Nigerian Energy And Mining Law Newsletter

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segments of the media, albeit under

Energy and Mining Newsletter

cloak of confidentiality, that shut-in

March 2009 Vol. 22: Issue # 3

volume is about 1.3 million bpd. Sixty per cent of this is as a result of militancy,

In the immediate past six months,

while the 40 per cent balance is as a

Nigeria has lost an estimated 680,000

result of technical challenges.

barrels per day to illegal oil bunkering and theft. All indications suggest that crude oil theft from the upstream sector of the oil industry in the country has worsened and would in fact not get any better in the foreseeable future.

interviews

of

security

operatives by some journalists in the country strongly indicate that some retired generals and senior military officers have been implicated in the escalating theft of crude oil and the perpetuation of the air of insecurity in the Niger Delta region of Nigeria. Officials of oil majors — Shell, Mobil, Chevron, Total and Agip — which operate joint ventures with the NNPC claim that a significant proportion of the shut-in volume is as a result of technical challenges, but they declined to state the exact volume affected.

Investment,

Management

Services (NAPIMS), a subsidiary of the NNPC,

have

confirmed

been oscillating between 1.6 million bpd and 2.0 mbpd, short of the 2.2 mbpd production volume upon which the 2009

The incidence of crude oil theft has increased in the last six months. At the Shell

Nigeria

Production operated bunkering

Exploration

Company Sea

Eagle

activities

(SNEPCo)

FPSO, has

and illegal

continued

unabated, even though operations were suspended about 3 years ago. In the last quarter of 2008, irregular visits of barges were observed transiting the field and inspection conducted confirmed illegal bunkering activities on 19 wells and by end of January, 2009 nocturnal visits by barges escorted by speed boats had increased to 5 days a week.

However, some officials of the National Petroleum

the last one month output volume has

budget was predicated.

Recent investigations by the media and confidential

NAPIMS officials have confirmed that in

to

certain

Interestingly, during the period, the security

agencies

were

informed

accordingly, but there was no response

©Blackfriars LLP 2009. All rights reserved. This document is for general guidance only. Definitive advice should be sought from counsel if required. Blackfriars LLP is a Nigerian law firm with a representative office in Toronto, Canada.

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in January, up till the second week in

Militants in the Niger Delta area seem

February, when a feeble attempt at

convinced that the Nigerian government

pursuit of the thieves was initiated.

itself aids some corrupt retired military officers to remove crude oil for sale.

In an effort to protect the facilities around the Sea Eagle, Shell personnel mobilised and visited the facility to remove tubing and valves installed by the thieves to open the sub-surface safety valve and master control valve. However, the oil thieves, who wear balaclava suits resurfaced with machine

Ms. Nkeiru Onyeaso Tel: +234 808 718 0833 Email: [email protected] Fax: +1 646 536 8978 Dr. Virtus Igbokwe Tel: +234 802 220 4755 Email: [email protected] Fax: +1 646 536 8978

guns mounted on top of four fastmoving boats and fired busts of gun shots to warn off the Shell personnel from their criminal activities.

Ms. Clara Ndive Email: [email protected] Tel: +234 803 323 1868 Fax: Fax: +1 646 536 8978

In the vicinity of Warri, Port Harcourt and Yenagoa, crude oil thieves enjoy a field day, taking crude oil unhindered from well heads of different oil and gas exploration and production companies, with the security agencies unable to check their excesses. There is no evidence that the Nigerian government has mustered the political will to deal with the brigandage and impunity of corrupt retired military officers and their

“militant”

allies.

Vessels that have been arrested for illegal oil bunkering are often released on the orders of top military officers.

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©Blackfriars LLP 2009. All rights reserved. This document is for general guidance only. Definitive advice should be sought from counsel if required. Blackfriars LLP is a Nigerian law firm with a representative office in Toronto, Canada.