Nigeria Loses N221bn, 7.193m Barrels to Ageing Oil Facilities, Others in One Month

Emmanuel Addeh in Abuja

The seeming wastage of Nigeria’s most priced natural resource, crude oil, continued in July, with the country losing a humongous 7.193 million barrels of the commodity to mainly deteriorating facilities at the country’s offshore and shallow waters assets.

It was the highest loss in months mostly as a result of shut-ins due to incessant repairs as well as to a lesser extent, disruptions arising from community workers’ protests and fire incidents.

At the official exchange rate of N410 to $1, the loss would amount to about N221 billion or $539.4 million.

At a time Nigeria desperately needs every dollar, the continued monthly losses was seen as a direct leakage on the country’s economy.

Delayed maintenance and low investment have combined to ensure that the country has been unable to pump enough oil to meet the quota allocated to it by the Organisation of Petroleum Exporting Countries (OPEC) in the last four months.

The loss in July was the complete wipe-out of a little short of five full days at the current production level of roughly 1.5 million barrels per day, excluding condensates, a THISDAY’s analysis of the data from the Nigerian National Petroleum Corporation (NNPC) latest presentation to the Federal Accounts Allocation Committee (FAAC) had indicated.

In addition, to put it in proper context, at 158.9 litres of petrol derivable from a barrel of crude oil, the 7.1 million barrels lost to the incidences in the month under review could have produced 11.123 billion litres of petrol which can feed Nigeria’s petrol demand of roughly 1.8 billion for months.

Experts predicted that Nigeria may not be able to return to at least its pre-pandemic levels when it drilled up to 2 million barrels daily, until the first half of 2022.

However, the Minister of State Petroleum, Chief Timipre Sylva and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) , Mallam Mele Kyari, recently disagreed, projecting that by the end of October or mid November things would return to normal.

Waning investment and nagging maintenance problems continued to hobble Nigeria’s output as a consequence of several shutdowns, with July share of the disruptions amounting to at least 40 incidences.

However, Nigeria’s struggle to up its production capacity also mirrors the impact of OPEC+ on the country’s oil facilities some of which were shut down in 2020 due to production curb by the cartel, to support prices when COVID-19 hit demand.

Kyari recently said the compulsory closure of the wells was affecting production, maintaining that it was difficult getting them back on-stream due to the complexity of operating the facilities.

The problems range from unserviceable wells to replacing valves, pumps and pipeline sections.

Five onshore export terminals run by oil majors, which typically export around 900,000 bpd, handled 20 per cent less oil in July than the same time last year, despite relaxed quotas, according to analysis shared with Reuters from consultancy Hawilti Ltd, last week.

The decline indicates lower production from all the onshore fields that feed these terminals.

Only French oil major TotalEnergies’ new deep offshore oilfield and export terminal Egina, had been able to quickly turn the taps back on, according to Hawilti, citing an analysis based on data from the Department of Petroleum Resources (DPR).

A breakdown of the incidences leading to shutdowns showed that the biggest loss came from Forcados terminal with a whopping 1.891 million barrels shut-ins for the month of July.

The Forcados terminal which is the major trunk line in the Forcados pipeline system and also the second largest network in the Niger Delta after the Bonny oil pipeline system, at the last updated data, exports about 250,000 barrels of crude oil daily from the country.

A further analysis showed that the disruptions from the Forcados terminal happened at 10 points in the facility, including the shutdown of Aroh to manage tank top, leading to loss of 35,000 barrels, shutdown of Seplat facility due to a fire incident, resulting in loss of 140,000 barrels.

Similarly, 80,000 barrels were shed by the NNPC and partners at the injection into Trans-Forcados pipeline which was suspended because of a fire incident as well as shutdown of Trans-Ramos for maintenance and a two-day shut-in at the same facility.

Other shut-ins, the THISDAY checks revealed, happened at Batan station, which was due to maintenance works, Aroh again, for top tank top issues, and another incident at Batan due to failed surge vessel transmitter leading to 138,000 barrels loss.

Also, at the Atan terminal, there were three incidences leading to deferment as a result of high gas to oil ratio, Moni Pulo production was shut-in for valve leak repairs, among others, resulting in ultimate loss of 1.095 million barrels.

The story was not different at the Bony terminal, Sea eagle facility, Usan, Brass, Yoho, Qua Iboe, Excravos, Akpo, Ajapa, Otakikpo, Pennington and Ima terminals for various reasons, including demonstrations by aggrieved community workers, which led to a shut-in of 675,000 barrels at the Forcados terminal at some point in July.

The previous month, a document obtained by THISDAY showed that the Nigerian NNPC and its partners lost 6.035 million barrels of crude oil to emergency shutdowns, an over 1 million increase compared to the month under consideration.

In its last presentation to FAAC, before the latest one, the corporation recorded that there were 32 of such incidents throughout its facilities in the country.

A breakdown of the losses, according to the document , indicated that the highest combined shortage of 1.62 million barrels was from Qua Iboe, with 200,000 barrels due to production shut-in arising from flare management and low well head pressure.

Still on Qua Iboe, a further 530,000 barrels were lost to shut-ins following tank top concerns, 650,000 barrels as a result of production cut-back as directed by the Department of Petroleum Resources (DPR) as well as a loss of 240,000 barrels due to a gas leak on one of the assets.

This was followed by losses from the same Forcados facility, which shed 200,000 barrels, 84,000 barrels, 30, 000 barrels and 80,000 barrels respectively on different days, with reasons ranging from leak repairs, tank top issues, a fire incident and declaration of a force majeure.

However, Nigeria has continued to ask OPEC for an increase in its baseline production and has written officially to the oil producers’ group which is expected to meet later today to determine whether to leave oil production quotas at current levels or to carry out further adjustments.