DSS Steps in as Delta Communities Protest Withdrawal of Salvic Petroleum from OML 30
By Ejiofor Alike
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There have been ongoing community protests at Oil Mining Lease (OML) 30, Nigeria’s second largest onshore oil and gas asset, located in the western Niger Delta, about 35km east of Warri in Delta State, compelling the Department of State Services (DSS) to step in to forestall unrest in the area, THISDAY has learnt.
Central to the unrest, according to oil industry sources, is the termination of the third party operator agreement of Salvic Petroleum Resources Limited on April 16.
Investigations revealed that Salvic, a technical services operator, had been acting as the third party operator of OML 30 in the last one year on behalf of the name-plate operator – Heritage Energy Operational Services Ltd (HEOSL).
The Salvic/OML 30 project was led by, but not exclusively, Ikemefuna Okafor, CEO of Salvic, and Ebenezer Ajayi, Executive Director, Operations, among others on the team.
In 2012, Heritage, in conjunction with its Nigerian partner, Shoreline Natural Resources, acquired Shell’s 45 per cent stake in the prolific OML 30.
However, it was unable to ramp up output from the oil block due to funding constraints and militancy in the Niger Delta, until Heritage, under a new ownership, entered into a mandate agreement with Salvic Petroleum in 2017 to operate the block.
Under the arrangement, Salvic ramped up production in the one year it took charge of the mining lease to the benefit of all stakeholders, to the extent that the communities are now unhappy over the sudden move to replace Salvic with foreign operators who allegedly do not understand the local environment nor the requisite stakeholder engagement.
THISDAY investigations revealed that Heritage, in a sudden move and without notice and/or offer of compensation, informed Salvic of its decision to terminate the mandate agreement.
Covering 1,095sqkm, comprising 11 fields, nine flow stations, the Ughelli tank farm, the Trans Forcados Pipeline (TFP), and with reserves estimated at about 1 billion barrels of oil, OML 30 is a critical source of oil revenue for the federal government, Delta State, 110 host communities and other asset owners around the region.
Community leaders who spoke to THISDAY pointed to Salvic’s performance in OML 30, taking production from zero to 75,000 barrels per day (bpd) last December, bringing back the Forcados Pipeline which had been down for 15 months prior, in record time, and sustaining an uptime of over 86 per cent during the 12 months of operations between March 2017 and April 2018.Â
Attempts to speak to Kola Karim, Chairman of Shoreline Natural Resources, were unsuccessful as he did not answer or return THISDAY’s phone calls.
The community leaders expressed satisfaction with the efforts made by Salvic as the operator appointed by Heritage to restore good relations with the communities, noting that during the one-year period OML 30 recorded no major security or environmental issues.
Of particular concern to the stakeholders in the community was the employment of 500 indigenes who might now lose their jobs following the termination of Salvic’s contract.
The communities and their leadership saw no justification in Heritage’s decision to terminate Salvic’s contract, which they said had brought stability to the area.
Also, the DSS, according to sources within the agency, said that they had to step in when they learnt of the community protests at the critical oil asset.
“We had to step in and invite all parties to the table to understand the issues that were making the communities restive.
“Remember that the critical Trans Forcados Pipeline, which had been restored by Salvic, flows through OML 30 and the last thing we want are renewed attacks on the pipeline.
“So, it was in Nigeria’s interest that we stepped in because one attack on any of the oil installations in OML 30 could trigger further attacks in the Niger Delta. This is the last thing we need now, especially in a pre-election year,†said a DSS operative who preferred not to be named.
Salvic is a new exploration and production (E&P) company in Nigeria’s oil and gas industry.  Company information indicates that Salvic has strategically differentiated itself as an E&P company with a service orientation focused on providing the full range of value chain E&P services as a non-equity holder third party operator.
Salvic’s strengths lie in execution, excellence, cost control, operational efficiencies and optimising existing infrastructure to extract value, even from challenging and mature assets and deliver premium value to stakeholders.
In 2017, OML 30 was the ideal for Salvic to prove its new approach and capabilities, said sources close to the company owned by Nigerians with a formidable track record in E&P operations in the country.
Between March 2017 and April 2018, under a mandate agreement with Heritage, Salvic was said to have embarked on handling all aspects of operations and crude oil production in OML 30, including technical support services, security, operation & management (O&M), community relations and other stakeholder management, CSR and management of the 87km Trans Forcados Pipeline.
Salvic was given steep production targets with a penalty of $25 million if the targets were missed, despite the fact that the asset had recorded zero production for 15 months prior and the Forcados Pipeline had been down throughout the 15 months, making it a daunting challenge for any operator.
However, Salvic took on the task of turning around the fortunes of OML 30 and by mid-December 2017 had ramped up oil production from zero to 75,000 bpd, a feat that drew the commendations of industry experts and the communities, as well as the federal and Delta State governments.
According to company sources, Salvic achieved the feat without drilling any new wells but put in place a robust work programme of creative and innovative solutions that optimised production and unlocked value from the legacy infrastructure and old equipment.
Production ramp up was made possible by another feat that Salvic achieved: the company restored the erstwhile debilitated Forcados Pipeline in a record time of three months and maintained uptime throughout of over 85 per cent.
According to sources, these feats were instrumental in improving revenue generation for the federal government, Delta State, all injectors into the Forcados Pipeline and other asset owners in the western Niger Delta.
The sustained uptime on the trunk line also enhanced gas production to the domestic market for power generation by the continuous support of OML 34 condensates evacuation.
Other verifiable milestones that Salvic attained in OML 30 on behalf of Heritage and its JV partner – Nigerian Petroleum Development Company (NPDC) – included peaceful community relations and stakeholder management.
One of the main legacy community issues was unemployment and the casualisation of labour, but Salvic changed the practice of treating community workers as cash-based casual labour by converting them to full-time permanent employees with full benefits.
The operator also recorded no major health, safety, security & environment (HSSE) incident. Specifically, in February 2018, the company achieved a total of over 1.1 million loss time injury-free man-hours, a rare feat in view of the size of the OML 30 asset and the operations.
“The Salvic and OML 30 success story is one of defying all the odds,†said one industry observer. “By their achievements in OML 30, the Salvic team has gained a name as turn-around experts in handling and extracting value from challenging and complex assets.
“They met and exceeded targets that were near impossible and demonstrated that excellence does not come from the age of a company but from the resilience of innovative, driven people who are empowered and focused on results,†he added.
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