12 June 2016, Lagos – In spite of the austere economic situation in the country, the Nigerian National Petroleum Corporation, NNPC, spent about N14.023 billion on pipeline repairs and management in February 2016, according to data obtained from its latest financials.
The report stated that the NNPC recorded some 293 pipeline breaks in the month under review, which meant that the Corporation spent an average of N47.86 million to repair each of the line breaks.
Additionally, the NNPC, in its Monthly Financial and Operational Report for February 2016, also revealed that it expended a total of N107.44 billion for the repairs of 3,039 vandalised points over the last 12 months, from March 2015 to February 2016.
The NNPC further stated that the Port Harcourt and Mosimi pipelines were the worst affected areas with 145 and 112 line breaks respectively. The report added that due to vandalism and sabotage, the NNPC recorded N558.56 million in crude oil losses and N1.24 billion in petroleum products losses in February.
In the 12 months between March 2015 and February 2016, it further lost N9.52 billion and N46.55 billion to crude oil and petroleum products losses respectively. The NNPC lamented that incessant vandalism and products theft have continued to destroy value and put it at disadvantaged competitive position.
According to the NNPC, reduction in vandalism will indeed unlock several industry upsides, which include improved upstream oil production due to reduced pipeline disruptions, improved refinery utilisation due to increased crude oil feed from restored pipelines, and reduction of crude/product losses.
It added that the “Forcados Oil Terminal (FOT) Export line, a 48-inch export line, was vandalised in February 2016, crippling the Nigerian Petroleum Development Company, NPDC, and all Joint Venture (JV) Partners’ ability to export crude oil from the terminal.
“This situation led to the declaration of force majeure by Shell Petroleum Development Company (SPDC) occasioned by production shut-in of about 300,000 barrels of oil per day. This infers that circa 130,000 barrels per day of NPDC Crude will be impacted for about 8 weeks as repair works is ongoing. This adversely impacted on NNPC’s February 2016 report leading to a loss of about N20 billion of NPDC oil revenue .”
To this end, the report explained that dollar receipts by the NNPC dipped by 41.97 per cent to $236.7 million in February from $407.86 million recorded in January 2016.
According to the NNPC, total export proceeds of $236.70 million were recorded in February, 2016 consisting of crude oil receipt of $153.63million, Liquefied Petroleum Gas (LPG) & Escravos Gas to Liquid (EGTL) proceed of $72.53 million, and miscellaneous receipt amounting to $10.544 million. The report attributed the drastic slump in total export receipt to a further 26 per cent slide in average crude oil prices, from $39.0405 to $29.0173 and shut-in at Escravos, Yoho, Sea Eagle & Bonny Terminals.
“Other incidents include shut down at Forcados& Brass Terminals and production loss at Agbami terminal for mini Turnaround Maintenance (TAM),” the report noted.