Crude Oil Theft: NNPC Admits Revenue Shortfall

Nigeria's Minister of Finance

The Group Managing Director of the Nigerian National Petroleum Corporation NNPC Mr. Andrew Yakubu, has said that the spate of attacks on major crude oil arteries are having a negative impact on the nation’s revenue.

The NNPC GMD said the persistent crude oil theft, pipeline vandalism and shut-ins have constrained the sector from meeting its revenue projection.

Yakubu, at a meeting with the Joint Committee of the Senate and House of Representatives on the Medium Term Expenditure Framework on the 2014 budget, expressed worry that the persistent attacks on major pipeline arteries supplying crude oil to export terminals has impacted negatively on the nation’s economy.

He observed that the oil and gas sector was a key component of MTEF, adding that any impact on it will have a negative effect on revenue flow to the federation account.

According to Yakubu, “the critical and most important point to note here is that when the artery conveying crude oil to the terminals is hit, this reduces our production volume by 150,000 barrels per day and, for the period that the line is down, that accounts for the drop in crude oil production.

“From February to date, we have witnessed so much breaches and each time we go down about 150,000bpd goes down.

“We have looked at the 2014 oil projection from a realistic point of view and we would continue to recalibrate it with the National Assembly and other relevant stakeholders to ensure that the petroleum sector continues to play a key role in the national economy.”

He said the daily crude oil production figure presently ranges between 2.2mpbd and 2.3mbpd, stressing that the production figure has been erratic as a result of the several attacks on the arteries from February to date.

He said that the NNPC actively participated with the Budget Office in arriving at the MTEF, adding that the corporation would do everything possible to ensure that MTEF is achieved in terms of accruals from oil and gas projected input.

Similarly, the Director-General, Budget Office, Dr Bright Okogu, said the activities of crude oil theft and pipeline vandalism coupled with the discovery of shale oil and gas were responsible for the inability of the NNPC to realise the projected 2.5mbpd crude oil production in 2013.

He however dispelled speculations that the country was insolvent saying, “Nigeria is not broke even though we may have cash flow problems from time to time.” But that does not translate to Nigeria being broke,” Okogu stated.

Okogu’s position was corroborated by the Accountant-General of the federation Mr Jonah Otunla and a deputy governor in the Central Bank of Nigeria (CBN), Mrs Sara Omotunde Alade, in their responses to questions during the National Assembly Joint Committee on Finance meeting on the 2014-2016 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).

Okogu cited countries like Greece and Spain which had recently sought bailouts but said Nigeria was nowhere near that situation, he stated in reference to the state of the economy.