Suspected crude oil thieves have reportedly attacked and vandalised the 24-inch Ogboinbiri/OB-OB gas pipeline, disrupting the gas export schedule of Nigerian Agip Oil Company (NAOC) from oilfields in Bayelsa.
The breach of the pipeline operated by Agip Oil Company cuts the firm’s gas export feed to the Nigeria Liquified Natural Gas gathering and processing plant.
OSDRA boss explained that shortly after fixing the gas pipeline a few days ago, vandals blew up the pipeline and it went up in flames.
“There was a gas leak last week from a vandalised gas pipeline OB-OB/Ogboinbiri pipeline at Okaka in Bayelsa State. The pipeline was repaired but unfortunately re-vandalised again thus resulting in fire.
“The Nigerian Agip Oil Company is working actively to depressurise the pipeline in order to effect repairs on the pipeline,” Musa said.
Officials of NAOC declined to comment on the incident and negligence of the regulator’s advice to intensify surveillance on the asset when contacted for a response.
The fire at the incident site, which had forced surrounding vegetation to with is yet to be put out as of Thursday morning
Wood McKenzie, a global mining and consultancy research group, had on Thursday stated: “Nigeria Suffers Record Levels of Oil Theft.” It stated that the problem was scaring investors from the sector.” Hence, the reason why oil-producing companies in the country and even Nigeria continue to lose out on the rising international price of crude.
The firm disclosed that oil theft challenge in the country has been responsible for that and that the situation has gone beyond a crisis point.
The company cited example of Shell reported about 107 sabotage incidents in 2021 alone.
The report identified Imo River and Rumukpe as hotspots for the menace, the document showed that the Nembe Creek Trunkline, operated by Aiteo experienced a downtime of 40 per cent during the period.
Bonny pipeline, it stated remains the hardest hit by theft and vandalism, the research organisation stressed that Heirs Oil and Gas, owned by Tony Elumelu, for example, averaged losses of 66 per cent from Oil Mining Licence (OML) 17 in 2021, before peaking at 97 percent in December.
Woodmac added that although improved security and monitoring reduced losses at Forcados, lack of pump capacity at Ughelli had a major impact on oil production in the Western Delta.
The document stated further that, ND Western reported 300 theft points on a 12 kilometre section of pipeline during the period around OML 34, while shell declared force majeure at Forcados in August and December last year.
It disclosed that Eni’s Brass oil pipelines in the northern areas are now worst affected, while local security officials contend with an unprecedented number of incidents.
Although Chevron’s Excravos network is mostly offshore and not so vulnerable, it noted that the southern swamp community dispute shut in 8.8kpd in December 2021 while 50 percent of liquids production now comes from offshore, which offers some form of protection.
“Oil thefts have gone beyond crisis point and are deterring investment in the onshore. Crude theft and sabotage have long been problems in Nigeria, but 2021 saw record levels of theft.
“Thefts combined with export terminal and pipeline shut-downs are limiting Nigeria’s ability to ramp-up production and take advantage of high prices. Onshore operators are spending to secure current production rather than grow it. This represents a huge opportunity cost.
“The Bonny and Brass pipelines in the eastern delta are worst affected, Forcados much less. Barging can be cost-effective but only at small scale longer term solutions needed,” it said.
Explaining that, “Nigeria has been here before in 2016,” Woodmac said alternative pipelines are coming far too slow to materialise. It added that investors and the state were paying the price.
“Nigeria’s production is likely to improve in 2022, but underperformance against OPEC+ quota remains a major risk. NNPC reports that crude thefts in 2021 reached 200,000 barrels per day a quarter of onshore production.
“Prolonged shut-downs at Forcados and Qua Iboe export terminals also hampered output. There has been little improvement in 2022, with Brass and Bonny terminals shut-in in March,” it noted.
The report reiterated the recently released data by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) that stolen volumes cost Nigeria up to $3.27 billion oil shut-ins and impact associated gas production and sales to the domestic market.
“Some onshore investments are on hold while operators try to secure production via alternative export routes. The scale and sophistication of crude thefts suggests an organised operation on an industrial scale,” it pointed out.
It noted that attempts at finding alternatives had come at a higher cost, as barging costs, for instance, are typically between $15 to $20 per barrel.
“Barging becomes cost effective when losses exceed 20 percent, provided that oil prices are high enough to cover the additional cost Logistics can limit barging volumes to a maximum of 20,000 bpd.
“Producers need access to a navigable river and barging Jetty, and an agreement with an offshore vessel to export the crude. Larger producers see barging only as a short-term solution and typically return to the major trunk lines once performance improves,” it said.
The firm stated that there had been a failure to construct alternative pipelines since 2016 as many producers barge crude offshore from Warri as it offers more secure exports but at prohibitive costs
Olusola Bello