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Oil Theft: Bayelsa’s Revenue Drops As JTF Blames Shell, Agip

The Joint Task Force (JTF) in the Niger Delta called “Operation Pulo Shield” has blamed Shell and Agip for a production loss of some 190,000 barrels of crude daily from oil fields in Bayelsa.

 The steep decline in production was responsible for a significant drop in oil revenue accruing to Bayelsa State. The state’s revenue slipped from N12.4 billion in May 2013 to N9 billion in June 2013, according to a breakdown of monthly revenues provided by Governor Seriake Dickson.

 Shell and Agip, the two major oil companies operating in Bayelsa State, had declared “force majeure” on their crude output from their facilities domiciled in Bayelsa. The move was part of a corporate strategy to absolve the two companies of liabilities to crude oil buyers.

 “Force majeure” is a legal notice that absolves an oil firm of liabilities for failure to meet supply obligations to crude buyers due to circumstances beyond the firm’s control.

 An oil industry analyst stated that the two companies determined the level of revenue accruing to the oil-bearing states. “They do this by deciding which of their locations to produce crude from,” said the analyst. He added: “Oil companies often declare operational mishaps to justify such manipulations which determine how much [revenue] goes to the oil bearing states.”

The analyst stated that oil companies had found the tool effective in keeping the governors in check and getting the various state administrators to do their biddings.

The oil firms had blamed the shutdown of their operations on unsustainable levels of oil theft in Bayelsa.

 Mr Igo Weli, the General Manager in charge of Nigerian Content Development for Shell Petroleum Development Company (SPDC), stated that the oil firm had been losing 150,000 barrels of crude export since April 15 following the shutdown of its Nembe Creek Trunk Line.

 In a statement, Agip also said it had authorized the suspension of operations on March 22, and subsequently declared “force majeure” on its oil output from the facility on March 23.

 “Eni (Agip’s parent company) confirms that during the night between 21 and 22 March, the company has declared force majeure and ordered the closure of its onshore activities in the Swamp Area, located in Bayelsa,” the company stated. Agip’s release added: “The decision was made due to the intensified bunkering, consisting in the sabotage of pipelines and the theft of

crude oil, which has recently reached unsustainable levels regarding both personal safety and damage to the environment.”

 The company declared further: “Sustainability is for Eni a priority in Nigeria as in all the countries in which it operates.”

 The firm disclosed that it had produced about 40,000 barrels of crude oil daily from the shut facilities.

 However, a JTF spokesman, Lieutenant Colonel Onyema Nwachukwu, stated at the group’s headquarters in Yenagoa that the shutdown of production was avoidable if the companies had reacted to reports by the JTF troops.

 “Two major pipelines were shut down, and before these pipelines were actually shut down, our patrol troops had reported breaches on these pipelines. If the oil companies had reacted [in a timely manner] to these reports, the breaches would have been clamped,” said the officer.

 The officer added: “And it would not have resulted in this entire shut down of the pipelines. So I would say that if you take an ‘overfly’ of the entire area, you would find that most of the illegal refineries that were in operation, that were alive in those days, have been shut down, completely scuttled.”

Colonel Nwachukwu said that the JTF and Bayelsa government were collaborating in the fight against oil theft. He urged the oil firms to be proactive stakeholders and to play their roles in efforts to stamp out illicit activities like oil thefts.

Famous James, an oil industry services contractor who corroborated the JTF officer’s views, stated that the oil firms have taken a full grip of the fortunes of the states in the region.

“What is unknown to many Nigerians is that the oil industry and, by implication, the Nigerian economy is in the total control of foreign interests. That is why they determine who gets what at the background,” said Mr. James. He added oil companies “can cripple any governor who fails to do their bidding by shutting down wells in the state and opening the ones in the state of their choice. And at the end of the day the revenue goes to where the companies want. That explains why the government is not able to check the excesses of these foreign companies. Look at the issue of gas flare and the deadline to stop it. The companies simply are unmoved because they know the government is only interested in the oil funds and not the impact of oil exploration on the environment.”

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