Vanguard (Lagos)

27 January 2013

Nigeria's Oil Production Faces Threat Amid Fears of Vandals Activities

Photo: Leadership
Pipeline vandals

Nigeria's achievement of all time high 2.6 million barrels of crude oil daily is under threat as pipeline vandals seem set to resume their activities, following some respite after government contracted ex-militants on surveillance of oil facilities in the Niger-Delta.

Recently, it was reported that the country lost about N170 billion to pipeline vandalism over a period of time,but the act was checked when the Jonathan-led government contracted ex-militants to monitor oil facilities.

The Pipelines and Products Marketing Company (PPMC), while reacting to our the challenge, tried to put things in perspective. "The nation is losing huge amount of money to the spate of vandalism across the country, both on crude theft and refined products",it said.

According to the company, over N90 billion was lost to crude oil theft,as against N10 billion lost to refined products stolen in 2011. In 2012 alone, stealing of crude oil through pipelines reduced to N 42 billion, while products theft increased to N20 billion".

Considering the huge damage to the lines, it was gathered that about N8 billion was spent to effect repairs between 2011 and 2012. This includes the expenditure on security and environmental integrity.

The pipeline fire at Arepo caused by activities of vandals ...

The recent attack on oil facilities was System 2b, Nigeria's most strategic pipeline running from Atlas Cove, offshore Lagos up to Kwara State. The attack is responsible for the epileptic supply of petrol in some parts of the country which has given rise to occasional vehicular queues at filling stations around Lagos, Abuja and other major cities. Aside from this, three staff of PPMC lost their lives to an attack on oil facilities by armed vandals.

Meanwhile, the Nigeria Security and Civil Defence Corps (NSCDC) said 1,283 suspected vandals had been arrested from early 2012 to January 2013. While this may be true, not a few industry watchers dismissed this as a scratch on the surface as the real vandals are very sophisticated to be apprehended like mere criminals.

Speaking on the development, Mr. Tamuno Green, an engineer with an oil servicing company in Warri, Delta State, said a contract was signed by the Federal Government with, some ex-militants for the purpose of intense surveillance of oil facilities in the Niger-Delta and afterwards there was sanity.

Green explained, "Sometime in 2012, the president, for whatever reasons, thought it wise to engage the repentant militants in a more productive project of oil facility surveillance across the region and, in Delta State, for instance, Oil Facility Surveillance Ltd was so contracted, and, even if some of us criticized the rationale behind the president's action back then, it later dawned on us that nothing could have been more effective as these people seem to know the creeks better than government uniformed agents and, in most instances, they even know those who carry out these acts and penetrate them so easily.

" Hence before long, the nation's crude production began to rise! Not because new fields were discovered, after all there has been no licensing rounds since 2008 or thereabouts but we were, as a nation, able to ramp up 2.6 million daily crude production. That was due to the activities of these surveillance contractors, and now, government has refused to renew their contracts hence the rise in the activities of oil pipeline vandals.

"This is because the people you refer to as vandals are not rag-tag or riff-raffs; they are professionals, very enlightened and educated people engaged by highly unscrupulous elements with access to cash and ammunition, and they are also following events. They are aware that there is no contract binding the surveillance companies of these dreaded ex-militants and the government, hence they should be able to unleash terror on oil facilities without interference.

"I think government should, as a matter of national urgency, renew the contracts for these companies to continue their surveillance activities of oil facilities especially in the Niger-Delta, and this should not be politicized in any way in view of its strategic importance to national earnings and development. It is so important because even the nation's budget depends highly on oil production output because it is mono-dependent economy we're operating here in Nigeria."

According to him, about a month ago, Oil Facility Surveillance Ltd (MT Lady Jay) arrested a vessel filled to the brim with illegally refined diesel (AGO) with a ten-man crew. "This arrest was carried out in the Escravos River, while both vessel and crew were handed over to the appropriate security agencies for further investigation, even without a contract in place as we are aware that the contract they had with government expired in February 2012",he added.

Nigeria has about 15000 kilometers of oil pipelines, four refineries that are producing less than 145,000 barrels per day. With about 121 oil depots, the nation operates 62 jetties and about 25,000 fuel tankers hauling products across 24,500 filling stations across the country.

From the total of 24,500 filling stations, the major oil marketers have 2,471; independent marketers have 22,033, while the NNPC has 37 retail outlets.

Due to incessant vandalism, most of the pipelines are not functional, therefore posing threat to smooth distribution of products across these facilities.

Also it could be recalled that Shell Petroleum Development Company of Nigeria Ltd (SPDC) declared force majeure on outstanding cargoes of Bonny Light with effect from 4 May 2012. The action was blamed on production deferment caused by incessant crude theft and illegal bunkering on Nembe Creek Trunkline (NCTL).

Shutdown of the line for repairs resulted in a deferment of some 60,000bbls per day of production. The NCTL is the major conveyor of SPDC's and third party production in Eastern operations to Bonny Terminal, and had to be replaced when the old one became weakened due to the installation of many crude theft points.

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