Fresh investigations have revealed that the group of vandals targeting pipelines supplying natural gas to Nigeria LNG Limited are in pursuit of stealing crude condensate — a highly coveted hydrocarbon that commands greater local demand than crude oil – and not the gas transported.
A report by Bloomberg on Tuesday stated that this high-risk act is responsible for an 80 per cent reduction in the gas supply required to meet the company’s needs, triggering an operational crisis at its Bonny Island facility and severely affecting its ability to fulfil export demands.
It noted that the vandals install valves that slow down the pressure on the lines before cutting through pipes to leak out gas so they can collect the condensate at the bottom.
It further stated that light oil fetch prices comparable to Nigeria’s high-end crude grades, such as Forcados and Bonny Light, can be easily refined or directly used in generators.
Investigations showed that the fuel is commonly sold on the streets of southern cities like Port Harcourt and Aba.
This development, which has worsened in recent weeks, is a threat to the nation’s revenue streams and its projected 2025 dividends of N727bn, a 113 per cent growth from N346bn last year.
Vandalism and sabotage have curtailed operations at the plant and curbed exports of liquefied natural gas, or LNG.
Criminal groups have for decades targeted the oil pipelines that criss-cross the country’s Niger Delta region, but a government crackdown on crude theft has driven them to gas conduits where they seek an ultra-light form of oil that’s easy to process at makeshift refineries.
The surge in activity has crippled the gas supply to Nigeria LNG Ltd., a joint venture owned by Nigeria, TotalEnergies SE, Shell Plc and Eni SpA.
The report quoting the managing director of ANOH gas plant, a Seplat Energy Plc subsidiary, Effiong Okon, noted that the rupture of gas pipelines is very dangerous but rewarding if successful.
Okon, who operates a $700 million gas project in the area, said, “It is a very high-risk, very dangerous operation that’s not always successful. But when it’s successful, they make a lot of money.”
“Criminals are willing to face significant danger even though they are accessing small volumes of condensate. High risk, high reward,” he stated.
NLNG was held up as a model state-backed enterprise when exports of the super-chilled fuel started in 1999, but its footprint has dwindled.
Nigeria accounted for 3.5 per cent of the total global LNG supply last year, steadily decreasing from 6 per cent in 2020, according to BNEF.
The PUNCH reports that the vandals’ new theft strategy comes in the wake of the current administration’s announcement to use condensate production to meet its daily crude oil production target of 2.7 million barrels by 2027, following enhanced security measures at oil production and transportation sites.
This is because the condensate output doesn’t count against the oil-production quota Nigeria agreed to as a member of the Organization of Petroleum Exporting Countries.
The Minister of State for Petroleum Heineken Lokpobiri last month said that Africa’s largest producer aims to achieve a combined output target of 3 million barrels per day, with half of that consisting of condensate.
The rise of illegal operations adds another obstacle to increasing that production.
NLNG exports tumbled in February, according to commodities tracking company ICIS.
That month, the plant only received one-fifth of its gas supply, forcing a shutdown of processing units.
The Managing Director of Nigeria LNG Limited, Dr Philip Mshelbila, further revealed at the Nigeria International Energy Summit that only two of the company’s six gas trains are currently operational, attributing the operational challenges to persistent attacks on its gas pipelines by vandals.
While five of its six production units are back up, a disruption of several months of all NLNG exports would have “a significant impact on the global gas markets,” said Anne-Sophie Corbeau, a researcher at Columbia University’s Center on Global Energy Policy.
The vandalism potentially threatens supply for a seventh NLNG unit that’s under construction, along with existing supply contracts and other planned projects to develop the fuel.
“Security issues may put in question future investments in the gas industry in Nigeria, especially if Nigeria wants to expand its LNG exports,” said Corbeau, citing a glut of projects planned globally and additional LNG exports from the US backed by President Donald Trump.
For decades, crude theft has sparked conflict, exacerbated environmental devastation caused by oil companies, stoked corruption and robbed the country of billions of dollars in revenue a year.
In 2022, as Nigeria struggled to meet its OPEC quota, the head of the national oil company estimated that it could be producing as much as 700,000 barrels a day more if not for criminals stealing crude and oil companies holding back for fear of theft.
Since coming into office in May 2023, President Bola Tinubu has increased security at the oil pipelines, sparking a rebound in output — a boost of more than 40 per cent from three years ago — that exceeded Nigeria’s OPEC production pledge in January.
Some of the security measures have been war-like: using drones and fighter jets to drop bombs on illegal refining sites that dot the delta, while on the ground, private security firms managed by former militants — who used to blow up the pipelines and hold workers for ransom — have ensured better protection of the main crude lines.
“Improved security at the oil pipelines is pushing criminals in other directions,” said Salahuddeen Tahir, head of assets and investments management at NNPC Gas & Power Investment, a unit of the national oil company.
While in the past gangs tapped oil pipelines with tools and hacksaws, today’s gas thieves shows signs of more sophisticated engineering skills — in line with the more dangerous nature of the work.
“These pipelines operate at high pressure, and any rupture poses a significant risk of explosion or uncontrolled fire,” said Claudio Steuer, a senior research fellow at the Oxford Institute for Energy Studies and former general manager at Shell Nigeria.
Reacting, the Special adviser to the president on Energy, Olu Verheijen, said the government is dealing with the attacks, but declined to give details.
She said, “NLNG is working with government agencies “to strengthen the security of upstream production and transmission assets.”
