Nigerian oil producer Belemaoil Producing has resumed operations at its Oil Mining Lease (OML) 55 after a three-year shutdown, which was caused by extensive damage to its facilities resulting from rampant oil theft.
In a statement released yesterday, Belemaoil confirmed the restart of production activities at the site, which had been suspended since 2021 due to significant theft from its delivery lines to the Bonny terminal. OML 55, located in Nigeria’s oil-rich Niger Delta region, comprises five oilfields, producing approximately 14,000 barrels of oil per day and over 70 million standard cubic feet of gas daily.
The company’s spokesperson described the arrival of the first floating oil storage vessel at OML 55 on October 6 as “a major milestone” in Belemaoil’s efforts to restore full production at the facility. OML 55 is situated about 40 kilometres west of the Bonny oil export terminal, which is one of Nigeria’s main export facilities. Belemaoil acquired the block from Chevron Corporation in 2015 but had been forced to suspend operations in 2021 following severe disruptions from oil theft.
Oil theft remains a persistent and crippling problem for Nigeria, particularly in the Niger Delta, where the theft and vandalisation of pipelines have severely affected both production and revenues. Estimates from the Nigerian National Petroleum Company Limited (NNPCL) and the Ministry of Petroleum indicate that between 200,000 and 400,000 barrels of crude oil are stolen daily in the country. These losses are particularly concerning in light of Nigeria’s recent production struggles, with the country averaging 1.35 million barrels of crude per day in August well below its OPEC quota of 1.5 million barrels per day.
In 2024, Nigeria has consistently missed its OPEC production targets, which has exacerbated the nation’s already declining foreign exchange earnings and fiscal revenues. In response, the Ministry of Petroleum Resources has set an ambitious goal of reaching 2 million barrels per day by the end of the year. However, achieving this target will require a significant reduction in the widespread theft that has long plagued Nigeria’s oil sector.
The Nigerian government has intensified efforts to tackle the problem by engaging local security contractors to monitor and protect the oil infrastructure. While the effectiveness of this strategy remains in question, it represents one of several recent attempts by the federal government to combat oil theft.
During a recent interview with Channels Television, NNPCL’s Group Chief Executive Officer, Mele Kyari, highlighted the scale of the issue, revealing that the company had deactivated 8,684 illegal refining sites referred to as “boiling points” rather than true refineries since 2022. He further disclosed that NNPCL has removed over 5,900 illegal connections to its pipelines, although more than 1,000 connections remain active, and new ones are reinstalled almost daily.
The rampant theft, insecurity, and frequent disruptions in Nigeria’s onshore oil fields have driven several multinational oil companies (IOCs) to divest their onshore assets in favour of less volatile offshore operations. ExxonMobil, Eni, and Shell are among the oil majors that have opted to scale back their onshore activities, selling their assets to indigenous firms and redirecting investments into deepwater projects, which offer more security and lower operational risks.
Eni recently completed the sale of its onshore assets to Nigerian energy company Oando, while other oil majors remain entangled in lengthy regulatory processes as they attempt to decommission assets and resolve disputes with host communities.
The exodus of IOCs from Nigeria’s onshore oil fields raises significant questions about the future of local production, with many observers concerned that local operators may not possess the technical expertise or financial resources required to maintain, let alone expand, output in the face of Nigeria’s persistent security and infrastructure challenges.
Belemaoil’s efforts to resume production at OML 55 signal a tentative step forward, but the broader problems that have hampered Nigeria’s oil sector continue to pose significant risks to the country’s energy security and economic stability.
As Nigeria grapples with these ongoing challenges, the restoration of operations at OML 55 represents a glimmer of hope for the beleaguered oil sector. However, whether the country’s production targets can be achieved in the face of widespread theft and infrastructure decay remains uncertain.
