The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mr. Mele Kyari, has issued a stark warning about the pervasive issue of crude oil theft and vandalism in the Niger Delta region. Testifying before the Senate Committee on Appropriation regarding the proposed 2024 budget, Kyari revealed the existence of over 4,800 illegal connections on crude oil pipelines, emphasizing the potential impact on the Federal Government’s oil production projections.
Kyari underscored the critical dependence of daily oil production on the security situation in the oil-rich Niger Delta region. He denounced the rampant vandalism and oil theft in the area as a calamity and a wholly abnormal situation not witnessed elsewhere in the world. Describing the prevalence of 4,800 illegal connections on the pipelines as a catastrophic state of affairs, Kyari highlighted its detrimental effect on production, emphasizing the futility of sealing these illegal insertions in the bid to achieve desired production levels. He underscored the influx of people from various parts of the country engaging in illegal refining activities in the Niger Delta, signaling the urgent need for intervention to address the colossal environmental and communal damage resulting from these activities.
Amidst the budget discussion, a contentious debate erupted between the Senate and NNPCL regarding the proposed increase in the crude oil production benchmark for the 2024 Appropriation Bill. While Senator Olamilekan Adeola advocated for the increase, Kyari expressed firm opposition, asserting the company’s adherence to the benchmark approved by President Bola Ahmed Tinubu. Kyari explained that the crude oil price and production benchmarks were intricately linked to global oil market dynamics, endorsing the projected daily crude oil production of 1.78 million barrels at $77 per barrel.
Kyari also provided an optimistic outlook on the revitalization of the Port Harcourt and Warri refineries, envisioning their coming into operation in the foreseeable future. Notably, he lauded the decisive termination of the fuel subsidy regime by President Bola Tinubu, affirming that the company’s financial sustainability was imperiled before this bold intervention. Kyari maintained that the removal of the subsidy has now positioned the company on a more robust financial footing, allowing it to meet its tax and royalty obligations effectively.
The Senate’s scrutiny extended to the company’s financial contribution to the Federation Account, with skepticism expressed over the N406 billion dividend remitted by NNPCL between July and November. In response, Kyari contextualized the company’s operational framework, emphasizing the need for the passage of the Petroleum Industry Bill into law for a paradigm shift towards profit-driven efficiency.
Kyari’s comprehensive testimony shed light on the multifaceted challenges and prospects within Nigeria’s oil sector, illuminating the intricate interplay between local and global dynamics impacting the country’s crude oil production and refining landscape. As Nigeria navigates these complexities, Kyari’s resolute assurances reflect the ongoing efforts to uphold operational integrity and environmental sustainability within the oil industry, resonating both domestically and on the international stage.
By embracing transparency and accountability, Nigeria’s strides in optimizing its oil sector stand poised to resonate positively across global markets, heralding a new era of sustainable development and resilience in the face of multifaceted energy challenges.
