NNPC disagrees with Shell over $700m loss

Drums used for oil theft07 August 2013, ABUJA — Nigerian National Petroleum Corporation, NNPC, has disagreed with claims that Shell lost $700 million to oil theft in the second quarter of the year.

NNPC said in a statement by the corporation’s Acting Group General Manager, Public Affairs Division, Ms. Tumini Green, in Abuja, yesterday, that Shell’s claim was “defective” and that the loss the multinational oil firm claimed to have suffered was not based on its operations in Nigeria.

NNPC described Shell’s argument that its current divestment was due to harsh operating environment and absence of leadership in the oil industry as defective and rooted on weak syllogism.

According to NNPC: “Mergers, acquisition and divestment, MAD, is a global portfolio management strategy employed by mostly big corporations to restructure and reposition companies for better and efficient revenue growth and competition.”

It wondered anybody “could canvass such position when the multinational oil companies themselves, especially Shell, have repeatedly stated that part of the reasons for divestment of its assets was a deliberate measure to encourage and promote indigenous participation in the upstream oil and gas industry.

On Shell’s report
“With regard to claims by Shell that it lost $700 million by the second quarter of 2013 to crude oil theft and other disruptions in Nigeria,” NNPC said “the loss claims are not localised to Nigeria as reported.

“Shell’s acquisition of Shale oil and gas assets in North America has also proven not to be good investments and as such programmed for divestment to minimise risk.

“In order to further buttress the global challenges, Shell’s current tight oil output is 50,000 barrels per day, bpd, as against an estimated 250,000bpd in the United States.

“Furthermore, ExxonMobil’s Q2 2013 earnings were down substantially by 57 percent year-on-year primarily due to prior year gains, Japanese restructuring and divestment.”

NNPC said that Shell’s divestment were a blessing in disguise for the nation as they “have in fact increased indigenous participation which will in turn create new job opportunities, reduce capital flight, encourage capacity building and support gas-based industrialisation aspirations.”

‘We’re winning war against oil theft, vandalism’
It claimed that the nation was winning the war against oil theft and pipeline vandalism, which was being led by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke and the leadership of the corporation.

Consequently, the conglomerate disclosed that daily crude oil production had increased to an average of 2.4 million pbd.

It said: “Suffice it to say that some vandalised pipelines and flow stations have been repaired and re-opened such that average current national daily production stands at 2.4 m/bpd compared to the average year to date figure of 2.13 m/bpd as at June 2013.”

The corporation traced the current success to the minister’s directive to NNPC to constitute an industry-wide committee on Security Strategy Against Crude Oil and Product Theft.

That committee’s members include representatives from NNPC, all IOCs, NPDC, security agencies and Oil Producers Trade Section, OPTS, of the Lagos Chambers of Commerce and Industry, LCCI.
Production projections

NNPC said: “In a fortnight, repair works on the Nembe Creek Trunk Line, which has a daily capacity of 150,000 bpd is expected to be fully completed.

“On completion, daily average crude oil production is expected to increase to 2.50 m/bpd which will exceed the national daily target of 2.48 m/bpd.

“Our expectation is to increase production from the 2.48 to 2.55 m/bpd (both crude and condensate) for the rest of the year. We have the capacity and potential to maintain production above 2.55 m/bpd in the country.

“All that is required is to continue the fight against pipeline vandalism and crude oil theft to achieve this target. This will increase our 2013 average production to about 2.34 m/bpd if the current fight against pipeline vandalism and crude oil theft is sustained.”

The corporation restated its determination to work with all stakeholders in the oil and gas industry to ensure effective management of the nation’s vast hydrocarbon resource base.
NNPC expressed gratitude to security agencies that have been collaborating with its team and assured that it was determined to sustain this tempo to free the nation’s oil resources from every form of criminality.

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