At a time the country is battling severe financial constraints, the oil and gas sector has again come under attacks as vandals have in the last three weeks attacked two major oil installations.
The development has since sent shivers down the spines of both indigenous and International Oil Companies (IOCs), after having some respite in the last three years from the nefarious activities of vandals and economic saboteurs.
The attacks on oil installations got to a head in 2016, with the country producing less than 800,000 barrels per day (bpd) from a daily projection of 2.1 million bpd.
The development had forced some International Oil Companies (IOCs) to divest their stakes in major oil assets, especially from onshore operations.
In 2015, the Shell Petroleum Development Company of Nigeria Limited (SPDC), a subsidiary of Royal Dutch Shell plc (Shell), completed the assignment of its interest in oil mining lease (OML) 29 and the Nembe Creek Trunk Line ( NCTL) and related facilities in the Eastern Niger Delta
Its interests in OML 29 and the Nembe Creek Trunk Line were assigned to Aiteo Eastern E&P Company Limited for cash considerations amounting to $1.7 billion
Shell said the divestment was part of the strategic review of SPDC’s onshore portfolio and is in line with the Federal Government of Nigeria’s aim of developing local companies in its upstream oil and gas business. But the recent inauguration of COLT by the Minister of State for Petroleum Resources, Mr.Ibe Kachikwu, seems to be a step in the right direction in the fight against oil theft assuming the implementing agency; DPR would not lose focus nor rest on it oars
Chevron, Aiteo as latest victims
Already about five oil wells, belonging to Chevron Nigeria Limited, in some communities in Ilaje Local Government Area of Ondo State, caught fire last month.
A source disclosed that the fire started in the Ajegunle Ikorigho community and spread to communities like Ojumole, which is located in Ikorigho land in the local government.
According to the source, the inferno also affected Isan-West field, Parable field, Malu field, Ororo and Opokaba Otumara, Ikorigho, Ajegunle-Ikorigho, Zion Ikorigho, Iluayo, Kendo Ayeren and Ehinmoghan-Ikorigho communities, all in the Ilaje Local Government.
The oil company, which issued a statement through the General Manager, Policy Government and Public Affairs, of the CNL, Mr Esimaje Brikinn, confirmed the incident and said efforts were ongoing to put out the fire.
The statement read, “The operator of the joint venture between the Nigerian National Petroleum Corporation and the CNL confirms that at about 10pm on Thursday, April 18, 2019, a fire was observed at the Ojumole Well No. 1, an idle and plugged well with no flowline connected to it. Ojumole field is in NNPC/CNL JV’s Western Niger Delta area of operations.
“The CNL conducted an overflight to evaluate the fire and also mobilised emergency responders to assess the site, contain the fire and boom the area. In addition, CNL notified community stakeholders about the incident and also reported it to the Department of Petroleum Resources, National Oil Spill Detection and Response Agency and other regulatory and security authorities.
“A Joint Investigation Visit to the site of the incident on Saturday, April 20, 2019, by a team made up of regulatory agencies, community stakeholders and CNL, determined that the fire incident was caused by third-party interference. There was no impact on any of the neighbouring communities.”
Brikinn, in the statement, insisted that the CNL had been working with contractors to safely put out the fire as quickly as possible.
More worrisome is the constant attacks on the operations of Aiteo E&P,an indigenous firm, in the past three months, the oil and gas company has witnessed three attacks on its assets.
On March 1, for instance fire started in the early hours behind Mile 1 community in Bayelsa State in the vicinity of its Nembe Creek Well-7.
According to sources close to the site, Aiteo responded to emergency calls from the community and mobilised its team to the area. It was later discovered that the fire was caused by an explosion at the oil company’s Well-7, which produces about 3,500 barrels per day.
Also on April 21, a fire outbreak by Aiteo’s surveillance team comprising the JTF, FSS around NCTL RoW near Awoba was discovered, compelling it to declare a force majeure.
By May 3, Aiteo confirmed that emergency pipeline repair teams have successfully completed leak repair activities on all reported leak points on the NCTL.
Consequently, it said all injectors have been advised to re-align and commence start-up formalities immediately and advise on their startup times.
But, less than 24 hour (May4) after starting up the NCTL from repairs of identified leak points occasioned by activities of oil thieves, two new leak points were reported along the line near Awoba Riser Manifold. ‘‘ Our emergency response process was immediately activated, and containment boom deployed to limit oil spread on bodies of water whilst efforts to identify cause of incident/repair have been initiated.
