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Attacks: Osinbajo Meets Security Chiefs, IOCs, Production Falls

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Tuesday, May 10th, 2016
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Vice President Yemi Osinbajo on Monday presided over some meetings as part of efforts aimed at tackling the menace of militants who have been vandalising oil and gas pipelines in the Niger Delta.

Osinbajo first met behind closed doors with some top security chiefs and government officials over the matter.

Chevron’s Okan offshore production platform around Escravos in Warri, Delta State was last week blown up, a development that led to the shutdown of the facility by the oil major.

On Thursday night, a pipeline transporting crude oil to the Warri and Kaduna and a 16-inch gas line owned by the Nigerian National Petroleum Corporation were also blown up.

A group known as Niger Delta Avengers has claimed responsibility for the explosions.

Monday’s meetings presided over by Osinbajo were held in the conference room of his office inside the Presidential Villa, Abuja.

The first of the meetings was also attended by the Minister of State for Petroleum Resources, Ibe Kachikwu, as well as the Navy and Army chiefs.

Osinbajo also had a separate meeting with the Bayelsa State Governor, Mr. Seriake Dickson; and the Amayanabo of Toun Brass, Bayelsa State, King Alfred Diete-Spiff, on the same matter.

Dickson and Diete-Spiff arrived the vice president’s office at about 6pm while the first meeting was still ongoing and waited to meet with Osinbajo.

The vice president again returned to the conference room for another round of meeting with representatives of major oil companies in the country.

Those who attended included the representatives of Shell, Agip, Total, Nigeria Liquefied Natural Gas and Chevron, among others. Dickson and Diete-Spiff also joined the meeting.

The last meeting, which started at about 7:45pm, was still ongoing as of the time of filing this report at 8pm.

Following the spate of attacks on oil and gas assets, Nigeria’s output of crude oil has declined and is now close to a 22-year low, Reuters data shows, putting intense pressure on the country’s finances.

Shell’s Forcados field is still closed and under force majeure following a February subsea pipeline attack, taking out 250,000 barrels per day.

The violence has depressed production in the country to roughly 1.69 million bpd in May, the lowest since at least June 2007, when production fell to 1.68 million bpd, International Energy Agency data shows.

A small reduction from any field would quickly send output to the next low, seen in August 1994, when it hit 1.46 million bpd, according to the IEA data.

“It’s really not a good situation,” said Eugene Lindell, senior energy analyst with JBC Energy in Vienna, noting that the global excess of crude was keeping Brent prices from moving significantly higher on the back of the outages. “They have less production, and they’re getting less bang for their buck.”

Analysts said the violence could scare investment away from the country.

“If it continues like this… there are companies who will probably not consider Nigeria” for upstream investments, Lindell said.

The country’s 2016 budget, signed into law just last week, assumes 2.2 million bpd of oil production at $38 a barrel. In a country analysis released late last week, the US Energy Information Administration noted that pipeline sabotage and oil supply disruptions had increased in 2016, putting direct pressure on the country’s finances.

“Because Nigeria heavily depends on oil revenue, its economy is noticeably affected by changes to its oil production and/or to global crude oil prices,” the report said.

Strong indications emerged on Monday that the attack on the Trans Forcados pipeline in Burutu Local Government Area of Delta State had reduced the production of the Nigeria Petroleum Development Company from 250,000 barrels per day to almost 115,000 bpd.

It was gathered that the NPDC, which is the crude oil production arm of the Nigerian National Petroleum Corporation, had been forced to stop operation in the area because of the damage to the 48-inch pipeline being operated by the Shell Petroleum Development Company.

It was gathered that the total production of crude oil by the state-owned NPDC dropped from 250,000 bpd to 115,000 bpd on Monday, because of the February attack on the major pipeline.

The NNPC’s latest financial report had stated that vandalism of the Forcados Export Pipeline resulted in crude oil loss worth about N20bn between the months of February and March.

It was learnt that efforts were being made to repair the pipeline when the militants under the aegis of the Niger Delta Avengers again attacked the Chevron Okan platform at Abiteye and the NNPC pipeline transporting crude oil and gas to the Warri and Kaduna refineries.

The source said that there were serious doubts about the repair of the damaged pipeline as the two recent attacks, which took place in Escravos, were in the same place as the Forcados pipeline.

The source said, “There are concerns over the repair of the pipeline. The repair efforts have not been completed. And you know that that these recent attacks took place in the same area. This is quite unfortunate.

“It is affecting everybody. The Forcados attack has reduced NPDC’s operation by more than half. The company was doing over 250,000 barrel per day but that has been reduced to 115,000 barrels now. This means that the 135,000 barrels from the Forcados are not coming now.

“Another thing is that the other pipeline taking crude oil to the Warri and Kaduna refineries is also a gas pipeline.

It was also gathered that the loss may have eroded the gains Nigeria would have derived from the recent rise in oil price.

The attacks on the oil and gas facilities have worsened the blackout being experienced in many parts of the county as four power plants became idle on Sunday, bringing the total number of plants not generating any megawatts of electricity to 12.

There was significant reduction in generation from virtually all the plants producing electricity, including Egbin in Lagos State and Alaoji in Abia State.

Meanwhile, International Oil Companies operating in the country have been jolted by the latest attacks on oil and gas facilities in the Niger Delta, which have seen Chevron shut down one of its major offshore production platforms in the country, the Okan platform.

Chevron said the damage to the Okan platform had affected about 35,000 barrels per day of its own net crude production, or about 15 per cent of its output in the country.

Onshore oil assets in Nigeria have been attacked for years, forcing IOCs to reduce their land-bound operations in the area in favour of more-secure offshore projects. But the latest attack shows that offshore facilities are also vulnerable.

Shell workers at the Bonga oil field in the Niger Delta on Monday were evacuated following a militant threat, Reuters reported.

“We are aware of the development and the evacuation is being done in categories of workers and cadres. My members are yet to be evacuated,” the Chairman of the Warri branch of the Nigeria Union of Petroleum and Natural Gas Workers, Cogent Ojobor, was quoted to have said.

Shell had earlier said that oil output was continuing at its fields in Nigeria despite reports of a militant attack near its Bonga facilities.

When contacted for comment, the Media Relations Manager, SPDC, Mr. Precious Okolobo, said, “We continue to monitor the security situation in our operating areas in the Niger Delta and are taking all possible steps to ensure the safety of staff and contractors. We do not wish to go into details. Our operations are continuing.”

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