A Review of the Nigerian Energy Industry

Nigeria loses N20bn to oil pipeline vandalism in one month

*NNPC Towers, Central Business District, Garki, Abuja.

Ike Amos

28 November 2017, Sweetcrude, Abuja — Nigeria lost N19.993 billion to sabotage and pipeline vandalism in the month of August, according to data released by the Nigerian National Petroleum Corporation, NNPC.

The NNPC, in its Monthly Financial and Operations Report for August 2017, disclosed that the loss recorded in August represented an improvement of 40.37 percent compared to N14.243 billion lost in July 2017.

Giving a breakdown of the losses in the month under review, the report stated that the NNPC recorded crude oil losses of N1.137 billion, compared to N343.385 million in July; product losses of N16.485 million, as against N406.3 million; while N18.84 billion was expended on pipeline repairs and management, compared to N13.5 billion recorded in July 2017.

The rise in the amount lost to vandalism was irrespective of a significant decline in the number of pipeline breaks recorded by the NNPC subsidiary, the Petroleum Products Market Company, PPMC.

Specifically, the report stated that the PPMC recorded 70 pipeline breaks in August 2017, dropping by 39.66 percent compared to 116 pipeline breaks in July 2017.

Out of the 70 pipeline breaks, the report said 62 pipelines were vandalised, adding that Port Harcourt – Aba pipeline accounted for 46 vandalized points, representing 74 percent of the total.

The NNPC also noted that its financial performance continued to be hampered by acts of vandalism and sabotage which had led to the continued shutdown of key export terminals.

It said, ‘The NNPC recorded a trading deficit of N5.74 billion which is relatively lower than the previous month’s deficit of N11.87 billion. This represents 53.10 percent or N6.14 billion improvement compared to the last month’s performance.

“This improved performance is mainly due to the revamping of the Forcados export terminal which enhances Nigerian Petroleum Development Company’s (NPDC) performance despite the under-performance of the downstream value chain due to high crude oil inventory and the shutdown of KRPC and PHRC during the period. Other drag to this month’s performance includes the shutdown of Trans Niger Pipeline and production shut-in at the Que Iboe terminal and Bonga Terminal.”

The NNPC disclosed that in collaboration with the Federal Government, it had continued to engage members of various host communities to stem incidences of pipeline infractions.

According to the report, some of the steps taken by the NNPC include security synergy with international oil companies (IOC) to curb oil, gas sabotage through the deployment of a structured and holistic security apparatus to tackle incidence of oil and gas infrastructure sabotage in the country.

“This is in addition to robust community security engagement mechanism where members of oil-bearing communities are engaged to secure the oil facilities within their domain. The strategy was paying off with a drastic drop in oil and gas facility breaches,” the report said.

In general, the report stated that the NNPC recorded domestic crude oil and gas receipt of N180.76 billion, consisting of N13.65 billion from the domestic gas; N166.90 billion from domestic crude oil and N0.21 billion from other receipts.

It noted that out of the amount, the sum of N83.76 billion was transferred to Joint Venture Cash Call (JVCC) being a first line charge, to guarantee continuous flow of revenue stream to Federation Account, while N45.10 billion was transferred to the Federation Account.

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