Ejiofor Alike
1 July 2009
Lagos — Nigeria's precarious budgetary situation seems to be getting worse despite the rising prices of crude oil at the international market as Shell Petroleum Development Company of Nigeria (SPDC) said yesterday its crude oil production had further dropped to 140,000 barrels per day (bpd).
The current levels depict some 85.9 per cent drop from the 999,000 bpd SPDC Joint Venture produced in 2003.
SPDC, the largest private oil company in Nigeria, operates a joint venture in which the Nigerian National Petroleum Corporation (NNPC) holds 55 per cent, Shell 30 per cent, Total 10 per cent and Agip 5 per cent.
Shell's Joint Venture operations have the capacity to produce an average of one million barrels of oil equivalent per day.
In 2008, production averaged over 850,000 barrels of oil equivalent, according to the company's website.
SPDC's operations in the country cover two major oil export terminals at Bonny, Forcados - including 90 oilfields, 1,000 producing wells, 73 flow stations and eight gas plants.
With this latest drop in its output, the Royal Dutch Shell's operation in the country is being largely sustained by offshore production from the giant Bonga deepwater field, which is currently producing in excess of 100,000 barrels per day, but far below its capacity.
The 225,000 bpd capacity Bonga field, which came on stream in 2005, is however, being operated under a Production Sharing Contract (PSC) with the NNPC by Shell Nigeria Exploration and Production Company (SNEPCO), the second arm of the Shell Group.
This drastic cut in oil output by Shell is seen as a dent on the 2009 budget, which projected a daily production of over two million barrels at a price of $45 per barrel - even though oil is currently being sold at about $70 per barrel.
Royal Dutch Shell's Africa Regional Communications Director, Olav Ljosne, yesterday told Reuters that attacks by militants in recent days had cut oil output from facilities operated by SPDC joint venture to around 140,000 bpd.
Ljosne said: "In the past 10 days, we have had five attacks that have reduced our oil production to around 140,000 bpd."
Before this latest drop, a top official of the company in Nigeria had told THISDAY that production from the company's onshore business had dropped to 300,000 bpd, from nearly one million barrels per day, owing to the Niger Delta crisis.
He said: "Recent estimates suggest that Shell boosts production muscle of nearly one million barrels per day from its onshore business alone, but that the onshore production has lately dropped to 300,000 barrels daily production in the face of the insecurity and other challenges confronting the business.
"Armed attacks on facilities and kidnappings of oil company workers and even their families have sometimes resulted in fatalities and cast a dark cloud of insecurity over the Delta. Several of the large and competent contracting firms, which held lucrative civil works and project support contracts, have decided to pull out of the area in frustration."
According to him, "Owing to the heightened insecurity in the region, several big and competent contracting firms, which held lucrative civil works and project support contracts, have decided to pull out of the area in frustration."
THISDAY reported last Monday that owing to the increasing spate of attacks on its workers and installations by militants and other criminal gangs, SPDC had suspended its entire operations in the western Niger Delta.
Citing an industry source, Reuters also reported last Monday that there was virtually no crude oil production from the company's facilities in the western Niger Delta.
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