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Nigeria Recorded Biggest Oil Disruption in Months, Loses 7.5m Barrels in January

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Nigeria has recorded its highest monthly crude oil loss in a long time as a result of disruptions due to maintenance, community issues and force majeure at the Forcados terminal, THISDAY has learnt.

 

Although the interruptions mainly occurred in December last year, it reverberated in the January activities of the Nigerian National Petroleum Company (NNPC), during which the firm was unable to contribute anything to the Federation Account.

 

In a document in which the national oil company explained its operations to the Federation Account Allocation Committee (FAAC), it told the body that the nation lost 7.503 million barrels during the month, in eight major incidents.

 

 

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.

 

With an average oil price for the month of January hovering at around $90, it is estimated that the country may have lost as much as $675 million to the phenomena during the period under review.

 

Forcados took the most hit during the period, with force majeure declared as a result on the terminal. The facility lost 4.640 million barrels during the 10-day period its activities were halted.

 

According to the NNPC, the force majeure was announced, following what it described as a serious incident involving a jack up barge in the vicinity of the facility, prompting the operator, Shell Petroleum Development Company (SPDC) to shut down the plant.

 

In drilling operations, Jack up barges, also known as jack up rigs, are used as a stable base for the construction and servicing of a variety of overwater structures, including drilling platforms, bridges and wind turbines.

 

While the shutdown of the Forcados terminal curtailed production within the period, it was followed by the Odudu and Ima terminal, where Nigeria lost 1.250 million barrels due to maintenance work.

 

At the Excravos facility, the NNPC said there were unresolved issues with South Swamp community, disrupting activities for several weeks, coupled with a number of other issues leading to the loss of 588,700 barrels of oil at a daily loss of 8,800 barrels.

 

Also at the Okan axis of the same asset, a leak occurred for weeks in which 11,500 barrels were lost per day.

 

At the Brass terminal, the country’s production was curtailed by 225,750 barrels during the disruption that lasted the whole month, due to shut down as a result of a flow line leakage, pressure build-up, high sand production, leak repairs, among others.

 

In addition, 420, 000 barrels were lost in the Yoho facility, which was shut down due to maintenance works, while Urha lost 276,000 barrels due to a turn-around-maintenance being carried out there, extending for a period of about 10 days.

 

The story was the same in Ajapa, where production was curtailed to the tune of 12,000 barrels during a period lasting a whole month, while Aje also lost crude oil barrels totalling about 91,000. Specifically, the entire losses during the period was 7,503,633 barrels.

 

Recently, THISDAY reported that a combination of huge oil pipeline repair cost and high-level theft of crude oil was bleeding out the Nigerian economy, with losses amounting to at least $29 billion in the last six years, spanning between 2015 and 2021.

 

In addition, during the latest presentation in February around its January activities, the extant NNPC document showed that the national oil company spent N1.056 billion on its pipeline repairs and maintenance.

 

Whereas N733 million was budgeted for pipeline maintenance in January, the NNPC presentation showed that the company expended N1.056 billion, exceeding its budget by N324 million.

 

But to ameliorate the problems, the firm recently announced that it had secured a $5 billion corporate finance commitment from the African Export-Import Bank (Afreximbank) to fund major investments in Nigeria’s upstream sector.

 

The funding commitment was sequel to a meeting between the Chairman of the Board of Directors and President of the Bank, Prof. Benedict Oramah and the NNPC Ltd team led by the Group Managing Director, Mallam Mele Kyari, in Cairo, Egypt.

 

Under the contract, Afreximbank agreed to enter into a finance advisory and fundraising role to raise $5 billion to “acquire, invest and operate energy producing assets in Nigeria as part of NNPC’s growth strategy following its incorporation as a limited liability company.”

 

Accordingly, the commitment from the finance would enable the NNPC to fund some of its major investments in the country’s upstream oil and gas sector, it was learnt.

Culled from THISDAY

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