By Adewale Sanyaolu
A threat dismissed
When the Niger Delta Avengers (NDA), the new militant group operating in Nigeria’s oil rich region, gave oil companies two weeks’ ultimatum to shut down, many dismissed it as one of the regular threats they were used to.
But following the expiration of the two weeks’ ultimatum, the impact is clear for all to see as most of the oil companies in the Niger Delta region have either shut down or scaled down operations while others have evacuated their workers to a safe haven, leaving the country bleeding with a daily production of 900,000 barrels per day (bpd), according to statistics from analysts.
‘‘With damages to some oil companies’ operations over the past month, Nigeria’s crude oil production had dropped to less than 1.5 million bpd and far short of the 2.2 million bpd assumed in the 2016 budget,’’ Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, had lamented.
Three weeks after the threat, the economy of the country was almost grounded to zero per cent as most oil installation facilities in the region have shut down operations.
The group had in an email sent to oil companies by its spokesperson, Col. Mudoch Agbinibo, said the attack on oil blocs would be bloody at the expiration of the ultimatum. ‘‘To owners and operators of these oil blocs in our region, the Niger Delta Avengers is giving you two weeks’ ultimatum to shut down your operations and evacuate your staff. If at the end of the ultimatum, you are still operating, we will blow up all the locations. It will be bloody. So just shut down your operations and leave,” the group whose strikes have devastated oil and gas operations of major oil companies in the Niger Delta region and practically crippled crude oil production said.
Economic loss
Nigeria may have lost over N100 billion between February and June to the vandalised Forcados pipeline that conveys Forcados grade of crude oil of over 400,000 bpd.
The repair of the damaged pipeline, which currently cost Nigeria about 250,000 barrels of crude oil per day due to the bombing of Forcados pipeline, may last till June ending.
Though the Nigerian National Petroleum Corporation (NNPC) targeted the repair to last for about eight weeks from the day of the attack, latest information shows that the repair may linger till the end of June.
Recall that the NNPC had announced a major loss in the month of April due to attacks on oil installations, leading to a N20 billion deficit owing to attacks on the Forcados export line by the NDA.
The situation, according to the Minister of State, Petroleum Resources, Kachikwu, had adversely impacted the country’s 2016 production target of Nigerian Petroleum Development Company (NPDC) oil revenue.
NNPC said the persistent pipeline vandalism poses the greatest threat to the industry. In addition, the revenue from crude oil and gas was impacted by shut-down and shut-in of production for maintenances at different periods and terminals during the month under review.
Oil production suffered deficit of record 1.01 million bpd, raising the revenue losses by the country and International Oil Companies (IOCs) to N10.1 billion ($50.5 million) daily.
Head of Energy Research at Ecobank, Dolapo Oni, said that crude production in Nigeria, hitherto the biggest crude producer in Africa, has now dipped to about 990,000 bpd.
Oni, according to Reuters, said: “Between pipeline repairs and militant attacks, Nigeria is probably producing no more than 990,000 barrels of oil everyday as against the 2.2 million daily production figure captured in the 2016 budget. That leaves the country with a deficit of 1.01 million bpd.
With crude price hovering around $50 per barrel, the losses in revenue on the 1.01 million barrels deficit amounted to N10.1 billion ($50.5 million) daily.
Also, Nigeria may lose additional $42 million (N8.3 billion) to the damage of 35,000 bpd Valve Platform, an offshore oil facility belonging to Chevron Nigeria Limited located near Escravos in Warri South-west.
800,000bpd loss not sustainable
More worrisome is the recent revelation by Kachikwu at a special session of the House of Representatives convened over the recent petrol price hike that Nigeria was losing 800,000 barrels of oil per day due to pipeline vandalism, especially with the latest onslaught by NDA.
As at the last count, over 40 major pipelines have been bombed and destroyed across the Niger Delta by the militants’ group, NDA, as it pursues its avowed goal of crippling the country’s oil and gas industry.
Already, the combined effect of the successful attacks so far carried out by the group since February 10, when it bombed the Soku Gas Plant operated by Shell, which supplies gas to the Nigeria Liquefied Natural Gas (NLNG) plant in Bonny for export, has resulted in a precipitous drop in crude oil production and export by the major operating partners of the NNPC.
He condemned the incessant attacks on oil installations in the country, saying, “we declined from 2.2 million barrels which was the focus of the 2016 budget to 1.4 million barrels as of today.”
He, however, expressed the Ministry’s commitment to ensuring that destroyed facilities are repaired and effectively protected. “We are going to work hard to see how we will get these issues resolved and get our production back.’’
Managing Director and Country Chair, Shell Companies in Nigeria, Mr. Osagie Okunbor, said at a recent meeting with Energy Editors in Lagos that nowhere in the world do some set of people take up and destroy national assets.
“Crude theft, illegal refining and insecurity were key challenges in 2015. We are constantly monitoring the security situation in our operating areas in the Niger Delta and are taking all possible steps to ensure safety of staff and contractors,” Okunbor had said.