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Nigeria Struggles To Improve Oil Production Despite Setbacks Linked To Corrupt Officials

By Ebere Inyama

(Lagos) In a bid to alleviate the nation’s fuel supply challenges, plans have been set in motion to make the Port Harcourt and Warri refineries fully operational by the end of 2024.

Speaking during the ongoing 2024 Offshore Technology Conference (OTC) in Houston, Texas.  The Chairman, Senate Committee on Petroleum (Downstream), Ifeanyi Ubah, assured Nigerians that the Port Harcourt and Warri refineries will be fully operational by the end of 2024.

 “My mandate is to ensure that the refineries in Nigeria are up and functional. By my involvement, before the end of this year, two refineries will be up and running.

“Also, before the end of next year, the Kaduna refinery will come on stream and the production of jet oil and lubricant will be produced by mid-next year.

“I can assure Nigerians that I will tirelessly pursue and ensure that these refineries are up and running before the end of the year. We have set up a technical team to visit the refineries every two weeks to meet the set target.” he asserted.

Corrupt Government Officials Sabotaging Efforts To Develop The Petroleum Sector In Nigeria

The major obstacles faced by the petroleum sector in Nigeria include corrupt practices by government officials, retrogressive OPEC regulations, theft and vandalism.

The cheating schemes that have robbed the Nigerian people of oil revenue can be traced to the American companies that operate oil fields, according to U.S. Congresswomen.   On May 9, 2024, two ranking U.S. congresswomen, Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee and Congresswoman Joyce Beatty (D-OH), the Ranking Member of the Subcommittee on National Security, Illicit Finance, and International Financial Institutions, sent a letter to the Department of Justice (DOJ), urging the DOJ to reopen an investigation into two oil companies, Shell and Eni, for their principal roles in a bribery scheme that violated America’s Foreign Corrupt Practices Act.

In the letter which was addressed to U.S. Attorney Gen. Merrick Garland, Waters and Beatty highlight the ongoing harm that the bribery has posed to the Nigerian people and its economy, while the companies involved continue to profit.

“We write to urge the Department of Justice (DOJ) to reopen a Foreign Corrupt Practices Act (FCPA) investigation into Shell and Eni regarding their 2011 purchase of the rights to Oil Prospecting License (OPL) 245, one of Nigeria’s most lucrative oilfields. Available evidence implicates both companies in a scheme that resulted in the payment of $1.1 billion in bribes to Nigerian government officials, including then-President Goodluck Jonathan. Shell and Eni, both registered with the U.S. Securities and Exchange Commission (SEC), continue to profit from the deal in violation of the FCPA,” the letter read.

 In addition,  the  Organisation Of Petroleum Exporting Countries (OPEC) ’s regulation of oil production of its members have cheated Nigeria of its fair share of marketable production, according to Obenna Iheukwumere, Obinna Emmanuel; Moore, David and Omotayo, Temitope in a scholarly article titled ‘Investigating The Challenges Of Refinery Construction In Nigeria: A Snapshot Across Two-Timeframes Over The Past 55 Years,’ (July 2020).

The OPEC marketing quotas allowed to each member nation have put Nigeria at a disadvantage to other members, including Venezuela, Kuwait, Saudi Arabia, Iran and Iraq. The latest survey of OPEC output shows Nigeria pumped 2.19 million bpd in October 2010, up from 2.17 million in September 2010, but under the implied agreement with OPEC, Nigeria’s target quota is 1.67 million barrels per day (bpd) meaning that the country cannot turn excesses of 500 bpd into ‘petrodollars’ for its economic development.

Saudi Arabia with a population of about 28 million (about 7.5 percent of OPEC’s total population) has a quota of 8.014 million barrels per day (about 30 percent of the total crude oil quota), whereas Nigeria, with a population of 156 million (42 percent  of OPEC total), has a quota of 1.704 million barrels (6.8 percent of total quota) per day. Even UAE with a population of just over 6 million people (1 percent of OPEC total population) has a higher quota (2.226 million or 8.9 percent of total quota) than Nigeria.

Nigeria’s population is higher than that of Saudi Arabia, but Saudi’s bigger reserve level of crude oil deposits means that its production quota is many times larger than that of Nigeria, according to the OPEC. This means that Saudi Arabia is able to generate vast amounts of petrodollars for its economic development, whereas Nigeria is restricted to a lower quota that generates a much lower export income.

Oil-Rich Nigeria With 4 Refineries Becomes Africa’s Largest Importer Of Petroleum Products

Dangote refinery (inset – Mr. Aliko Dangote) – COURTESY @ X https://twitter.com/ndekekwe/status/1752151241440776444
Dangote refinery (inset – Mr. Aliko Dangote) – COURTESY @ X https://twitter.com/ndekekwe/status/1752151241440776444

From June, 2016, during the administration of President Muhammadu Buhari, the Nigerian government shut down the four oil refineries across the country and began importing petroleum products for local consumption.

From their findings by March, 2024, analysts at S&P Global Commodity Insights revealed that Nigeria, one of the world’s largest producers of raw crude, has become the largest importer of refined petrol in Africa.

Speaking during a Channels Television’s program me, Politics Today held in September 2020, the Group Managing Director of the Nigeria National Petroleum Company (NNPC), Mele Kyari, disclosed that the four oil refineries in Port Harcourt, Warri, and Kaduna were shut down because they were functioning below capacity.” Crime gangs in Nigeria’s Deep South drained huge amounts of crude by tapping pipelines, stopping delivery to the refineries.

 “All the four refineries in three locations are shut down, and it was a deliberate decision for two reasons. One is that the delivery of crude oil to these refineries is completely challenged because the pipeline network has been completely compromised by vandals and all kinds of people that will not allow us to operate these pipelines,” he said.

Later in July, 2023, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) led by Mr. Farouk Ahmed issued licenceS to 56 oil marketing companies to import petrol into the country.

Three months after, precisely in October, 2023, the NNPC boss, Mele Kyari, voided the licenseS given to petrol marketers, claiming that the NNPC is the sole importer of petroleum products into Nigeria.

Evolution Of The Petroleum Industry In Nigeria

In a scholarly article titled “Refining in Nigeria: history, challenges and prospects,” published by ResearchGate in September 2018, the author, Anthony Ogbuigwe traced the history of crude oil exploration in Nigeria to 1956 when Shell-BP Petroleum Development Company of Nigeria Limited was granted the sole concessionary rights over the whole territory of the country after it discovered crude oil in commercial quantity in Oloibiri in present-day Bayelsa State.

According to the author, Shell-BP built the first refinery in the country near Port Harcourt in 1965, an investment which was later acquired by the Federal Government of Nigeria in 1978 under an outright buy out.

The Warri and Kaduna Refineries were completed in 1978 and 1980 respectively while the second Port Harcourt refinery was built by the NNPC in 1989.

The mega refinery in Lagos by commissioned in May 2023 by industry developer Aliko Dangote is intended to refine 650,000 barrels of crude per day allowing 53 million liters of petrol to enter the market daily.  The massive petrochemical complex, albeit, one of Nigeria’s single largest investments valued at $19 billion  has not been able to operate at full capacity due to a series of delays. However, it began receiving crude oil in December and finally started distribution of diesel to marketers in the local market in March 2024.


Ebere Inyama is a reporter for TruthNigeria

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