Latest updates from Nigeria’s oil sector reveal that within a space of three months, over 335.8 million barrels of crude could not be produced due to various challenges, as seen in PUNCHNG
The shutdown, shut-ins and maintenance exercise on some oil fields and crude production facilities in different stations across the country between May and July this year resulted in a total crude oil production loss of about 335.8million barrels.
An analysis of the key challenges encountered in the oil and gas sector, as contained in the latest operations and financial report for July 2019 of the Nigerian National Petroleum Corporation, showed that the industry suffered some serious oil production setbacks in the months under review.
Although the corporation did not state the exact locations of some of the terminals and oil fields where the country recorded the losses, operators stated that most of the facilities were located in the Niger Delta region.
It was gathered that the shutdown of Auntie Julie platform due to pipeline leakage at the Pennington Terminal resulted in production loss of 19,000 barrels per day for over 12 days in July.
At the Agbami Terminal, oil production rate was impacted by facility shutdown due to loss of main power, while production cut was 77,000 barrels for a day.
The Erha Terminal witnessed production shut-in for two days due to maintenance activity and flare management with total loss of 304,490 barrels.
At the Bonny Terminal, the corporation stated that “the Nembe Creek Trunk Line was shut down from 21/04/19 – 12/05/19 (12 days in May) due to fire around Awoba manifold and riser with shut-in of 120 -150kbd.
“Also, Trans Niger Pipeline was shut down for just a day due to leaks at Owokiri (near Patrick waterside) with shut-in of 120kbd (120,000 barrels per day).”
The Qua Iboe Terminal witnessed production shut-in at Usari from May 25, 2019 to June 6, 2019, but the corporation stated that the crude losses were incurred in six days in the month of June following equipment failure.
It stated, “Likewise, production was shut-in for another six days at Asabo due to maintenance. Cumulative loss of production within the period was 235,000 barrels.”
At the Amenam Terminal, there was full field shutdown for integrity work on Oil Mining Lease 100 for over 21days and a shortfall of 15,829kbd was recorded.
Also, OML 102 wells were closed due to pump inefficiency at the field. Force majeure was declared on April 25, 2019 and was lifted on June 25, 2019, while shut-in was 16kbd for 21 days.
The Usan Terminal suffered production shutdown for six days during review period due to plant trip incidents with total loss of 192,460 barrels.
Also, at the Egina and Bonga terminals, oil production was shut-in at Egina due to the trip of safety device with shut-in of 32kb for one day.
Again, there was drop in production at Bonga due to plant shutdown on July 6, 2019, with loss of 90,000 barrels.
The corporation also stated that product theft and vandalism had continued to destroy value and put NNPC at disadvantaged competitive position.
It said a total of 2,092 vandalised points had been recorded between July 2018 to July 2019.
The Minister of State for Petroleum Resources, Timipre Sylva, had stated at a workshop in Abuja during the week that the country was losing so much revenue due to shut-ins, pipeline vandalism and high cost of crude production.
Sylva, who said the government had decided to focus on cutting down the cost of producing crude, however, noted that a lot of work was being done to address other challenges in the sector
He said the Federal Government had commenced moves aimed at reducing crude oil production cost from above $30 per barrel to below $10.The minister charged operators to come up with measures that would help government cut down the cost.
Sylva, who spoke through his Chief of Staff, Moses Olamide, stated that by reducing crude production cost, Nigeria would be able to boost its revenue.
He said, “Let me go back the memory lane, the technical cost of crude oil production in the 1980s/90s was around $4 per barrel. In the early 2000, it was between $5 and $6 per barrel, while today it is over $35 per barrel.
“It is interesting to note that some countries like Kuwait and UAE (United Arab Emirates) are producing at less that $10 per barrel. In the regime of $50/60 per barrel price of crude oil, a cost of over $30 is unsustainable.”
The minister added, “That is why we need to come up in this programme on what we need to do to reverse the trend.
“It is my hope that we shall use the outcome of this conference to give our oil sector the propulsion it requires to bring down the cost of crude oil production to a single digit as obtainable in other economies. This is an urgency of yesterday.”
A former President, Association of National Accountants of Nigeria, Dr. Sam Nzekwe, told our correspondent that the country was losing so much revenue as result of the losses it records daily in terms of oil production.
Nzekwe said, “You can imagine the huge amount of crude we lose due to oil facility shutdown and shut-in across the Niger Delta. This is aside from the losses we record as a result of pipeline vandalism. This is not good for an economy like ours.”
He urged the government and the NNPC to ensure that they stopped all forms of leakages in the sector in order to reduce the humongous losses incurred by the country.