The Corporation under the new management of Dr Maikanti Baru, group managing director then went ahead to assure Nigerians that every aspect of its operation
“Incessant vandalism, crude and products theft have continued to destroy value and put NNPC at disadvantaged competitive position. Reduction in vandalism will indeed unlock several industry upsides which include improved upstream oil production due to reduced pipeline disruptions, improved refinery utilization due to increased crude oil feed from restored pipelines, and reduction of crude/product losses,” the report stated.
Putting figures to the story, the NNPC monthly said, in July 2016 about 311 vandalised points were recorded. While the summation of vandalism recorded between August 2015 and July 2016 was said to be 3,213 points. “Therefore, crude and products losses have continued to cost NNPC and the Nation huge amount of money,” the report noted.
It will be recalled that Dr. Baru had earlier emphasised the need to curb pipeline vandalism and oil thieves due to its negative impact on the nation’s economy when he made a courtesy visit to the commandant general of the Nigerian Security Civil Defense Corps (NSCDC), Abdullahi Gani Muhammadu, at the corps headquarters in Abuja.
Speaking on the danger of the act on the nation’s economy at that event the NNPC GMD said, “The 2016 National Budget plan was based on 2.2 million barrels per day of crude oil production. However, the budget plan is now grossly impacted due to renewed militancy with 700,000 bpd of oil production curtailed due to pipeline vandalism.”
This fact was further buttressed in the latest monthly report, with the Corporation stating that it failed to meet the crude oil sales estimated of about N27 billion due to Force Majeure declared by Shell Petroleum Development Company (SPDC) as a result of vandalised 48-inch Forcados export line.
Articulating the losses incurred during the period, it said, “The activities of pipeline vandals and oil thieves are taking heavy toll on operations of the oil & gas Industry with over 500,000bopd lost as at May 2016. In June, 2016 there was additional shut in of about 50,000bopd, as a result of sabotage/attack on the delivery pipelines to Escravos Terminal. At Forcados Terminal about 300,000bopd remained shut-in and cargoes were deferred until repairs are completed. The Force Majeure declared on 10th May, 2016 for repair works on Nembe Creek Trunk Line (NCTL) and the resultant shut-in of about 275,000bopd subsists.”
It however pointed out that, “In June, 2016, Crude Oil production in Nigeria rose to 1.77mbopd due to completion of repairs coupled with no new major attacks since mid-June, 2016. This however was still 10.72 per cent lower than June, 2015 production (the second lowest in over two decades).”
In addition, the report raised hopes pointing that the nation’s deep-water assets are safe, hence it is where production is now carried out.
“Crude volumes from Production Sharing Contracts (PSC), mainly deep-water assets, remained steady compared to Joint Venture (JV) & Independents producing predominately from Onshore and Shallow water locations impacted by security breaches and militant activities. Onshore and shallow water assets were severely damaged by militant activities.”
Refinery Operations
The Corporation’s ability to utilise effectively its own local refineries were said to have been equally impacted negatively by vandalism as the total crude processed by the three local refineries (KRPC, PHRC & WRPC) for the month of July 2016 was 126,756MT (929,275bbls) and intermediate of 40,640MT (297,972bbls) which translates to a combined yield efficiency of 77.82 per cent compared to crude processed in June 2016 of 225,770MT (1,655,346bbls) with a combined yield efficiency of 80.39 per cent.
The three refineries were said to have produced 139,2841MT of finished petroleum products out of 126,756MT of crude processed and intermediate of 40,640MT at a combined capacity utilisation of 6.74 per cent compared to 12.40 per cent combined capacity utilisation achieved in the month of June 2016.
“The adverse performance was due to crude pipeline vandalism in the Niger Delta region coupled with on-going refineries revamp, however the three refineries continue to operate at minimal capacity,” the report stated.
Natural Gas Vs Power Generation
Natural gas supply to thermal power plants was also adversely impacted with a drop from about 800mmscfd in July 2015 to below 400mmscfd in July 2016 and a drop in power generation to circa 2000MW from about 3500MW on the same period owing directly or indirectly to the impact on the pipelines vandalism, the report stated.
A Communal Way Out-Off Vandalism
Early this week it was reported that the Bayelsa State command of the Nigeria Security and Civil Defence Corps (NSCDC) has reopened an oil well shut by the Ogboibiri community, southern Ijaw local government area of the state.
It was gathered that the community blocked the wellhead following a disagreement with the Nigerian Agip Oil Company (NAOC), which operates in the area.
The community leaders accused the oil firm of failing to honour a Memorandum of Understanding (MoU) it signed with them.
A community source said people of the area ran out of patience on September 21 and blocked the wellhead.
He said the decision, which was taken by the Community Development Committee (CDC) led by one Okosughe Benson, was leaked to operatives of the NSCDC who were patrolling oil facilities in the area.
“The CDC chairman got a telephone call from the NSCDC state commandant, Desmond Agu, who engaged the committee and told them to suspend their action.
“Agu reeled out the implications of shutting down an oil well and advised them to embrace dialogue. He promised to intervene to resolve the lingering dispute between the community and the oil firm,” the source added.
The Lesson
The Ogboibiri community story and how it was resolved simply shows that vandalism in the oil and gas sector is possible. But how we go about it matters. Indeed, until the corporate organisation operating in this communities, the government and security agents take the bold side of relating with the people and offer to provide them the necessary social economic infrastructure, vandalism may continues and Nigeria will continue to lose money.
As noted by the monthly which said, “Crude and products losses have continued to cost NNPC and the Nation huge amount of money.”
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