- As operators decry impact of low crude price, vandalism
By Adewale Sanyaolu
OIL and gas operators have decried the unabated crude oil theft in the Niger Delta, warning that if unchecked, about $12 billion worth of investment in the oil and gas sector may go down the drain.
The operators equally said the continued slide in crude prices, which saw the Brent sliding to about $40 last week Thursday and the attendant effect of vandalism may sound a death knell for the sector.
Another challenge confronting operators is dearth of industry infrastructure, a situation, which, according to them, requires the investor to raise additional funds to build independent infrastructure like pipelines, flow stations and terminals close to every production stream. These challenges often escalate the cost of field development.
Chairman, Society of Petroleum Engineers (SPE) Nigeria Council, Mr. Emeka Ene, in his presentation at a recent conference hosted by the Nigerian Association of Petroleum Explorationists (NAPE), declared that the problem of crude oil theft and illegal refining in the Niger Delta calls for a state of national emergency, regretting that the earnings generated through these illicit activities far surpass the national legitimate income average.
According to him, worst hit by vandalism and crude theft are those linked to onshore joint venture facilities operated by Shell, Agip, Chevron and Total.
Regrettably, the four foreign companies, through systematic divestments, are transferring the assets, associated liabilities and losses to indigenous companies that acquired the assets at a high cost, Ene disclosed.
“After staking over $12 billion in a series of acquisitions, the indigenous companies are now grappling with huge production losses, protracted downtime, frequent facility vandalism and rising maintenance cost.
Official figures have it that the industry suffers production losses as high as 250,000 barrels per day, a figure former Venezuelan Petroleum Minister, Dr. Alirio Para, said is equivalent to full capacity production from two world-class deepwater fields anywhere in the world,” he lamented.
Managing Director of Seplat Petroleum Company Limited, Mr. Austin Avuru, said there has been no respite for companies channeling crude production output to export terminals, especially through the notorious Trans- Forcados Pipeline since 2014.
The pipeline is one of the export pipelines that have become the target of attacks by thieving syndicates that thrive on crude oil theft.
“Recall that in our first quarter report for 2014, we stated that our operations were heavily impacted for the most part of the period. For 36 days out of the 90 days, we couldn’t produce because the Trans-Forcados Pipeline was down. Even when we produce through the Trans-Forcados pipeline, we suffer a lot of losses during reconciliation.”
On its 2015 half year report, he reiterated that the company was confronted with the Trans-Forcados problem between November 2014 and April 2015.
“It was a huge problem. We experienced 40 per cent outage for the first half of the year, meaning that out of 180 days, we did not produce for 77 days. It was that bad,” he lamented.
“You are referring to a situation where it doesn’t matter where you find oil and you want to produce 200 barrels per day. You should be able to hook up to a pipeline and get to some export pipeline.
“Part of the solution to the Niger Delta question is to take away infrastructure for oil and gas as a separate business. Government’s role is merely to facilitate a separate business that guarantees ease of access to all players, big and small.
“We have passed the stage where infrastructure development in Nigeria is done at the whim and caprice of individual producers. It now has to be a national infrastructure network for safe, easy and efficient delivery of natural gas and crude oil to their destinations. So it has to be done urgently,” he stressed.
Source : SunOnline
