06 March 2014, Abuja – The Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Andrew Yakubu, has said activities of insurgents in the Northeastern is affecting exploration of oil in the Chad Basin.
The NNPC GMD spoke yesterday when he appeared before the Senate Committee on Petroleum (Upstream) to defend the 2014 budget of NNPC.
Yakubu also told the committee that NNPC is exploring new technology to lay oil pipelines in the Niger Delta to curb vandalisation.
He noted that apart from Chad Basin, there are seven other basins being explored for oil.
He said the low performance in the Chad Basin in 2013 was as a result of increased insurgent activities in the region.
Yakubu said: “What we did last year was to acquire the aero magnetic data from the geometric survey department.
“We have Yola, Bida, Sokoto, Dahomey and others. The main focus now which was a result of an extensive geological study that was done a couple of years ago is on the Chad basin.
“The data for the other basins had been acquired and as soon as we progress with the Chad Basins we will intensify action in the others.”
He added that the Chad Basin has 13 phases “and we are now in phase six”.
On pipe line breach, he noted that there was no doubt that the current experience is worrisome, adding that the environmental damage is even more than the economic loss.
He said: “But a number of proposals are coming up, we are reviewing them with security agencies. The pipe lines are strategic national assets. By the time the proposals are implemented every Nigerian will own the assets. The Justice Ministry is also looking at all the laws to determine how anybody who tampers with the assets will be treated. It will involve communities, local governments and states.”
Chairman of the committee, Senator Emmanuel Paulker, asked the NNPC management to explain to Nigerians the actual money earned from crude oil sales.
Paulker said such explanation would disabuse the minds of some Nigerians who might sit in their offices and multiply the quantum of crude production per day with oil bench mark as the total money earned by the government.
The committee wanted to know what NNPC did to mitigate fall in revenue in 2013.
The GMD agreed that there was drop in revenue but added that there was also advantage of price.
He said the production projection for 2014 is 2.4mbpd, which the committee described as good but ambitious.
The NNPC boss said the corporation was working to arrest decline in production.
On the effect of oil pipe line vandalisation, he noted that any thing that has to do with the breach of oil pipe line will automatically impact on the environment.
Yakubu insisted that the best way to stop the menace is to intensify campaign for those perpetrating the act to cease.
This followed the question by a member of the committee, Senator Enyinnaya Abaribe, who wanted to know what NNPC was doing to address the effect of pollution on those living around the affected areas.
On challenges, he said funding continues to be a major challenge for the Joint Venture.
Partners, he said, are not willing to continue funding through Modified Carry agreements.
He also said partner and external financing close date negatively impacted by the delay in passage of national budget which in turn leads to schedule slippage and low performance.
Yakubu said high cost resulting mainly from high crude oil price continue to negatively impact government revenues.
He said NNPC was working with partners with a drive towards cost reduction.
He added that “having overcome initial reluctance of partners to fund domestic gas projects, there has been a steady increase in performance versus plan. Sustained funding from 2014 through 2016 will be the key to achieving government’s domestic gas objectives”.
He said national gas infrastructure projects needed to be fully funded to ensure upstream domestic gas gets to the market.
Yakubu also said that resolution of all commercial issues will help improve project delivery.
On the ongoing fuel scarcity in parts of the country, he said: “We have a full team right now in Lagos. Last week, the team was in Abuja.
“We went round the clock to clean it up to get strategic reserved released to the stations and we are able to reduce the fuel queues.
“We shifted to Lagos at the weekend but we have injected quite a lot into the Lagos market. All the marketers, the DPR, the PPPRA, NNPC, and the PPMC have a very strong team out there to ensure that the deliveries are made offshore.
“We have some vessels that had not been offloaded into the tank farms in Lagos and a lot of supplies have gone into most filling stations.
“In the last couple of days, we have close to 1000 trucks that had been loaded out of the various depots and jetties in Lagos and the entire fuel are being supplied to the various stations in Lagos and beyond.
“As at the close of business on Tuesday, most filling stations in Victoria Island and Ikoyi were dispensing fuel and we expect that other parts of Lagos will be impacted by the increase in the fuel supply strategy that the combined team has been doing.
“Hopefully by the end of work today (Wednesday) we would begin to see a change in the fuel scarcity situation in Lagos.
“The best way to distribute fuel is through the pipeline network to our various depots that are all over the country.
“We have over 20 of them and about 5, 000 kilometers stretch of pipelines and that is the best and the most efficient way to distribute petroleum products but when they are breached then you have this kind of challenge.
“Making use of 1000 trucks per day to distribute fuel across the country is usually not the best but when we are faced with this situation, then the fall back will be the truck and that should be temporary and as soon as we fixed the pipelines normalcy would be restored.
“The projection of a daily crude production of 2.44m is realistic however the security challenges occasioned by the breaches.
“We have the capacity but we need additional investment to address the security breaches that we continued to have.”
– The Nation