The oil industry in Nigeria faces a dire situation due to rampant oil theft and pipeline vandalism, severely impacting the nation’s crude oil supply. The Lagos State Chamber of Commerce and Industry has sounded the alarm, emphasizing the serious consequences for both major oil players and modular refineries.
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Nigeria’s 25 modular refineries, which require 200,000 barrels of crude daily, are struggling to secure adequate supply. Even the $20 billion Dangote refinery in Lagos, with a capacity of 650,000 barrels per day, is feeling the strain. Adding to the challenge is Nigeria’s low crude oil production, currently at 1,281,478 barrels per day.
Persistent issues such as oil theft and pipeline vandalism in Nigeria’s upstream oil sector have resulted in significant revenue losses. The country faces an annual estimated loss of N1.29 trillion, with approximately 300,000 barrels of crude oil pilfered daily.
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Aliko Dangote, President of Dangote Group, has expressed concern over international oil companies’ preference for prioritizing crude exports over domestic markets. Despite efforts by the Nigerian National Petroleum Company Limited (NNPC) to ensure feedstock supply, international oil companies remain hesitant to reduce exports.
To address these challenges, the Lagos Chamber of Commerce and Industry is urging the government to create a conducive business environment, taking into account the global pricing dynamics of crude oil. The chamber advocates for enhanced regulation and improved performance within the oil and gas sector, recognizing the obstacles faced by oil producers.
It is imperative for Nigeria to tackle these issues to increase crude oil production, meet the needs of local refineries, and strengthen the national economy. Dr. Chinyere Almona, Director-General of the Lagos State Chamber of Commerce and Industry, emphasizes the importance of a smoother transition for the new refinery. She calls on the government to address concerns regarding pricing and supply contracts between the Dangote refinery and international oil companies.
