3.65m Barrels Production Shut-in at Bonny Terminal Raises Nigeria’s April Crude Losses by 300%

Emmanuel Addeh

With over 3.65 million barrels of crude oil shut-in at the Bonny Terminal during the March/April productions circle, Nigeria’s total losses, month-on-month rose by over 300 per cent.

A THISDAY analysis of the latest figures from the Nigerian National Petroleum Company (NNPC) indicated that the huge loss was due to a force majeure on the critical line, which supplies a substantial part of the country’s export.

Overall, between March 3 and April 1, the production curtailment pushed the country’s total loss to 5.545 million barrels of crude for the month under review as opposed to 1.69 million barrels previously.

The development meant that crude oil production at Bonny terminal dropped significantly while the operators declared force majeure on all outstanding agreements for the period.

It came a month after Nigeria recorded significantly less oil production losses in the February/March drilling cycle, with shutdowns arising from sabotage, force majeure, crude production assets’ breakdowns and community issues markedly down to 1.69 million barrels for the entire month.

Force majeure refers to a clause in contracts that allows both parties to walk out of the contract when an extraordinary event or circumstance beyond the control of the parties happens.

It was seen as a major improvement on the January 2022 high of 7.5 million barrels lost to the phenomenon, a development that has negatively impacted the country’s capacity to export the commodity.

Nigeria has for months been unable to meet the production quota allocated to it by the Organisation of Petroleum Exporting Countries (OPEC) due to losses to facilities’ breakdown, vandalism and outright sabotage as well as community issues.

The menace has further impacted on government institutions as well as individual operators who have recently raised the alarm over the humongous losses the nation and private entities are being subjected to.

Among those who have raised the alarm over the situation in recent times were the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele as well as the Chairman, Independent Petroleum Producers Group (IPPG), Mr Abdulrasaq Isa.

Further lamenting the situation recently were the management of Aiteo Eastern Exploration and Production Company (AEEPCO), operators of the Nembe Creek Trunk Line (NCTL) pipeline, one of the most impacted by the activities of vandals.

Also adding their voices to draw attention to the negative impact of the menace were the Founder, Heirs Holdings ltd, Mr Tony Elumelu, Co-founder and former Chief Executive Officer of Seplat Energy Plc, Mr Austin Avuru and the General Overseer of the Redeemed Christian Church, Pastor Enoch Adeboye.

Nigeria’s upstream petroleum sector has struggled in the last one year, due to deteriorating facilities occasioned by waning investment as well as oil theft, sabotage and community issues.

Since this year, the NNPC has  failed to remit its statutory funding of the Federation Account, a joint pool collectively operated by the federal, state and local governments since the beginning of this year despite the rising international prices of oil.

But Bonny which lost the highest amount of oil for the period, according to the THISDAY review,  was followed by Odudu terminal which experienced a whopping 937,663 barrels leakage due to what the NNPC described as maintenance work.

At the Excravos end, Nigeria shed as much as 329,832 barrels due to community issues, with roughly 9,000 barrels shut in per day, according to the document.

In addition, Jones Creek lost 227,000 barrels due to the stalling of production at Ugwocha for three weeks.

The story was not different in Ukpokiti which lost 210,000 barrels as a result of a fire incident as well as 180,000 barrels in Brass due to tank management issues, while Aje and Bonga lost 11,000 barrels and 174 barrels respectively.

Meanwhile, exports of Nigerian Forcados crude are due to rise in July while volumes from the Bonga stream will fall slightly, preliminary export programmes seen by traders, have shown.

Forcados will load 263,000 barrels per day (bpd) in July, up from 245,000 bpd in June, while Bonga will load 123,000 bpd in July, down from 127,000 bpd the previous month.

Last month, the Group Managing Director, NNPC, Mr Mele Kyari while appearing before the House of Representatives Committee on Petroleum (Upstream), confirmed that Nigeria can only get 3,000 barrels out of 239,000 barrels injected into the pipeline from Bonny Terminal.

He further disclosed that the country lost $4 billion to theft at the rate of 200,000 barrels per day in 2021. He added that the country already lost $1.5 billion so far in 2022 because, according to him, vandalism had escalated.

“Indeed what is happening are massive acts of vandals and thieves on our pipelines that have first made us lose our volume. Secondly, it forced us to shut down production. 

“The difference between the current production of 1.49 million and our potential that we can easily do –close to 1.8 million or so—at an independent level is not necessarily stolen and they are not within the reach of ordinary vandals. 

“What has been in massive difficulty is the production from the independents and the Joint Ventures. Unfortunately, except for the ExxonMobil production, most of our JVs are onshore. This is where we have the challenge,” he said.

He said the rate of vandalism has forced the NNPC and its JV partners to shut down two production fields, stressing that the NNPC had to abandon the lines because removing the breach will not deter the oil vandals.