Nigeria loses 221 billion naira, 7.193 million barrels to aging oil facilities, more in one month
Emmanuel Addeh in Abuja
The apparent waste of Nigeria’s most expensive natural resource, crude oil, continued into July, with the country losing a whopping 7.193 million barrels of the raw material due to deteriorating offshore asset and water facilities. shallow depths of the country.
It was the highest loss in months, mainly due to closures due to relentless repairs as well as, to a lesser extent, disruption resulting from protests by community workers and fires.
At the official exchange rate of N410 to $ 1, the loss would amount to about N221 billion or $ 539.4 million.
At a time when Nigeria desperately needs every dollar, the continued monthly losses have been seen as a direct drain on the country’s economy.
Delayed maintenance and low investment combined to ensure that the country was unable to pump enough oil to meet the quota allocated to it by the Organization of the Petroleum Exporting Countries (OPEC) over the course of of the past four months.
The July loss was the complete erasure of just under five full days at the current production level of about 1.5 million barrels per day, excluding condensate, a THISDAY analysis of data from the Nigerian National Petroleum Corporation (NNPC) latest presentation to the Federal Accounts Allocation Committee (FAAC) had indicated.
Also, to put it in proper context, at 158.9 liters of gasoline from a barrel of crude oil, the 7.1 million barrels lost to incidents during the month under review could have produced 11.123 billion liters of gasoline that can fuel Nigeria’s oil demand. of about 1.8 billion for months.
Experts have predicted that Nigeria may not be able to return to at least pre-pandemic levels when it drilled up to 2 million barrels per day, until the first half of 2022.
However, the Minister of State for Petroleum, Chief Timipre Sylva and the Group Director General of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, recently expressed their disagreement, predicting that by the end of October or the by mid-November, things would return to normal.
Declining investment and lingering maintenance issues continued to hamper Nigerian production due to multiple shutdowns, with July’s share of disruptions amounting to at least 40 incidents.
However, Nigeria’s struggle to increase its production capacity also reflects the impact of OPEC + on the country’s oil facilities, some of which were closed in 2020 due to the reduction in production by the cartel, to support the price when COVID-19 hit demand.
Kyari recently said that the mandatory shutdown of wells affected production, saying it was difficult to get them back into service due to the complexity of operating the facilities.
The problems range from unusable wells to replacing valves, pumps and pipe sections.
Five land-based export terminals run by oil majors, which typically export around 900,000 bpd, processed 20% less oil in July than in the same period last year, despite relaxed quotas, according to a report. analysis shared with Reuters from consulting firm Hawilti Ltd, last week.
The drop indicates a drop in production from all the onshore fields that supply these terminals.
Only the new deep-offshore oil field and export terminal of French oil major TotalEnergies, Egina, was able to quickly turn off the taps, according to Hawilti, citing an analysis based on data from the Department of Petroleum Resources (DPR).
An analysis of incidents leading to closures showed the biggest loss came from the Forcados terminal with a whopping 1.891 million barrels closed for the month of July.
The Forcados terminal, which is the main main line of the Forcados pipeline system and also the second largest network in the Niger Delta after the Bonny pipeline system, exports around 250,000 barrels of crude oil from the country daily.
Further analysis showed that the disturbances at the Forcados terminal occurred at 10 points in the facility, including the shutdown of Aroh to handle the top of the reservoir, resulting in the loss of 35,000 barrels, the shutdown of the Seplat facility due to a fire, resulting in the loss of 140,000 barrels.
Similarly, 80,000 barrels were paid by the NNPC and its partners during the injection into the Trans-Forcados pipeline which was suspended due to a fire as well as the shutdown of Trans-Ramos for maintenance and ‘a two-day stop at the same facility.
Other closures, revealed by THISDAY’s checks, occurred at the Batan station, which was due to maintenance work, Aroh again, for tank top issues, and another incident at Batan due to a faulty surge transmitter resulting in a loss of 138,000 barrels.
In addition, at the Atan terminal there were three incidents resulting in postponement due to a high gas / oil ratio, production of Moni Pulo was halted for valve leak repairs, among others, resulting in a terminal loss of 1.095 million barrels.
The story was no different at Bony Terminal, Sea Eagle Facility, Usan, Brass, Yoho, Qua Iboe, Excravos, Akpo, Ajapa, Otakikpo, Pennington and Ima terminals for various reasons including protests by aggrieved community workers, which led to a closure of 675,000 barrels at the Forcados terminal at one point in July.
The previous month, a document obtained by THISDAY showed that Nigeria’s NNPC and its partners had lost 6.035 million barrels of crude oil to emergency shutdowns, an increase of over one million from the month under review.
In its last presentation to the FAAC, before the last, the company recorded 32 such incidents at its facilities across the country.
A breakdown of the losses, according to the document, indicated that the highest combined shortage of 1.62 million barrels came from Qua Iboe, with 200,000 barrels due to the shutdown in production resulting from the management of flares and the low discharge pressure of the well.
Also at Qua Iboe, an additional 530,000 barrels were lost due to shutdowns over tank concerns, 650,000 barrels due to reduced production as reported 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 lost 200,000 barrels, 84,000 barrels, 30,000 barrels and 80,000 barrels respectively on different days, for reasons ranging from repair of leaks, problems tank top, fire and the declaration of force majeure.
However, Nigeria continued to ask OPEC for an increase in its baseline production and formally wrote to the Oil Producers Group which is expected to meet later in the day to determine whether to leave production quotas at. oil at current levels or make further adjustments.