A Review of the Nigerian Energy Industry

Nigeria’s production down by 160,000 bpd — Alison-Madueke

27 January 2014, Lagos – Nigeria is losing about 160,000 barrels of oil daily due to the activities of pipeline vandals, the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke has said,

Mrs. Alison-Madueke

The minister who stated this at television monitored programme, Kaakaki, in Lagos, last weekend, said that but for sabotage and vandalism, Nigeria would have attained a production peak of 2.4 million barrels per day.

She said: “In terms of our crude production, we have 2.24 million barrels per day;when really, if not for this high spate of vandalism, we should be heading towards 2.4 million and above.”

The minister further said that saboteurs go as far as under the water to puncture pipelines in order to disrupt the economy.

She said: “If you have people who are paid to swim under the water to puncture gas pipelines, clearly, nobody is going to gather gas. So, it is being with the clear intent of damaging and disrupting this economy.

“I must say for the record. I find this so highly irresponsible and unacceptable. If a government is striving to provide infrastructure for its people, because by this time, if not for this level of vandalism, we should have achieved a much higher level of power output in terms of megawatts.

“You cannot police over 5,000 kilometers of pipeline. That is what we have in Nigeria, 5,000 kilometers of crude pipeline. At any point in time, as much as you are trying to secure your pipelines, there will be people who set out along the creeks to puncture them.

“However, the result is that we have to shut in those holes in the pipelines for x number of weeks or so to actually repair them, and that means that we have what we call shut in production or deferred production and our daily production drops.”

Alison-Madueke, who described the activities of the vandals as political, also absolved the federal government from being part of it.

She noted: “Well, I will only imagine that it is political, because it cannot be the government of the day puncturing the pipelines. We desperately need the revenue for Nigeria. As the crude oil prices drop, the more stable your production is in terms of millions of barrels per day, the more revenue you hold to boost your foreign exchange reserves, etc. the more you have to distribute at the end of every month for FAAC to all the states, because we still have a system where all the states depend on the centre.

“It becomes a major problem when the main source of revenue, which is the joint venture crude payments are going lower and lower because some months they cannot meet their normal quota that they put into our revenues due to vandalism and shut-in production.”

Speaking on why the impact of the reduction in petrol price has not been felt, the minister explained that it will take about 45 days to be effective.

She said, “It takes about 30 to 45 days from Port to the fuel stations to actually feel the impact of any change, even globally in the price of crude and therefore the price of petrol. Of course, it does not happen instantly or overnight. NNPC has moved in to ‘kero direct’ to try support and we hope in the next couple of weeks, we will see price stability in that direction as well. We are looking at it in a holistic fashion from every angle.”

As regards the division among the Organisation of the Petroleum Exporting Countries, OPEC, the Minister stated that members would meet to stabilise oil price.

She said: “It is our hope that as President of OPEC, we will be able to bring the players around the table to look at the downward trend and see how best we can stabilise it. We do understand in an ideal world, Saudi’s position, which was that they will drive inefficient producers out of the market. They produce at a very low cost and others produce at a very high cost.

“They are of course talking about the large producers such as the United States, with their shale production of about nine million barrels per day and of course Russia that also produces about nine million barrels.”

Saudi produces about 9.8 million barrels per day.

“It is one of those issues in life that we feel strongly about. Obviously it has affected many countries negatively that are party to OPEC itself, such as Angola, Algeria, Iran, and Venezuela. They are all terribly affected just as Nigeria is.

Some of them are even harder hit than Nigeria.

During the last OPEC meeting, I mentioned that OPEC has to consider the countries that are a party to OPEC in taking these decisions. But the truth of the matter is Saudi still controls the largest production in the world. If the price does not stabilise soon, then we have to sit down and talk,” she added.


– Vanguard

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