Oil Theft Threatens Nigeria’s Crude Recovery as NCDMB Backs Annual FID Week

Nigeria’s plan to raise crude oil output and secure new investment in the petroleum industry will depend heavily on stopping pipeline vandalism and crude theft, the Nigerian Content Development and Monitoring Board, NCDMB, has said, as it proposes an annual period for oil and gas companies to take final investment decisions (FID) on projects.

The Board’s Executive Secretary, Engr. Felix Omatsola Ogbe, said the scale of attacks on crude pipelines and theft had become a major threat to the country’s energy security, with oil and gas operations also exposed to hostilities in producing communities.

Ogbe presented the position in a paper, “Resolving the Nigerian Energy Trilemma: Energy Security, Sustained Growth, and Affordability,” at the 42nd Annual International Conference and Exhibition of the Nigerian Association of Petroleum Explorationists, which opened in Lagos on Monday.

Represented by the NCDMB General Manager for Corporate Communications and Zonal Coordination, Mr Esueme Dan Kikile, Ogbe said Nigeria needed major petroleum projects and a security arrangement built on mutually beneficial engagement with host communities.

The Board has therefore proposed that stakeholders reserve one week each year for Final Investment Decisions, or FIDs, on new oil and gas projects.

The arrangement could be attached to any major petroleum or energy conference in Nigeria, creating a fixed period within the industry calendar for prospective investors, regulators and project promoters to conclude investment decisions.

NCDMB believes such an arrangement could encourage investors to act within agreed timelines and support faster project approvals.

Ogbe said new FIDs could open the way for more projects across the Nigerian oil and gas industry and help realise the objectives of the Presidential Directives introduced by the Presidency in March 2024.

He said closer industry cooperation could shorten contracting periods and make investment conditions more attractive.

Investment calendar for new projects

The proposed FID Week would sit alongside existing industry platforms, including the Nigerian Oil and Gas Opportunity Fair, known as NOGOF.

The biennial fair provides a meeting point for international and indigenous operating companies to present projects and business opportunities expected to come up in the sector.

By creating a specific period for investment decisions, the Board wants the industry to convert project opportunities into firm commitments.

For Nigeria’s oil and gas sector, the issue is not limited to attracting capital. Projects also require an operating environment where pipelines, personnel and installations are protected from disruption.

Ogbe said the financial burden of vandalism and attacks had become a major cost for operators.

“We are convinced at the Board that the incessant tampering with crude oil pipelines and hostilities in oil-producing communities have a huge impact on energy security,” he said.

The Board has introduced a policy known as the “Back to the Creeks Initiative” as part of its response to disruptions in oil-producing areas.

Communities placed in security strategy

Under the initiative, NCDMB plans interventions in host communities aimed at reducing disruptions to petroleum operations.

The programme includes corporate social responsibility projects, affordable financing for local contractors, improvement of educational facilities in villages and communities, teacher capacity development and better infrastructure for schools.

Details of the initiative are expected to be made public soon.

The Board believes the programme could encourage host communities to see nearby oil and gas facilities as assets connected to their economic well-being.

NCDMB expects that outlook to improve protection for petroleum infrastructure, reduce attacks and help raise crude oil production.

The Board also expects lower security costs for operators and more favourable petroleum product prices if disruptions are curtailed.

Investment and security, for Ogbe, must therefore advance together if Nigeria is to reverse negative trends in the energy sector.

New oil and gas projects can increase productive capacity, but the Board’s position is that the gains will be limited if crude pipelines and other installations continue to suffer tampering and attacks.

The proposed annual FID Week is intended to give new projects a clearer route to investment approval, while the Back to the Creeks Initiative is designed to address the community environment in which much of the country’s petroleum infrastructure operates.