scale operations during the crude oil stage.
How Hot-tapping, Cold-Tapping Of Crude Oil Are Executed:
During the process of hot-tapping, an illegal secondary pipeline belonging to crude oil thieves is attached to a high-pressure primary pipeline belonging to oil firms. After this breach is successful, oil is diverted from the primary pipeline into mobile oil bunkering facilities that are attached to the secondary pipeline.
By gradually withdrawing small amounts of oil, the primary pipeline is able to function at an almost normal pressure and can remain undetected by oil corporation officials. Although a gradual amount must be withdrawn, the pressure within a pipeline is substantial enough for a transport barge to be filled with thousands of metric tons of oil within a few hours. Hot-tapping is considered to be extremely dangerous and complex.
On the other hand, in the process of cold-tapping, a portion of a pipeline is blown up and a secondary pipeline is attached to the shut-down primary pipeline. After the primary pipeline is repaired, the existence of the secondary pipeline’s access to the oil flow is unknown since the overall pipeline pressure will not fluctuate. Cold-tapping is considered to be less dangerous.
Impact Of Crude Oil Theft On Nigeria’s Oil & Gas Sector
The theft of crude oil is having a negative effect on the revenue of the federal government, thus denying the country the much-needed fund to boost economic development.
Apart from revenue loss, the issue of oil theft is currently threatening not just the NNPC’s quest for energy security for the country, it is also having a debilitating effect on Nigeria’s foreign exchange earnings.
In the first quarter of this year, Nigeria lost $1bn in revenue to crude oil theft and production shut-in caused by pipeline vandalism.
With a daily loss of over 700,000 barrels of crude oil to theft, pipeline vandalism and production shut-ins,
caused by tapping of crude oil from a maze of pipelines owned by oil majors, experts have said that it has become compelling for the government to adopt a holistic approach to address the crude oil revenue loss challenge.
At an average price of $100 per barrel crude oil price, it means that Nigeria is currently losing about $70m monthly to crude oil thieves and production shut-ins.
Nigeria relies on crude oil revenue for over 90 per cent of its foreign exchange earnings and about 70 per cent of government revenue.
The high level of oil losses caused by crude theft haded to a drop in daily oil production from 1.8 million barrels per day in the last three years to just a little over one million bpd.
When vandals carry out their illegal attacks, such activities lead to low crude oil production and export, losses in crude oil, gas, and petroleum products, interruption in gas supply to power plants, drop in country wide distribution of petroleum products, and increase in refinery downtimes.
Furthermore, such attacks on oil installation create instability in the oil and gas market, increase pipeline maintenance and surveillance costs, raises power cuts / blackouts, and jerks up cost of petroleum products.
Crude oil theft and production shut-in also reduce refinery capacity, increase petroleum products importation, provide resources to criminals to fuel conflicts and insurgence and also lead to environmental pollution and loss of lives and human resources.
According to experts, the incentives of criminals to engage in crude oil theft is caused by many factors. Some of them are high unemployment rate, high propensity for crime and criminality, absence of a strong legal framework and prosecution process, and availability of ready illegal international market for stolen oil from Nigeria.
Technology As Game Changer
With oil theft and pipeline vandalism overwhelming Nigeria’s oil business in recent weeks, the NNPC Ltd is adopting the Saudi Aramco’s model of using video surveillance to monitor its pipelines carrying crude oil from wells to flow stations in the Niger Delta.
The NNPC Ltd in collaboration with security agencies have put up a control centre to provide surveillance of all the country’s oil and gas assets in the Niger Delta.
The surveillance system is known as the Central Coordination, Data Integration and Activation Control Room.
Just like the Saudi Aramco, the NNPC Data Control Centre uses video visibility to monitor the country’s Niger Delta pipeline networks, where more than 90 percent of the country’s crude is explored.
The NNPC is also working with its business partners to make sure every data concerning Nigeria’s assets are visible through the centre for to enable quick action during emergency.
Through the Data Control Centre, the NNPC has the capability to see and monitor the movement of vessels in the coast of Nigeria’s territorial waters in real time.
From the facility, officials of the NNPC, working with operatives of the Nigerian Navy can determine, in real time, if a vessel is carrying out operations within Nigeria’s coastal waters legally.