Consequently, all injectors have been advised in accordance with NCTL shutdown procedure to shut-in production into the NCTL immediately. Appropriate Oil Leakage/Spillage Notification Report will follow shortly to DPR/NOSDRA.’’ Aiteo said in a statement.
COLT as solution
The Federal Government as part of its oil sector reforms last February appears to have recorded a major milestone in the history of the country’s oil and gas sector with the inauguration of the Crude Oil and LNG Tracking (COLT) to final destination portal by the Minister of State for Petroleum Resources, Mr.Ibe Kachikwu.
Prior to the launch of the portal, accurate and real time data of the country’s daily oil production figure has been a subject of controversy as there have been disagreements between government agencies responsible for collation of data for revenue purposes.
On many instances, figures presented by the Federal Inland Revenue Service, International Oil Companies(IOCs), Nigerian Maritime Administration and Safety Agency (NIMASA), Nigerian Ports Authority (NPA) and the Nigeria Customs Service (NCS) often contradicts the ones presented by the industry regulator-Department of Petroleum Resources (DPR).
Kachikwu while inaugurating COLT command centre at the DPR headquarters in Lagos admitted that the dearth of figures for the country’s actual oil production was not in doubt, adding that the NPMS portal would put an end to that national embarrassment. He equally said oil theft remained a major challenge while assuring that stolen oil could now be tracked and traced to its destination.
However the recent disclosure by the Nigeria Natural Resource Charter (NNRC) that the country lost about N3.8 trillion within the last two years – 2016 and 2017 appeared to have unsettled many stakeholders.
According to the Assistant Director, Information Communication Technology, Department of Petroleum Resources (DPR), Mr. Ayo Cardoso, the National Production Monitoring System (NPMS) portal among other things would help track the country’s actual production figure, movement of vessels from one point to the other, track revenue and also determine the volume of refined petroleum products imported into the country.
According to the Minister the essence of the initiatives was to be able to track crude oil productions and vessels on the onshore and offshore the country’s waterways.
“The clear mandate as a Minister of State is to try and change the oil industry, because we were deeply worried about what was looking like a value dip in terms of the reputation of the oil industry and some of the issues of corruption that were all over the place. I said to them, let the people come out and know what they have been doing over the last couple of years.
He said DPR has been able to track production, track the movement of that production, following these initiatives had launched series of IT-based platforms and interventions which had helped Nigerians into the next foray of how oil companies and oil operations in this country should run.
“All our fields are largely tracked online now and what it means is that we can actually feed the nation on what was our actual production and from which fields and what is the volume and also identify if there are leakages.
We have also had the COLT which is basically tracking of crude oil and LNG. It is just not enough to produce, but to know where it is going to. As you know, some of our problems is both accounting for production and what happened to crude oil produced.’’
Kachikwu said that what COLT does for Nigeria was to be able track any of these vessels be it LNG or crude and track where it is going, adding that Nigeria can also track those vessels to the point of discharge.
A report in 2013 by the British NGO, Chatham House, said Nigeria’s oil was being stolen on an “industrial scale,” perpetrated by organised criminal groups featuring oil traders, security personnel, oil industry insiders, armed militant groups in the Niger Delta region, politicians, shippers and local community leaders.
Estimates of the quantity of crude stolen range from 100,000 barrels per day to 400,000 bpd. These figures spike when militant activities lock out oil workers and security operatives from production sites and pipelines.
The Buhari government cites a figure of 250,000 bpd stolen while pioneer chief of the Economic and Financial Crimes Commission Nuhu Ribadu’s figure of $9 billion lost each year to oil theft resonates with the tally of $12.7 billion worth of crude stolen in the three years to 2014 made by civil rights lawyer, Femi Falana, relying on audits by domestic and international agencies.
Between 2011 and 2014, undeclared or stolen crude by some oil firms was valued at $17 billion which the government said it might use legal action to recover.
OilPrice.com puts monthly loss at $1.7 billion, while Royal Dutch Shell rates Nigeria’s oil theft the world’s highest, pushing Mexico to a very distant second with 5,000 bpd to 10,000 bpd; a loss of $63 million was sufficient to attract Russia’s threatened closure of a major pipeline to Ukraine, while a loss of 2,000-3,000 bpd in Indonesia prompted a crackdown by Indonesian authorities.