Shell to offer Nembe Creek Trunkline for sale

Shell facility04 November 2013, Lagos – With no end in sight to losses arising from crude oil theft and persistent destruction of its pipelines and facilities in the Niger Delta, Shell Petroleum Development Company, SPDC, has decided to sell its 97-kilometre Nembe Creek Trunkline, NCTL.

The decision to sell NCTL is coming barely three years after the Anglo/Dutch multinational replaced the trunkline with a new line at the cost of $1.1billion, as a result of persistent attacks by oil thieves who drill holes into the pipeline, resulting in extensive damage to the environment.

Also, as some coastal communities in Delta, Bayelsa and Rivers States affected by a crude oil spill from Shell’s Bonga oil field have taken their case to the United Nations (UN) and European Union (EU) over alleged neglect by Shell, the company is proceeding with plans to open its data room on November 15 for prospective investors to carry out due diligence on the company’s four oil blocks currently on tender.

The NCTL and the Trans-Niger Pipeline (TNP) are two of the company’s major pipelines in the Eastern Niger Delta that transport some 400,000 barrels of crude oil per day from Shell’s fields and third parties in its Eastern operations to the Bonny Export Terminal in Rivers State.

Specifically, the NCTL transports crude oil from 14 oil pumping stations located in Nembe Creek, Krakama, Awoba, Ekulama and San Bartholomew oil fields and transports it to the Cawthorne Channel field and Shell’s Bonny Export Terminal for export.

Nigeria’s indigenous oil services company, Nestoil, executed part of the new NCTL project in 2010, which turned out to be the largest single project under SPDC’s asset integrity programme that had led to the replacement of over 1,000 kilometres of major pipelines and flowlines in the last eight years.

The new NCTL consists of five kilometres of a 12-inch diameter pipeline from the Nembe Creek III manifold to the Nembe Creek tie-in manifold; 44 kilometres of a 24-inch diameter pipeline from Nembe Creek to San Bartholomew; and 46 kilometres of a 30-inch diameter pipeline from San Bartholomew to Cawthorne Channel.

Nestoil constructed a 49-kilometre pipeline, consisting of the 12-inch diameter pipeline, a five-kilometre segment with the 24-inch diameter pipeline, and the 44-kilometre segment.

This section, it was learnt, transverses 100 communities in both Bayelsa and Rivers States.
The second part of the project consisting of 46 kilometres of a 30-inch diameter pipeline from San Bartholomew to Cawthorne Channel, was executed by Italian oil field services contractor Saipem.
THISDAY gathered that since Nestoil and Saipem installed the new NCTL for Shell in 2010, the new line has been targeted by crude oil thieves repeatedly, leading to the frequent shutdown of the line to remove theft connects and repair oil leaks.

This development has led to frequent declarations of force majeure on exports of Bonny Light grade of crude oil, the toast of foreign refiners, known for its low sulphur content.

A few months after the trunkline was installed, the line was shut down for one month in December 2011, following a spill caused by two failed bunkering connections but the thieves used the one-month pipeline depressurisation as a window to install even more bunkering points.

The new pipeline was also closed several times as a result of crude oil theft leaks and fires between December 2011 and December 2012.

Also in one instance, Shell recorded six separate oil spill incidents on the Okordia – Rumuekpe trunk line at Ikarama in Bayelsa State, within two weeks, all from hacksaw cuts by oil thieves.

In another incident, three hacksaw cuts were reported on the nearby Adibawa delivery line.

It was also gathered that the downstream section of the NCTL between San Barth and Bonny was reopened on August 6, 2013 after the removal of 60 crude theft points, but was shut again in September 2013 after the discovery of seven additional connections.

In fact, a total of 160 crude theft points were repaired on the trunkline between January and September 2013, forcing the Managing Director of SPDC and country chair of Shell Companies in Nigeria, Mr. Mutiu Sunmonu, to declare that his company was “dealing with a social tragedy, an environmental crisis and a sad waste of resources.”

Also the Vice-President, Health, Safety and Environment for Shell Sub-Saharan Africa, Mr. Tony Attah, had cause to declare that when the cost of repairs of NCTL was added to the “facility downtime and loss of revenue, it becomes clear how crude theft has denied Nigeria of badly-needed revenue.”

In a related development, SPDC will on November 15 open its data room for potential investors to conduct due diligence on some of its oil blocks it recently offered for sale.

It was gathered that SPDC received Expressions of Interest (EoIs) from 100 investors but 15 have been shortlisted to enter the data room.

The company said in June 2013 that it planned a strategic review of its Eastern Delta assets, a development, which industry sources blamed on incessant attacks on its oil facilities.

Also in October, it announced that it had put up four oil blocks for grabs in Nigeria in its latest divestment from the country.

The blocks are Oil Mining Leases (OMLs) 18, 24, 25 and 29 all located in the Eastern Niger Delta.

Meanwhile, some coastal communities in Delta, Bayelsa and Rivers States affected by a crude oil spill from Shell’s Bonga field two years ago, have taken their case to the UN and EU.

The communities, which had previously dragged Shell’s deepwater subsidiary Shell Nigeria Exploration and Production Company (SNEPCO) before the National Assembly, said yesterday that the multinational oil firm failed to comply with the recommendations of the Senate and House of Representatives Committees on Environment to provide relief materials to those whose economic livelihoods were impacted by the Bonga spill.

The communities said even after relevant government agencies such as the National Oil Spill Detection and Regulatory Agency (NOSDRA) affirmed that the said spill and pollutants used to disperse it has affected their fishing grounds, resulting in loss of income, the oil firm has continued to ignore their demand for attention.

A statement signed by representatives of the communities, Messrs F.A Monday, Tee Mac O. Iseli and Oludewa James, said in spite of the series of interventions by the National Assembly, SNEPCO had neither provided relief materials to them as a palliative measure nor had it cleaned up the polluted fishing areas.

“Up till date Shell/SNEPCO has refused to provide the said relief materials, visit our fishing areas for any JIV and/or joint scientific assessment.

“The actions of Shell/SNEPCO, which we suspect to be a calculated attempt to cause another misunderstanding in the Niger Delta region of Nigeria, are already causing tension and agitation.

“Based on our communities further petition dated 4th and 24th October 2013 addressed to the Senate and House of Representatives as well as the National Security Adviser, we hereby request these authorities to kindly wade into this matter so as to enable all parties have an urgent dialogue with a view to resolving the issues,” they said.

The communities applauded the role played by the Delta State Emergency Management Agency in assisting some of the communities with relief materials and the National Emergency Management Agency (NEMA) for the recent approval of relief materials to be provided for the impacted communities.

They further appealed to the UN and the EU to compel Shell to respond to the oil spill like British Petroleum did when a similar incident occurred in the Gulf of Mexico, the United States of America.

– This Day

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