N470m lost daily to gas pipeline attacks –FG

21 January 2016, Abuja – Last weekend’s attack on the Nigeria Gas Company’s pipeline connected to Chevron Nigeria Limited’s facility at Escravos in Delta State is costing the economy a daily loss of N470m and has also resulted in the shutdown of two of the country’s refineries.

Warri-pipeline-bombing1

Warri pipeline bombing site

According to the Federal Ministry of Power, Works and Housing, the vandalism of the gas pipeline would impact negatively on the Olorunsogo National Integrated Power Project plant, which has capacity for 600 megawatts of electricity, and other power plants across the country.

The Special Adviser on Media to the Minister of Power, Works and Housing, Mr. Hakeem Bello, said in a statement on Wednesday that although security agencies had intensified the search for those behind the attack on the pipeline, their action would slow down the country’s power supply system.

Explaining the financial and economic implications of the action on the Nigerian economy, he said, “The sabotaged gas pipeline, which contributes to the Escravos-Lagos Pipeline System, has led to a loss of 160mmsfcd of gas daily. At a cost of $2.50 per thousand scf, this loss means about $400,000 loss to the country on a daily basis (N78.8m) in gas volume.

“This is in addition to losses to be incurred daily from power generation ($1,988,223 or N391,680,000 daily). The total daily loss to the country is, therefore, estimated at N470,479,931. Repairs of the damaged pipeline are estimated to cost $609,137 or N120,000,000.”

According to the ministry, the real sector of the economy has also been counting its losses as some cement companies around Olorunsogo like Ewekoro and Ibese are also affected.

It stated that the latest incident occurred when the Federal Government through the Ministry of Power, Works and Housing and the Ministry of Petroleum Resources along with allied agencies had been making concerted efforts to improve gas supplies to the power plants.

“Such efforts led to previously offline plants like Ihovbor and Sapele coming back online and the subsequent output making up for the loss in power. The pipelines are being actively monitored for further attacks or other unforeseen impacts,” the statement noted.

The ministry added that available records showed that six incidents of vandalism from December 2014 to February 2015, which affected the Trans Forcados Pipeline at Oben, Sapele and Oredo, and the Escravos Lagos Pipeline System CNL led to a loss of 1,100mmscfd.

Industry experts explain that a loss of 200mmscfd is equivalent to a power reduction of 700MW.

Similarly, the Nigerian National Petroleum Corporation on Wednesday announced the operational shutdown of the Port Harcourt and Kaduna refineries owing to crude supply challenges arising from the recent attacks on vital crude oil pipelines.

The NNPC, in a statement issued by its Group General Manager, Group Public Affairs Division, Mr. Ohi Alegbe, said the plants were shut simultaneously on Sunday after the Bonny-Okrika crude supply line to the Port Harcourt refinery, and the Escravos-Warri crude supply line to the Kaduna refinery suffered breaches.

The NNPC stated that before the closure, the Port Harcourt refinery was recording a daily petrol yield of over 4.1 million litres, while the Kaduna refinery was posting a daily petrol production of about 1.3 million litres.

The national oil firm also stated that the Warri Refining and Petrochemical Company was on stream and was producing a little above 1.4 million litres of petrol per day.

The NNPC, however, gave an assurance that it had put in place strategies to guarantee unimpeded countrywide availability of petroleum products.

“In response to the unexpected setback, we have activated comprehensive remedial measures to sustain the prevailing stability in the supply and distribution of petroleum products across the country,” it said.

 

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