Nigeria: Economy takes a hit as militants wreck havoc on oil installations

*Militants regroup.

*Militants regroup.

Oscarline Onwuemenyi

11 June 2016, Sweetcrude, Abuja – Tensions are boiling over once again as the militant group, Niger Delta Avengers reportedly bombed yet another crude oil pipeline belonging to Agip ENI in Bayelsa state on Friday, even as the national economy appears to be on a free-fall, occasioned by the unmitigated attacks on oil and gas installations by militants in the Niger Delta region.

The militant group, which has adopted savvy ways of communicating its exploits, noted in a tweet on its twitter handle @NDAvengers, that at “3:am of Friday @NDAvengers blow up the Obi Obi Brass Trunk line belonging to Agip ENI. It is Agip’s major crude oil line in Bayelsa State.”

And so the attacks continue unabated, with the Nigerian military seemingly stumped on how to deal with the problem. In the meantime, Nigeria’s crude oil export has continued to drop. It was estimated that a further 130,000 barrels per day is being lost as the Trans Niger Pipeline, TNP, operated by Shell Nigeria, reportedly shut down after a leak was discovered. At $50/barrel the country is losing $6.5million per day in revenue or $45.5million for the week.

As a result of uncertainty over the country’s ability to deliver cargoes in the wake of renewed attacks on oil infrastructure by Niger delta militants, refineries are cancelling orders for Nigerian oil. So, on top of everything else, the price Nigeria commands for its oil has also been hit.

The Nigerian National Petroleum Corporation disclosed on Thursday that it lost more than N19.43bn in the month of April, as the country’s crude oil production dropped from 59.27 million barrels recorded in February to 57.43 million barrels in March, due to growing acts of pipeline vandalisation in the Niger Delta region.

The corporation stated this in its Monthly Financial Report released in Abuja on Thursday where it also revealed that over 1,500 megawatts of electricity were lost as a result of the destruction of oil and gas facilities, adding that the capacity utilisation of the Warri Refining and Petrochemical Company plummeted from 25.65 percent in March to 6.36 percent in April.

“The NNPC’s monthly financial and operations report indicate an operational loss of 19.43bn in April 2016 as against 18.89bn in the month of March 2016. The deficit increased by 2.83 per cent in the month of April 2016 due to a slight decline in revenue generation, which is attributed to the decrease in petroleum product sales by 7.11 per cent.

“The NPDC’s crude sale for the month is still hampered by Forcados pipeline vandalism, which continued to deny the NPDC of monthly crude oil revenue of about 20.0bn,” the report stated. The corporation explained that global crude oil spot prices increased by $3.41 per barrel in April to a monthly average of $40.75 per barrel, up from $37.34 in March and down from $57.54 in April 2015.

This represented an increase of 9.13 percent from March 2016 and -29.18 per cent from April 2015, adding that the increase in the crude oil spot prices by $3.41 per barrel in April this year to a monthly average of $40.75 per barrel was the highest monthly average so far this year.

According to the report, “Nigerian crude oil production for the month of March 2016 stood at 57.43 million barrels, which is 3.1 percent lower than February 2016 production, and so far, the lowest recorded in the 12-month review period. The recent upsurge in vandalism has negatively impacted on the Nigerian crude oil production output, losing its African top crude oil producer to Angola.

“About 380,000barrels per day remained shut-in due to vandalism of the 48-inch subsea export line on 15th of February, 2016. Hence, all March cargoes were deferred until the repair is completed.

“Also, the nation has lost over 1,500MW of power supply to the damage as gas supply from Forcados, which is Nigeria’s major artery, accounts for 40 to 50 percent of gas production. Incessant pipeline vandalism poses the greatest threat to the industry.”

In the midst of all these, a new militant group, the Ultimate Warriors of Niger Delta have surfaced in Nigeria, with a demand that the Federal government allocate 60% of the nation’s oil blocs to indigenes of the Niger Delta region.

In a statement signed by its spokesperson, Brig. Sibiri Taiowoh and made available to reporters on June 8th, the group said failure to meet their demands within 2 weeks will see the continuous attack of oil installations in the Niger Delta region.

The militants amongst other things are demanding for the completion of the Federal Maritime University which was established by former President Goodluck Jonathan as well as the contract to secure oil pipelines in the region.

It stated, “We want to be the ones to be safe-guarding oil pipeline in our area so as to create more jobs for our people. We would resist any attempt to give surveillance contracts of pipeline in our backyard to foreigners. We want the pipeline jobs to be given to our indigenous people.

“We also want 60 per cent of the oil blocs to be allocated to the Niger Deltans just as the Federal Government has also allocated 80 percent to those who are not from the oil producing area and just as 50 per cent of the resource was used to develop the non-oil area when we were producing cocoa and groundnut as main economic resources, the same 50 percent should be used to develop the Niger Delta region because we are the ones suffering the brunt of oil pollution and degradation in the region.

The group added, “We are behind the recent pipeline bombing in the Niger Delta region and I can assure you we will not stop until the EPZ project and the Maritime University are totally completed and start operations.”

A number of International Oil Companies in Nigeria have declared force majeure of crude oil export, while some have been forced to suspend or cut production as a result of the bombing of oil facilities across the Niger Delta.

At a time where every oil producing country is fighting to keep their market share especially after the re-entry of Iran into the global market, Nigeria is simply giving away its share of the market because it cannot protect its national interest.

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