Nigerian independent oil producer, Belemaoil Producing, has resumed operations at its Oil Mining Lease (OML) 55 after a three-year shutdown caused by facility damage resulting from theft.
The company announced this in a statement yesterday, explaining that operations at OML 55 were suspended in 2021 due to extensive oil theft from its delivery line to the Bonny terminal.
The company stated that the block comprises five oilfields, producing around 14,000 barrels of oil per day and over 70 million standard cubic feet of gas daily.
The arrival of the first floating oil storage vessel at OML 55 on October 6 marked “a major milestone in the company’s efforts to resume production,” according to the spokesperson.
Situated approximately 40 km west of the Bonny oil export terminal, Belemaoil acquired OML 55 from Chevron Corp in 2015. However, operations were suspended in 2021 due to ongoing oil theft.
Oil theft in Nigeria
The NNPCL and the Ministry of Petroleum estimate that Nigeria loses between 200,000 and 400,000 barrels of crude daily due to oil theft. These losses are significant, given that Nigeria’s average crude production in August was 1.35 million barrels per day, falling short of its OPEC quota of 1.5 million b/d.
In 2024 so far, Nigeria has consistently fallen short of its OPEC oil production quota of 1.5 million barrels per day, significantly affecting revenues and foreign exchange earnings.
The Ministry of Petroleum Resources has set a target of reaching 2 million barrels per day by year-end. To boost production and curb theft, the federal government has enlisted local security contractors to combat oil thieves, though the effectiveness of these efforts is yet to be determined.
In a recent interview on Channels Television, the GCEO of the NNPCL Mr. Mele Kyari explained that when the process of deactivating illegal refineries began in 2022, 8,684 sites, which he described as “boiling points” rather than true refineries, were deactivated. Additionally, there were 6,610 illegal connections to pipelines, of which about 5,913 have been removed. However, he noted that over 1,000 illegal connections remain, and they are reconnected daily despite efforts to remove them.
Exit of IOCs from onshore operations
The consistent theft and other problems in the Niger-Delta has necessitated the exit of multinational oil companies from onshore operations. Exxon Mobil, ENI, Shell are among the notable oil majors selling off their onshore assets in favour of less risky offshore, deepwater operations.
While the ENI has successfully completed the sale of its onshore oil assets to Oando, others are still tied back in regulatory knots with respect to issues relating to decommission and host community problems.