Nigeria records losses, N51bn in 4 months to militant attacks on oil assets

Nigeria has over the last four months, between January to April 2016, lost N51.388 billion to pipeline vandalism, and the country is poised to record more of such losses if the current spate of pipeline bomings by militant groups in the Niger Delta region is not addressed.

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With the second bombing of the Forcados Export Pipeline and the bombing of other oil and gas assets in the region in recent times, the loss to trhe country is expected to escalate when the figures for May and June 2016 is released.

Giving a breakdown of the cost of the bombings to the Nigerian economy, data obtained yesterday, from the Nigerian National Petroleum Corporation, NNPC, Monthly Financial and Operations Report for April 2016, revealed that the country, through the NNPC, spent N33.994 billion for pipeline repairs and management.

Also, as a result of the vandalisation, N10.335 billion worth of crude oil was also lost, while petroleum products losses between January and April 2016, stood at N7.059 billion.

Further analysis revealed that crude losses for the four months period, accounted for 61.06 per cent of the total crude oil loss of N16.925 billion recorded in the 12-month period, between May 2015 and April 2016, while pipeline repairs and management cost for the four-month period accounted for 36.3 per cent of the total loss of N93.649 billion between May 2015 and April 2016.

On the other hand, product losses for the four months period was 18.03 per cent of the total of N39.145 billion recorded between May 2015 and April 2016.

The amount lost to pipeline vandalism in the four months period, between January and April 2016, was 16.38 per cent of the total sum of N313.652 billion remitted by the NNPC to the Federation Account Allocation Committee, FAAC, in the four months period.

Furthermore, the report stated that Nigeria’s crude oil production for the month of March 2016 stood at 57.43 million barrels which is 3.10 per cent lower than February 2016 production and the lowest recorded so far, in the 12 months, May 2015 and April 2016, review period.

The NNPC said the recent upsurge in vandalism had negatively impacted on the Nigerian crude oil production output, losing its African top crude oil producer status to Angola.

Specifically, the report disclosed that about 380,000 barrels of oil per day, (BOPD) remained shut-in due to vandalism of the 48-inch sub-sea Forcados export line on 15th February, 2016, which deferred all March cargoes until the repair is completed.

The report explained that the reduced national production volume due to indiscriminate vandalism of the oil and gas facilities and product theft by the vandals had continued to destroy value and put NNPC as well as the Federation at disadvantaged competitive position.

In addition, the NNPC report argued that the incessant pipeline vandalism posed the greatest threat to the power industry, noting that the country has lost over 1,500 megawatts of power supply to the damage as gas supply from Forcados, which is Nigeria’s major artery, accounts for 40-50 percent of gas production.

The report disclosed that a total of 3,136 vandalized points were recorded between May 2015 to April 2016, stating therefore, that crude oil and products losses have continued to cost NNPC and the country huge amount of financial and human resources.

It said, “Reduction in vandalism will indeed unlock several industry upsides which include improved upstream oil production due to reduced pipeline disruptions, stable gas supply to power plants, improved refinery utilization due to increased crude oil feed from restored pipelines, and reduction of crude/product losses. In addition to reduced crude oil output, major refineries across the globe have concluded plans to stop the purchase of crude oil from Nigeria due to rising uncertainties about the country meeting up with deliveries.”

This is arising from the fact that a number of oil companies in Nigeria had declared force majeure of crude oil export, while a few others had been forced to suspend or cut production as a result of the bombing of oil facilities across the Niger Delta.

Data obtained from Reuters revealed that four of Nigeria’s oil grades – including the largest stream, Qua Iboe — had been under force majeure over the last one month — a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances.

The report stated that despite the fact that ExxonMobil, which declared force majeure on Qua Iboe in May due to an accident, lifted the declaration last week, the unpredictability is too much for some buyers.

The report further stated that refineries on the United States’ East Coast are starting to turn away from Nigerian crude oil, noting that these same refineries had been on a buying spree for Nigerian crude in recent months that averaged 240,000 barrels per day (bpd) in April and May.

As a result, the report said differentials to dated Brent for Qua Iboe, Bonny Light and other grades are under downward pressure, adding that there are several unsold cargoes for June loading.

According to the report, the reduced demand means Nigeria is not benefiting as much as others from a rebound in Brent crude prices, which is partly driven by its own oil outages, stating that the reluctance of the refineries to buy Nigeria’s crude oil was limiting the prices Nigeria can get for its oil even as there is less of it.

Stakeholders are, therefore, of the view that unless something urgent is done, the country would in the next couple of weeks enter a full blown economic crisis.

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6 Comments

  1. Nigeria has made over $600billion since oil boom in d 70’s frm oil in d ND…Small part of it was used to develop Abuja n Lagos…The larger part of it is in d bank accts of IBB,Abacha,Danjumas,northern oil cabals n few yorubas et al …

  2. You mean $600 billion? That is an understatement, they have made more than $5 trillion dollars since oil exploration!

  3. Two WRONGS can never make a RIGHT; it is only human beings in human kingdom that destroy things just because they don’t want another person to have it; other animal and insect kingdoms BUILD……….why? why?……………….we all lose in the end!

    Anger and wisdom don’t mix…………..I hope the elders of the region will call their children to order rather than destroying the heritage of our children as a nation………aaaaaaahhhhhhhhh!

  4. ADVICE TO ND AVENGERS: Keep on keeping on.

    Pls don’t listen to anybody advising you against pipeline vandalization. Keep it up. Deal with Buhari(Pharaoh), APC & northern hegemony. Destroy your land so that the people of Katsina will suffer. Before you detonate the next bomb & blow up the next pipeline, think again.

    The Ogoni land is getting cleaned up & soon commercial fishing will commence. Your friend in Enugu that is urging you on is going back to farm, Enugu will soon be one of the leading producers of banana & pineapple in the world in collaboration with a Mexican company.

    Your friend in Lagos is urging you on to destroy ur land but he is going to Kebbi to get farmlands for rice farming. Meanwhile they have also started drilling oil in Lagos. Wait, Kebbi will soon feed the whole country & export. Tuta absoluta attacked Kano, Jigawa & some northern states & you catch cold in your Creek. Your brother in Edo will soon be supplying the whole country with tomatoes due to Igbinedion university.

    Are you thinking already?

    Norway want to eliminate all cars using fossil fuel by 2025.
    The world is moving on my brothers. You think you are sabotaging Buhari but he is gradually settling down into govt. Boko haram has been largely decapitated & the world recognizes that. Anti corruption fight is progressing.

    About 3 trillion naira was announced recently as recovered & frozen loots. That’s money stolen by the love of your life. Money that could have been used to develop the Creek. Money that would have connected you with roads, bridges & other amenities.

    They stole it & gave you guns to go into the Creeks. How many among the love of your life can spend a night with you where you are right now? Where are their children?

    I heard your beloved PDP has zone presidency to the north for 2019 election. The same north you so much hate. The same north that is dominating you. Can’t you see they are just deceiving you? You are not their concern. Their concern is the loots from the oil produced on your land.

    They don’t care if you destroyed the land. They have no plan to live there. How many refineries have they built for you with all the looting. They love you so much to keep you on 65k per month but cannot give you basic education to emancipate you. Are their children handling guns and sleeping in the creeks with you?

    Pls don’t drop your arms. Destroy the environment to get at Buhari. But when you are alone pls read this over again.

    Dr Ben.

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