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Vanguard: Nigeria loses N5.3trn to oil shut-in in 3 years

Written by Omoh Gabriel & Hector Igbikiowubo    
Monday, 25 February 2008 

THERE are indications that the Nigerian economy lost a colossal $45.49 billion (about N5.3 trillion based on current exchange rate of N117) in the last three years, 2005, 2006 and 2007 owing to shut-in crude oil production in the troubled Niger-Delta, more money than is actually required to provide infrastructure development for the area.

The lost revenue in the three-year period is almost the equivalent of the N5.137 trillion the Federal Government received as its share from the federation account between 1999 and 2005, representing 45.9 per cent of the total allocation from the federation account.

It is a little lower than the N6.047 trillion states, local governments and the Federal Capital Territory (FCT) got during the six-year period which represents 54 per cent of the allocation from June 1999 – December 2005. The lost revenue in the three-year period is about half of the N11.185 trillion shared out from the federation account in the six-year period, to the three tiers of government.

Industry experts have estimated that Nigeria loses anywhere from 70,000 to 300,000 barrels of oil per day to illegal bunkering, outside the shut-in crude, the equivalent output of a small oil-producing country. In its annual report released in late August, 2006, Shell Nigeria estimated illegal bunkering losses at 20,000 to 40,000 barrels per day in 2005, down from 40,000 to 60,000 in 2004.

In a December 2005 report, the Washington-based Council on Foreign Relations’ Independent Task Force calculated that a loss of just 70,000 barrels a day at a price of $60 a barrel “would generate over $1.5 billion per year – ample resources to fund arms trafficking, buy political influence, or both.”

Former Managing Director, Shell Petroleum Development Company (SPDC),Basil Omiyi, estimated in November 2004 that 70,000 barrels a day were lost to bunkering.

The figure of 300,000 bpd cited by the Council on Foreign Relations’ Independent Task Force No. 56 Report (January 2006) and subsequently by the Commander of U.S. Naval Forces in Europe and Africa, Adm. Harry Ulrich, in a speech on May 30, 2006, available at  Shell, did not say if its figures were country-wide totals or limited to its own facilities.

According to government sources, demands from militants have included the creation of additional states for Ijaws, amenities and jobs for rural communities, contracts and oil concessions for faction leaders and even calls for independence.

The spokesman for the Movement for the Emancipation of the Niger-Delta (MEND), the most vocal and best organised of the militant organisations to emerge in 2006, says his group’s goal is to achieve resource control concession, or wreak “anarchy”.

Attacks since December 2005, including a spate of kidnapping of oil workers, have at times forced oil production shutdowns of up to 800,000 barrels per day, threatening Nigerian government’s plans to nearly double production to four million barrels a day by 2010. Only some of those production losses have been offset by recent offshore developments.

http://www.vanguardngr.com/index.php?option=com_content&task=view&id=3575&Itemid=0

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