Militants blow up Chevron oil facility, vow more attacks

• Group threatens to take fight to Lagos, Abuja
• Fear grips local oil firms over falling crude prices
• Operators list ways to cushion economic downturn
• Nigeria’s growth to decline to 2.2 per cent

Militants in the Niger Delta yesterday blew up the Chevron Valve Platform located on the high sea near Escravos in Warri, Delta State in a renewed attack on oil installations in the country.

The attack is another setback to the nation’s oil and gas production sector, even as the Shell Petroleum Development Company (SPDC) is still working to restore the Forcados export terminals after a similar attack two months ago.

Nigerian Navy spokesperson, Chris Ezekobe, who confirmed the incident yesterday, said the attack occurred about 40 nautical miles from the Escravos terminal, around the city of Warri.

Ezekobe said he was yet to know which militant group was responsible and there were no immediate details of any casualties.

The development may further reduce the nation’s oil and gas output. But Chevron is yet to confirm if production has been halted at Escravos and how much of the process is affected.

A source at Chevron who confirmed the attack said that the company is working on a public statement, which was not ready as at press time.

It was learnt that the facility was completely destroyed with the use of a dynamite.

The Niger Delta Avengers (NDA), a new militant group, has claimed responsibility for the attack, warning that the deployment of soldiers in the region would not deter them from carrying out further attacks.

NDA threatened not to relent until it cripples the nation’s economy.

A statement by the group’s spokesman, Madoch Agbinibo, noted: “The high command of the Niger Delta Avengers wants to use this medium to thank Strike Team 6 for successfully blowing up the Chevron Valve Platform. And we are ready to protect the Niger Delta people.

“This is what we promised the Nigerian government. Since they refused to listen to us we are going to zero the economy of the country.

“As for zeroing the Nigerian economy, the Niger Delta Avengers is done with the Niger Delta major oil installations. Now, we are taking the fight out of the creeks of the Niger Delta. We are taking it to Abuja and Lagos now,” he said.

Agbinibo continued: “We want to pass this message to the all international oil companies operating in the Niger Delta that the Nigeria military cannot protect their facilities. They should talk to the Federal Government to meet our demands else more mishap will befall their installations.”

The group had earlier claimed responsibility for the attack on the Forcados 48-inch Export Pipeline two months ago.

An attack was launched early this year on Escravos Lagos Pipeline System (ELPS) connected to Chevron Nigeria Limited’s gas network at Escravos. This negatively impacted gas supply to some critical power projects.

The Federal Ministry of Power said the attack cut off the supply of 160 million metres standard cubic feet per day (MMSCD) of gas to operators of electricity generation facilities and a cut in power supply from the affected power plants.

Meanwhile, indigenous companies operating within the Nigerian petroleum economy yesterday raised the alarm over the uncertainty surrounding the international crude oil prices which has led to the deferment of investment plans or outright cancellation of capital projects.

Their fear was based on the fact that the local content capabilities that have been built in the industry over the years may be in danger of being eroded if the companies do not survive the downturn.

This is further compounded by the expectations of the International Monetary Fund (IMF) which has projected that growth in Nigeria and other oil-exporting countries would decline to 2.2 per cent this year.

Operators stressed the need to reduce cost of operations and projects through local capacity development, indigenous working assets acquisitions, developing local expertise, low maintenance and reduction of operational costs of existing assets.

According to the operators at the content workshop with the theme “Local Content Implementation in the Nigerian Oil and Gas Industry: A Cost Reduction Strategy,” organised by the Petroleum Technology Association of Nigeria (PETAN), there should be cost-effective implementation of projects and utilisation of local resources to reduce overall cost.

They said there should be a policy direction to focus on sustainability of Nigerian local capacity to survive the declining crude oil prices.

At the event, Chairman of PETAN, Mazi Bank-Anthony Okoroafor, stressed the need for the industry to be placed on existing in-country capacity instead of patronage, adding that Nigeria should actively pursue reserves and production growth, which he said, has been on the decline.

Okoroafor stressed leveraging proven Nigerian companies and in-country capacity building, adding that proper implementation of the Nigerian oil and gas industry content development would significantly drive down the cost of doing business in the industry and cushion the effects of the low prices.

He stated: “The industry has operated under the Local Content Act regime for six years now and there is the need to take a closer look at the implementation strategy to ensure it is delivering the desired value to various industry stakeholders in particular and the Nigerian populace in general. Proper implementation of local content will lead to massive economic transformation of our great nation.”

Chairman, PETAN Conference Committee, Ranti Omole, stated that based on the belief of indigenous companies, the association is partnering to reduce cost of operations and projects in Nigeria through increased local patronage.

He said: “The industry has been undergoing challenges and facing turbulent period for the past two years due to low prices of crude oil and low demand. This has resulted in severe adverse consequences in the industry as well as on the economy of many oil-producing nations including our country.

“This has led major players in the industry to rationalise their operations, seek efficiencies and cost-saving measures to ensure profitability and survival of their businesses.”

Acting Executive Secretary, Nigerian Content Development and Monitoring Board, Daziba Obah, said with the right support and environment, indigenous companies were best positioned to provide services at lower cost without compromising standards.

Obah added that there was an opportunity to leverage the low value of the naira to source services, technology and solutions locally at much cheaper cost.

He noted that there would be much more cost-savings if operators develop increased project management capabilities, stressing: “Operators will save costs by optimising existing facilities and improving maintenance efficiencies.”

Dwelling on the role of the Federal Government to help save indigenous companies from the pangs of crude oil prices, former Chairman of PETAN, Emeka Ene, said that there was the need to develop the steel sector for local production of steel billets, coils and plate.

Ene added that government should accelerate gas infrastructure along gas corridors to ease the availability of gas in oil and gas parks, oil and gas free zones and other manufacturing locations supporting oil and gas activities.

“There is the need to engage relevant agencies in foster cordial and seamless working relationship with respect to expatriate quota and issuance of work permit.

“There should also be a periodic industry-wide capacity audit of local companies to establish current capacities and embark on gap closure interventions. Research and development clusters should be encouraged to promote the development of home-grown technology,” he said.

According to the IMF’s April 2016 regional outlook report, economic activities in sub-Saharan Africa have weakened markedly, with growth for the region as a whole, falling 3.5 percent in 2015, the lowest in 15 years.

Specifically, the IMF expects the economy to slow further in Angola, given, among other factors, limited foreign exchange supply and lower levels of public spending, and in Nigeria as the adverse impact of lower oil prices is compounded by disruptions to private sector activities through exchange rate restrictions.

The report stated: “In view of these trends, governments should consider a set of policy options tailoring the urgency of adjustment to the extent of domestic vulnerabilities.

“Commodity prices have fallen sharply and, for energy prices, at an unprecedented pace. Oil and other commodity exporters are adjusting, but given the extent of the shock they are facing, policies are currently ‘behind the curve.’ ’’