Nigeria’s pipeline breaks drop to 221 points in August

NNPC records N11.22 billion loss

The Federal Government’s efforts in tackling the issue of pipelines vandalism have shown remarkable progress, as disruption of oil flow dropped to 221 in August, down from 311 points in July, according to the latest data from the Nigerian National Petroleum Corporation (NNPC).

It disclosed that in August 2016, there was 28.94 per cent drop in the number of pipelinevandalised points relative to July, 2016.
The Corporation stated in its August Monthly Financial Report (MFR), released, that the spate of pipeline vandalism in the country has shown remarkable improvement, following Federal Government and NNPC’s sustained engagements with the Niger Delta militants.

In spite of this progress, the NNPC report also indicated a significant reduction in its trade deficit to ₦11.22 billion against the ₦24.18 billion reported July, 2016.

Although, the Group classified it as a remarkable improvement, explaining that the success was largely due to increase in Pipelines and Product Marketing Company (PPMC’s) coastal sales, and the significant improvement in Nigerian Petroleum Development Company (NPDC’s) revenue for the month under review.

It however noted that the existing Force Majeure declared by the Shell Petroleum Development Company (SPDC) as a result of vandalised 48-inch Forcados export line is a drag on NPDC and the overall Group performance.
Pipeline vandalism has continued to hamper crude oil production activities in the Niger Delta region. For example, NNPC figures showed that between January and April 2016, Nigeria lost N51.388 billion to vandalism.

The Corporation disclosed that a total of 3,209 vandalised points were recorded between September 2015 and August 2016, which cost NNPC and the nation a huge amount of money on account of crude and products losses.

It disclosed that the 48-inch export line, which was vandalised in February 2016, crippled crude oil export from the terminal being used by NPDC and other joint venture (JV) partners.

It added that the development also led to the declaration of force majeure by Shell and production shut-in of about 300,000 barrels of oil per day.

NNPC said that incessant vandalism and crude and products theft have continued to destroy value and put NNPC at a disadvantaged competitive position.

It noted in the report that reduction in vandalism will indeed unlock several industry upsides, which include improved upstream oil production, improved refinery utilisation due to increased crude oil feed from restored pipelines, and reduction of crude/products losses.

On the way out, the NNPC said it created an Internal Security Advisory Council, comprising its representatives as well as those from the International Oil Companies, the unions and security operatives, to brainstorm and address host community agitations to complement efforts of the Government security team.

The Group attributed the reduction in crude oil production in July, which stood at 1.65 million barrels per day (Mbopd) to pipeline vandalism.
It added: “This is 6.47 per cent decrease relative June 2016 production and 22.43 per cent lower than July 2015 performance. The shrinkage in the July production is due to subsisting force majeure at Forcados Terminal, which accounts for 300,000bopd.

“Other factors that negatively impacted on production include force majeure at Qua Iboe terminal following sabotage on the export loading line two, sabotage of Trans Niger Pipeline, Claugh Creek-Tebidaba pipeline and Escravos terminal delivery pipelines. Productions from the deepwater assets, which are beyond easy reach by militants, remain steady. Onshore and Shallow water assets, where government take is high, are the worst hit by security breaches. Hence, securing Onshore and Shallow water locations remain a priority to restore production.”

In the downstream sector, NNPC noted that the introduction of a more liberalised price regime, especially for Premium Motor Spirit (PMS) is encouraging competition among players, with some filing stations marketing PMS below the official price band in spite of the weakening of the Naira.”

It said that the ongoing Turn around Maintenance (TAM) of the refineries, promises to entirely change the anaemic outlook of the country’s refineries.