The Data Centre also uses an intelligence system to detect when an incident of crude oil theft has occured, the location, and the vessels involved.
Immediately such illegal operation has been established, officials of the Centre through it’s Incidents Reporting System will immediately escalate such threat to the security agencies for immediate action.
THE WHISTLER understands that through the facility, the security agencies have been able to reduce their incidents response time from two to three days fee weeks ago to less than two hours currently.
One of the officials in the Data Control Facility told THE WHISTLER that the Centre has been the brain behind the recent successes recorded in the fight against crude oil thieves.
So far, over 22 million litres of stolen crude have been recovered through intelligence provided by the Data Centre.
Similarly, over 22 million litres of Diesel, 0.15 million litres of Premium Motor Spirit, and 0.76 million litres of kerosene have also been recovered from criminals.
Through the operation, 112 suspects have been arrested while 11 vehicles, 30-speed boats, 179 wooden boats, 37 trucks have been seized and destroyed.
Other items recovered according to are 959 metal tanks, 737 ovens, 452 dugout pits, 342 reservoirs and 355 cooking pots have been destroyed.
Similarly, 207 pumping machines, 12 welding machines, six power generators, and two drilling machines were recovered from crude oil thieves.
The official said, “With this technology, we can see what is happening with vessels on the sea in real time. This intelligence system is designed to monitor all vessels on our coast and if there is any vessels that is operating without permit, what we do is to flag that particular vessels.
“After flagging that vessel, we escalate to the Nigerian Navy for prompt action. So, from here, we monitor all the vessels that are currently loading. For example, this is a vessel that is currently loading at the terminal. Apart from monitoring the vessels, we have the capability to see the contents in the vehicle. So, with a click for example, you can see the details of the vessels and the tonnage of such vessels.
“Apart from this, we can track these vessels to know where they are going after every operation. We have real time visibility of all the vessels at the terminal and we can also put eye on all vessels that are conducting ship to ship transfer.
“We have a list of all the approved STS transfer within our coverage and the intelligence system can capture the time, vessel and number of hours the STS is happening.”
At the Data Centre, there is also a Centralized Vessel Approval System that captures all the vessels that have ve given approval to operate within Nigeria’s maritime waters.
The official added, “We have the capability to see every floating infrastructure on our Nigerian economic zone, whether it is a permanent platform or they are moving vessel. We have the capability to see all of them including the products. When we see these infrastructures, we can know anyone of them conducting illicit activities
“From these infrastructures, there is never shortage of intelligence. We have more sophistication when it comes to intelligence gathering. We have an Incident Reporting System which is real time and it allows everyone to see every illicit activity.
“So, we have the intelligence, we can send the intelligence for prompt action. From what we have seen, the response time have improved. When we started this, we saw response coming in three four days but currently, we can see two hours on the average and this is a significant improvement.”
Speaking on the success of the Data Centre, the Group General Manager of the National Petroleum Investment and Management Services, Mr Bala Wunti, described the use of technology in the fight against crude oil theft and pipeline vandalism as a game changer for the oil and gas industry.
He said, “Through this technology, we have the capability to see the vessels that are loading crude. We can see the vessels anywhere they are going and we can from this room determine if they are carrying out legitimate transaction on our costal waters.
“The intelligence system is capturing what is happening in real time and from what you are seeing at the centre, you will agree with me that we don’t have shortage in intelligence gathering.”
Also speaking on the regulatory efforts being taken to ensure that Nigeria succeed in it’s fight against crude oil theft, the Executive Director, Distribution Systems, Storage and Retailing Infrastructure, Nigerian Midstream and Downstream Petroleum Regulatory Authority, Ogbugo Ukoha, said that the use of technology is the best way to tackle crude oil theft.
He said, “Technology can play a role, the security agencies, operators as well they also have a role to play. There is a correlation between the price of crude and the increase in thefts.
“In the previous years when crude price was near zero, the motivation was quite low, but the constant hit we are seeing now is because of the geo-political problem that has pushed price in excess of $100. So, that provides some kind of motivation to those who have been doing this very reprehensible acts.”
With the deployment of the technology, it is expected that the country will see a significant improvement in crude oil production within the next three weeks.