ExxonMobil Seeks Alternative Route to Export Qua Iboe Grade

•  Breached NPDC/Shoreline trunkline spills oil into Delta communities  • IEA: Global oil demand to exceed production

Ejiofor Alike in Lagos and Sylvester Idowu in Warri with agency reports
As repairs continue on its main export pipeline damaged last month, Mobil Producing Nigeria Unlimited, a subsidiary of ExxonMobil, is seeking to use an alternative pipeline to transport its Qua Iboe crude grade from the company’s producing fields to its Qua Iboe export terminal in Akwa Ibom State.

ExxonMobil’s subsea pipeline was purportedly breached by a militia group last month, forcing the company to declare force majeure on the export of the Qua Iboe crude grade, Nigeria’s largest export stream.

The Niger Delta Avengers had claimed responsibility for the attack on the company’s 48-inch pipeline, which the company denied, calling it a “system anomaly”.
Reuters quoted company sources as saying that the company later found substantial damage that would take at least one to two months to repair.

Whatever the cause of the damage, port sources and oil traders said repairs would take months, spurring the decision to try to export via a second, smaller pipeline that also feeds the platform.
“Exxon is preparing the alternate export line,” one source informed Reuters, adding that if it is successful, some exports could emerge within two weeks.

Two sources added that Exxon, and the Qua Iboe terminal itself, were not sharing details on the repair progress or export plans for fear of provoking militant attacks on oil infrastructure.
A spokesman for Mobil Producing Nigeria Unlimited declined to comment on the plan to use an alternative pipeline, saying: “We’re continuing to make progress, but we would not speculate on a timeline for repairs.”

Nigeria’s oil production has been impacted by militancy since the beginning of the year, with the Nigerian National Petroleum Corporation (NNPC) saying in its latest monthly report that pipeline attacks had taken out some 700,000 barrels per day from the country’s production, which was above 2 million bpd.

In addition to Qua Iboe, Shell’s Forcados and Agip’s Brass River crude grades are also under force majeure, while the pipelines for Shell’s Bonny Light and Chevron’s Escravos exports have been shut down.

In another incident, the oil spill arising from the breaching of a major trunk delivery pipeline to the Eriemu manifold in Urhoboland, Delta State, belonging to the Nigerian Petroleum Development Company (NPDC) and Shoreline Resources has spread to neighbouring communities, destroying farmlands in the area.

THISDAY’s investigation revealed that the oil spill was spreading fast and will require urgent attention to prevent it from spreading further.

A new militant group, the Niger Delta Greenland Justice Mandate claimed on Wednesday that it breached the trunkline operated by NPDC and Shoreline Resources.

A member of Operation Safe Delta, the joint task force of the Nigerian Armed Forces with an operational base in the Niger Delta, yesterday confirmed the attack on the delivery line and environmental damage caused by the oil spill.

A security source said: “Yes, there was an attack on the Uzere-Eriemu trunk 16 line in Isoko South Local Government Area of Delta State.

“The attack was carried out with the use of dynamite and as I speak to you, surrounding communities like Agbarha-Otor and Uzere, both in Ughelli North and Isoko South council areas have been affected by the spill from the affected trunk line.”

A youth leader from Agbarha-Otor community, Victor Emuherie confirmed the oil spill in his community and the surrounding areas.

He said: “We started noticing crude oil on our land only to be told that it was as a result of a spill from a trunk line conveying crude from Isoko to the Eriemu manifold.”

The new militant group, which claims to be agitating for the people of upland areas that are hosts to oil facilities, said they had been left out of previous negotiations between the federal government and riverine community hosts in the past.

The group had announced its emergence on Tuesday with a 48-hour ultimatum to   all the oil companies still in the onshore locations of the region – Agip, Total, Shell, Mobil, Shoreline, Neconde, ND Western, Seplat and others – to evacuate their personnel from the region, especially in the Ogba/Egi axis of Rivers State; Urhobo/Isoko/Ndokwa axis of Delta State; and other upland oil producing areas.

It also threatened to blow up the Warri and Port Harcourt refineries as well as the Utorogun gas plants in Ughelli South Local Government area of Delta State.

But as oil companies in Nigeria struggle to survive in the face of unabated militancy in the Niger Delta, the International Energy Agency (IEA) has raised hopes for crude oil producers, with its latest report showing that the global production of crude oil is falling behind demand, heightening expectations of potential recovery of prices.

IEA, which monitors energy trends for the industrialised countries, mostly consumer nations, said yesterday in its Oil Market Report (OMR) for August that from July through September, global production of crude oil would fall behind demand by almost one million barrels a day.

The Paris-based agency insisted that the oversupply of crude, which caused glut in the international market, is clearing out even though the Organisation of Petroleum Exporting Countries (OPEC) pumped at record or near record levels.

“Our balances show essentially no oversupply during the second half of the year,” the IEA’s monthly report said.

The glut in the international market has pushed down the price of crude oil, which hit $115 per barrel in June 2014 to a 13-year low of $27 per barrel in January this year.

While forecasting that the global oil demand growth was expected to slow from 1.4 m bpd in 2016 to 1.2 m bpd in 2017, IEA noted that the global oil supply rose by about 800,000mbpd in July, as both OPEC and non-OPEC production increased.

OPEC crude oil output rose by 150,000 bpd to 33.39mbpd in July as Saudi Arabia pushed output to the highest ever and Iraq pumped more.

According to IEA, robust Middle East production lifted total OPEC crude supply to 680,000 bpd above a year ago and held output at an eight-year high.

IEA identified two factors as being responsible for the disappearance of the glut – deep output cuts by producers outside the OPEC and healthy global demand for crude oil.

In North and South America alone, crude production is projected to fall by 700,000 barrels a day in the third quarter of 2016, compared with the first quarter, according to the IEA.
However, the disappearance of the glut has not bolstered prices as Brent crude, the international benchmark, hovered around $44 per barrel yesterday.

The IEA said an oil price rally that began in June, peaking at $52 a barrel was halted by a huge build-up of oil kept in storage and a new glut of refined fuel products like gasoline (petrol) that have cooled down demand for crude from refineries.

IEA also trimmed its forecast for the rise in global oil demand next year, predicting that global economic growth would fall short of previous projections.

“Some momentum will be lost in 2017, the IEA said, though its forecasted expansion of 1.2 million barrels a day “is still above-trend,” said the organisation.