Oil sector loses N200bn to production disruption

Kaduna refinery

Nigeria has lost over N200 billion in the last 11 months due to the force majeure declared by Shell Petroleum Development Company (SPDC) as a result of the vandalism of the 48-inch Forcados export line in 2016.

The Nigerian National Petroleum Corporation (NNPC) yesterday put the monthly loss to the damaged pipeline, which was shut down February last year at N20 billion monthly.

NNPC, which made this disclosure in its December monthly report released yesterday, said that the production shut in has made the corporation operate at a loss every month.

Stakeholders also stated that it has led to loss of jobs by many Nigerians. NNPC said that a favourable business environment would enable Nigerian Petroleum Development Company (NPDC) to reverse on average, the over N20 billion monthly revenue currently being lost due to pipeline sabotage, which would have created more profit and jobs.

The corporation attributed its continuous monthly deficit to subsisting force majeure at Forcados and Brass Terminals and shutdown of two Nembe Creek Trunk Line (NCTL) flow stations following pipeline leakages.

It listed the areas much affected by the militants’ activities to include the onshore and shallow water assets, where government stake is high. “Hence, securing onshore and shallow water locations remain a priority to restore production,” it added.

NNPC disclosed that various activities to re-kit NPDC for efficiency and profitability through cost optimisation efforts and setting up asset management teams with the intention of transiting to Incorporated Joint Venture Companies (IJVs) with the JV Partners were on course.

It stated: “Pipeline sabotage in the country continues to reduce due to Federal Government and NNPC sustained engagements with the stakeholders.

“Only 18 downstream pipeline vandalised points were recorded in the month as against 43 in November 2016. This also represents 69.77 per cent reduction relative to previous month.

“Production dropped as a result of shutdown of Trans Niger Pipeline (TNP) from November 12th -16th 2016. About 140,000bopd was shut in due to leakages on the line. Production also dropped due to shut down of the NCTL from 21st to November 23rd 2016 as a result leakages in Bodokiri axis. About 180,000bopd was shut-in.”

The Chairman of Petroleum Technology Association of Nigeria (PETAN), Bank-Anthony Okoroafor, said that the situation in the region had created a lot of unpleasant impact on the oil and gas industry. He said this had led to deferment and cancellations of projects and lull in activity level.

Okoroafor said: “We should find a creative approach of empowerment of the Niger Delta host communities to have some form of single digit percentage control over the resources thus boosting the confidence and morale of the people as they become stakeholders and participants in the business.



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