NNPC Prioritises Security of Onshore, Shallow Waters Assets to Keep up Oil Production

• Indonesian firm to build 10,000bpd modular refinery in Akwa Ibom

Chineme Okafor in Abuja

The Nigerian National Petroleum Corporation (NNPC) wednesday disclosed that it has prioritised security over oil assets located in Nigeria’s onshore and shallow waters, to ensure stability in the country’s oil production.
It said usually, the federal government gets more returns from oil production from the onshore and shallow waters than it did from deep offshore assets, hence, its decision to secure them.

The corporation stated this in its latest monthly production and financial reports for the month of April which was released in Abuja. According to the report, Nigeria’s oil production within the period under review declined to 1.6 million barrels per day (mbpd), some 12.04 per cent from its February 2017 production levels.

It explained that despite the government’s continuous engagements with militants in oil rich Niger Delta region, some of the issues that still dragged down production during the period were incessant deferred production due to leakages in the Trans Niger Pipeline (TNP) and Nembe Creek Trunk Line (NCTL); as well as leakages and low well head pressure at Qua-Iboe Terminal.

A subsisting force majeure at Forcados and intermittent shut-ins in Bonga Terminal due to Turn Around Maintenance (TAM), it added were also responsible for the drop in production volumes.

“In March 2017, crude oil production in Nigeria decreased to 1.60mb/d which represents 12.04 per cent decrease relative to February 2017 production and also lagged behind March, 2016 performance by 18.32 per cent.

“Areas much affected by the insecurity are the onshore and shallow water assets, where government take is higher. Hence, sustained security of onshore and shallow water locations remains a priority to restore production to peak levels,” said the NNPC in the report.

According to it, pipeline sabotage in the country however decreased from 94 downstream pipeline vandalised points in March, 2017 to 82 in April 2017.

This, it noted represented a 12.77 per cent reduction relative to the previous month, and which it said was made possible by government’s continuous engagements with the stakeholders.

The report equally indicated that NNPC recorded a trading deficit of N5.27 billion in April, 2017 representing 6.20 per cent decrease in its collective operating deficit when compared to March 2017 deficit of N5.62 billion.

“This decrease in the deficit is mainly attributed to the decrease in NPMC/NPSC/ML expenses relatively, although impacted by lower NPDC revenue. Other factors that impacted the overall NNPC’s performance include production shutdown of Trans Niger Pipeline (TNP) and Nembe Creek Trunk Line (NCTL) due to pipeline leakages, shut down of Bonga Terminal for TAM and existing force majeure declared by SPDC as a result of the vandalized 48-inch Forcados export line after the restoration on October 17, 2016,” it said.

Stressing its focus on security of oil assets, the report said: “NNPC is undeniably in need of the continued support from Nigerians especially in areas of security and Infrastructural integrity. Favourable business environment will afford NPDC the opportunity to reverse deferred production revenue – average of N20 billion per month – caused by pipeline sabotage.”

Meanwhile, the corporation has also said the government’s plan to attract investment in modular refineries to boost local refining of crude oil had begun to gain some interest with an Indonesian firm, PT Intim Perkasa Nigeria Ltd, which is a subsidiary of PT Intim Perkasa, Indonesia, indicating that it would build a refinery in Nigeria.

NNPC’s Group General Manager, Public Affairs, Mr. Ndu Ughamadu, stated in a statement that the Head of Investor Relations of PTPP (Persero) Tbk, who are partners to PT Intim Perkasa Nigeria Ltd, Mr. Adi Hartadi, disclosed this at a business meeting with the corporation’s Group Managing Director, Dr. Maikanti Baru, in Abuja.

Hartadi stated that the proposed modular refinery would be located in Akwa Ibom State, with a capacity to refine up to 10,000 barrels per day (bpd).

Hartadi, claimed in the statement that their company has more than 50 years of experience in construction and engineering and wanted to diversify into downstream oil operations in Nigeria.

According to the statement, Baru who was represented by the Chief Operating Officer (COO), Refineries and Petrochemicals of NNPC, Anigbor Kragha, stated that the corporation has prioritised investment in the nation’s refining sector, and has a department that specialised in new refinery projects which provided professional supports to potential investors in modular refinery in the country.

He explained the country’s three refineries with a combined capacity of 445,000bpd could not function optimally over the years due to lack of investment, adding that NNPC would give necessary support to the firm on its plans.

“On our end, we have embarked on ambitious plan to fast-track programmes to restore our capacity utilisation from 30 per cent to a minimum of 90 per cent in the next 24 months. To do that, we are working on securing financing from third parties, not just funding, but also technical expertise to help us increase our performance to world class levels that they should be,” Baru stated.

He also explained that by 2025, more than 40 million litres of petrol would be needed daily by Nigeria’s population which he said was growing at a fast pace. He thus added that the three refineries would not be able to satisfy more than 50 per cent of that demand.

He expressed optimism that with this kind of investment coming steadily, Nigeria could serve as a regional hub of refined petroleum products for West Africa and beyond.

He called on the investors to be mindful of clean fuel policy across African countries and ensure that they produce fuels that meet specification with regards to sulphur content.