Nigeria's oil industry woes
Insecurity, bureaucratic redtapes, high cost of projects,corruption,theft and continued uncertainty continues to blight oil industry
Nigeria’s export of crude oil has once again suffered a major setback as Shell Petroleum Development Company (SPDC) recently declared force majeure on the export of Forcados grade of crude oil after it had shut down the 400,000 barrels per day capacity Forcados export terminal in Delta State.
The declaration of the force majeure has freed them from contractual obligations to customers due to circumstances beyond there control.
Crude oil is exported from the Western Niger Delta through the Forcados terminal, which was once shut down on October 19, 2012 and more recently on March $,2014. Problem was reportedly due to flooding and damage to the supply pipelines and more recently a leak was discovered in one of the pipelines.
SPDC’s spokesman, Mr. Precious Okolobo, said in a statement that SPDC Joint Venture declared force majeure on lifting of Forcados blend “effective 09:00hours (Nigerian time) Tuesday, March 25, 2014, due to ongoing repairs on the 48-inch crude export line at Forcados terminal in the Western Niger-Delta. “The subsea line was shut when a leak was discovered on March 4, 2014, leading to suspension of SPDC and third party crude oil exports through the terminal,” he added.
Recent NNPC reports show that Nigeria lost 300,000 barrels of crude oil per day or 109.50 million barrels in 2013 from severe attacks on critical export pipelines. The Group Managing Director (GMD), Mr. Andrew Yakubu, gave the figures at the Nigeria Oil and Gas conference in Abuja, according to the News Agency of Nigeria (NAN).
According to him, what Nigeria lost in 2013 was equivalent to the total output of Equatorial Guinea and larger than the entire production of Ghana, Congo Brazzaville, Cameroun and Gabon.
Just think about this, Nigeria lost more than the entire production of Ghana, Congo Brazzaville, Cameroun and Gabon combined. This is serious by any standard.
It is widely stated that 90 percent of spills are due to bunkering activities. Effective clean up of these spills are virtually non existent. The reason for this is that no one is really taking responsibility for the clean up. Everyone blames the Oil companies but when you really think about the situation they are not to blame.
IOC’s spend billions exploring for oil and millions building a network of pipelines to safely transport the oil from one point to the other. Criminal elements in the society decides to break the pipes in order to steal the oil. The pipeline owner find the leaks and repairs it. Are they now expected to clean up the spillage as well. What about cases where the damaged pipeline blows up and destroys it immediate vicinity (as has happened on at least two occasions in Nigeria). This is just like asking haulage companies to fix the road and clear up all the mess whenever there is an accident or trailers are hijacked on the motorway.
There has to be some order and structure in place by the government to tackle this. International Oil Companies (IOC)’s are providing a great service and revenue to the country. If Nigeria could go it alone then they would have years ago. Company CEO cannot make local laws or enforce them. They cannot chase oil thieves or shoot at them. As much as they try to build communities the greed and corruption which is rife in Nigeria needs to be cutailed for any real development to take place in the Niger Delta. As we watch the American shale oil revolution we see how new prosperous communities are evolving and deprived areas in the shale region prospering. If Shell, Chevron can build a safe and secure estate for its staff they can do same in the community they operate in if allowed or encouraged.
President Goodluck Jonathan reportedly announced the government has earmarked $1 billion to fight oil theft. Oilandgas press feels he really should use this money to build roads, rural hospitals, schools and low cost housing in these areas. Build a proper community and create jobs. Poverty, desperation and greed is the main reason for illegal bunkering.
It is about time a more human approach is taken to deal with a very human problem. The eco system in the region is at greater risk than ever.The mangroves are destroyed. The drinking water is contaminated with high levels of hydrocarbons. As part of the oil burns away during artisanal refining process by the locals, oil seeps deep into the ground as distilleries are heated on open fires fed by crude oil that is tipped into pits in the ground. All these additional enviromental issues in a country with limited existing infrastructure.
As major IOC’s continue to sell up and move offshore. Nigeria will only have itself to blame for what clearly looks like a troubled future. A country cannot be defined by only two major cities (Lagos and Abuja). With a population of over 170 million people more cities and communities need to be developed and jobs created for the talented masses in the nation.
The Department of Petroleum Resources (DPR), recently disclosed that Nigeria’s crude oil reserves now stand at 35 billion barrels, thus dropping by 2billion barrels or about 5.4 per cent, from an initial level of 37 billion barrels. Director of DPR, Mr. George Osahon, stated this at a session during the 2014 Nigerian Oil and Gas (NOG-14) conference in Abuja according to News reports.
We need functional refineries NOW. Petrol shortage has to be a thing of the past. It is very embarrassing that an oil producing country experiences petrol shortages as much as it happens in Nigeria.
The young shall grow and it is definetly time for Nigeria and its people to grow up. Charity must begin in the villages.
By Segun Cole