A Review of the Nigerian Energy Industry

Pipeline Vandalism: Oil companies seek alternative route to Forcados Export terminal

24 February 2015, Lagos – Six oil and gas exploration and production (E & P) companies that deliver crude oil to the Forcados Export Terminal in Delta State, through the Trans -Forcados Pipeline are seeking an alternative crude oil supply route, following incessant vandalism of the current pipeline network.

Trans-Forcados Pipeline, which is used by E & P companies operating in the Western Niger Delta to transport crude oil to the 400,000 barrels per day capacity Forcados export terminal, has been the target of attacks by vandals.

oil pipelineIt was gathered that since the most recent acts of vandalism at five different points on the Trans- Forcados Pipeline were reported on January 6, the affected companies have not been able to ramp up production.

SEPLAT Petroleum Development Company Plc, which owns 45 per cent stake in Oil Mining Leases (OMLs) 4, 38 and 41, and operates these leases under a joint venture with the Nigerian Petroleum Development Company (NPDC) was one of the companies that suffered outage as a result of the vandalism.

These acts of vandalism, THISDAY learnt, forced Seplat to shut down Oben, Amukpe and Sapele stations in OMLs 38 and 41 on December 30, 2014, as a result of leak on the Kantu/Ofugbene/Yeye axis of the 50-kilometre stretch of the 28- inch Trans Forcados Pipleine network.

It was gathered that the leak, which led to NPDC’s production to drop to 1,000 from about about 3,700 barrels per day in OML 26 and zero output in OML 42, occurred at the Chanomi axis of the pipeline.

Other companies affected include; Shell Petroleum Development Company, Pan Ocean, and Nigerian Agip Oil Company.

The vandalism of the pipeline also affected gas supply to Nigeria’s power generating companies as the Transmission Company of Nigeria (TCN) disclosed that the maximum generated electricity available for it to transmit for distribution across the country dropped to 3,000 megawatts.

Chief Executive Officer of SEPLAT Petroleum Development Company Plc, Mr. Austin Avuru told THISDAY that his company budgeted 35 days of outage in 2014 but ended up suffering 75 days of outage because of incessant vandalism of Trans-Forcados.

“Once Trans Forcados is down, all of us suffer. In 2014 we budgeted 35 days of outage but we ended up suffering 75 days of outage. In the first 30 days of this year, we have already suffered 15 days of outage. So, the Trans Forcados remains a huge problem for all of us, producers in the western Niger Delta, who deliver crude to Forcados. When it is down, everybody suffers; we have production outage and therefore, for the period, there is no production for the country. There is no revenue that should have come out of that volume of production for the country and it is also a loss of revenue for us. So, it is a huge problem. I think all five of us now, including the Shell, the sixth one that deliver crude into the Trans Forcados are trying now to sit down together and see whether we can come up with a lasting solution because it is a huge problem,” he explained.

Avuru said his company had constructed a 10-kilometre pipeline to serve as alternative route that would reduce over reliance on the forcados pipeline.
According to him, the alternative pipeline transports crude oil to the Warri Refinery in Delta State.

“So, we are able to supply crude oil to the Wari Refinery if Trans Forcados is down and in fact, even when Trans- Forcados is running we are able to satisfy the Warri Refinery with crude oil delivery. That is useful to the refinery because we are delivering crude to them at no transport cost.

They probably pay more than $10 or $12 per barrel to transport crude from Escravos. So, that is good for them and it is good for us because we suffer no losses when we produce through that pipeline. So, that is the alternative pipeline we have and we are still working all the complex commercial elements in that arrangement with Warri Refinery,” he added.

– This Day

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