Vandals Are Having Field Day At The Expense Of Nigerians

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oil vandalisation
An Oil Vandal
Vandals are having a field day on Nigeria’s crude oil fields and causing the country significant problems. The latest report from the Nigeria National Petroleum Corporation (NNPC) shows the country’s crude oil production has dropped to a 12-month low of 1.69 million barrels per day (mbpd) in May 2016, down 12.12% from April production volumes of 1.99 mbpd.
Crude oil production in May is the lowest recorded in the last one year under the Buhari presidency. Crude oil production has averaged 2 mbpd since January; despite the 2016 budget projecting that Nigeria’s revenues will be based on 2.2 million barrels per day of crude oil production.
The May 2016 crude oil production of 1.69 mbpd is 510,000 barrels below the 2.2 mbpd as projected in the 2016 budget. Oil asset vandals are mainly responsible for the significant drop in crude oil production. The data from NNPC shows that there were a total of 261 pipeline vandalisations recorded in June 2016 just one more than 260 vandalisations that occurred in May 2016. The highest number of vandalisations of oil assets occurred in January when the NNPC recorded 400 incidents of vandalisations. From January to June 2016, there has been a total of 1,614 vandalisatins of NNPC pipelines.
Interestingly, the vandalisation of NNPC facilities is not just restricted to the Niger Delta where 90% of Nigeria’s crude oil production takes place. Vandalisation is nationwide challenge in Nigeria. Data from the NNPC shows the highest number of vandalisations up to June this year has taken place in Port Harcourt, which accounted for 57% of all pipeline vandalisations that took place in the country.
However, 21% of all pipeline vandalisations up to June this year took place in Mosimi in Ogun State, another 12% took place in Kaduna while 9% took place in Warri in Delta State. Gombe State in far North East of Nigeria accounted for one percent of all pipeline vandalisations in the country.  
Nigeria is estimated to have over 17,000 kilometers of pipelines connecting oil assets including refineries, oil platforms  and depots across the country, to facilitate distribution of petroleum products but the consistent vandalisation of the pipelines has made it impossible to use them for the purpose for which they were built.
Key oil assets and platforms that have been affected by vandalisation this year include; the Forcados Oil terminal, which has been shut down since 21 February due to the vandalisation of the pipeline supplying it crude. This has resulted in shut in of 380,000 bpd of crude oil.
Also on 10 May, Shell declared Force Majeure on the Nembe Creek Trunk Line (NCTL) after suspected pipeline vandalisation leading to the shut in of another 275,000 bpd of crude oil. Other pipeline vandalisations have also led to shut in of crude oil production at the Usan, Que Iboe and Brass Terminals, all costing the country billions in expected oil revenues.
Most indigenous firms in the oil and gas sector have seen their oil production shut in by the incessant vandalisations. Seplat and Oando, two of the biggest indigenous players in the oil and gas sector both announced losses in their half year financial result ended June 2016 with both companies pointing fingers at the increasing vandalisation of oil assets one of the reasons for their loss.
Internationally, buyers of Nigerian crude are also beginning to source from alternative suppliers due to the increasingly unreliability of crude supplies from Nigeria. India, which used to be one of the biggest buyers of Nigeria’s crude oil, has started looking to Iran for supplies in recent orders, following the increasing unreliability of supplies from Nigeria.
Nigeria’s revenues have also taken a hit. The Minister of Budget and National Planning, Udo Udoma Udo disclosed on 15 July that the government was only able to collect 55% of its project revenues in the first quarter of 2016. He blamed the inability to meet its revenue targets on the increasing vandalisation of pipelines.  
The lower revenue for the Nigerian government means that it has to borrow heavily to sustain its planned total expenditure of N6.1 trillion this year. Already, the Federal Government on 8 August advertised that it is seeking financial advisers to help it raise $1 billion from the international capital markets to support its expenditure plans this year.
The government is expected to borrow as much as $7 billon or N2.2 trillion to finance this year’s budget and the continuous vandalisation of pipelines could force the government to even borrow more. The Minister of Finance, Kemi Adeosun, said on 10 August that borrowing has become “inevitable” due to the dwindling revenues.