Renewed bombing of oil assets may erase production gains

11 July 2016, Abuja – The decision of belligerent group, the Niger Delta Avengers, to resume bombing of oil installations in the Delta notwithstanding reported dialogue with the government suggests that Nigeria’s oil production could once again plummet, writes Chineme Okafor

*JTF personnel inspecting a bombed pipeline.

*JTF personnel inspecting a bombed pipeline.

The Niger Delta Avengers (NDA), responsible for the relentless attacks on oil facilities in the Niger Delta, has resumed their disruptive attacks in the Delta, indicating possibilities of another cycle of dip in Nigeria’s crude oil production stock.

For the second time in a space of two days after it resumed bombing of oil facilities, the group last Monday night reportedly breached two manifolds operated by the Nigerian Petroleum Development Company (NPDC), the exploration and production subsidiary of the Nigerian National Petroleum Corporation (NNPC), at Batan community in Warri South-west Local Government Area of Delta State.

This was after it had in the wee hours of Sunday morning allegedly blew five oil facilities, including two more trunk lines belonging to the NNPC in the area and oil well 10 operated by Chevron at Mararaba community in Gbaramatu Kingdom.

As expected, industry experts have expressed views that the renewed destruction of facilities by the group will likely impact oil production and revenue accruable to the country. The development is however coming on the heels of reported dialogue between militants and the federal government.

Backed and led by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, the dialogue was called up to halt the activities of the groups considering its impact on Nigeria’s oil production. Both parties had reportedly disclosed their decision to ceasefire for 30 days to allow for the dialogue.

It offered President Muhammadu Buhari’s government some very limited time to come up with a comprehensive plan for the oil-rich region which the militants said was being short-changed by the Nigerian State, hence, their anger and rebellion.

Apart from that, it also offered the country an opportunity to claw back production volumes it had lost from past disruptions. But the group in their resumption of hostilities, warned that the dialogue committee constituted by the government should not be seen as a diversionary ploy.

They explained that weeks after Buhari announced the composition of the committee, nothing concrete had happened with the dialogue.

This was however contrary to what Kachikwu said recently in China where he went to sign off new investment potentials in the sector for the country. He had told Bloomberg that dialogue with the militants was going on fine.

“All the way from January right through to April of this year, we were producing about 1.9 to 2.2 million barrels per day which is still within the threshold that we budgeted for the year.

“In May and June, we suffered a lot of militant attacks which took us all the way down from 2.2 million barrels to about 1.3 million.

“We have managed to begin to lead conversations with the militants. We have been able to get production back to about 1.9 million barrels a day, we are continuing those conversations and by the time the Forcados is repaired in July, we should be able to come back to expected production ceiling for this year of 2.2 million and begin to look whether we can increase a bit to enable us recover the two to three months hiatus that we had.

“And so, things are looking up, engagements are going on well, we have been able to make inroads into those conversations but what is important is the need to continue that momentum and to look to long term solutions to the Niger Delta crisis that creates the militancy that we have,” Kachikwu stated.

Possible Impact

Days before the recent bombing was carried out by the militants, NNPC had indicated that the country’s production volume, which was down to about 1.3 million barrels per day at the height of the disruptions, was beginning to come up.

The corporation stated at that time that production was averaging 1.9 million barrels and could hit 2.2 million by the second week of July, some weeks before the August prediction of Kachikwu, for production to come back up to that level.

But with the recent development, even though no official status of production level has been reported, the possibility of a production dip is palpable especially from past experience of the impact of such attacks.

The group’s activities have also, in the past, resulted in lesser gas available for power production by gas power plants. This then suggests that the nation’s gradual ramping of power generation may again be cut back.

Since February, the Avengers had religiously carried out attacks on oil installations at least on a weekly basis. If their operational mode is to be considered, their resumption of bombing of oil installations would not be a good omen for Nigeria.

They and other groups have said they were protesting against the Nigerian government, which they alleged was stealing natural resources in the Niger Delta region and refusing to develop the region.

The militants had previously indicated that they would go on with their violent campaign against oil mining in the Delta and was not interested in dialogue. They even said at a point that they wouldn’t stop their operations until Nigeria’s oil production dropped to zero.

Also, their disruptive tendencies have the potential to impact oil prices if allowed to fester, and cut Nigeria’s contribution to global oil supply.

 

  • This Day
About the Author