Serial Militant Attacks Affecting Nigeria's Oil Production Capacity

Nigeria is said to be currently losing over N20billion [Naira] daily due to the renewed onslaught.  Recent serial attacks by MEND and other militant groups on oil facilities has punctured the country's oil production capacity and would hinder its drive to grow its oil reserves to 40 billion in 2010.

The Movement for the Emancipation of the Niger Delta (MEND) in the last three months extended its fight against the federal government to the oil companies.

MEND had recently attacked Afremo B oil platform of Shell Petroleum Development Company (SPDC) in retaliation for the alleged invasion of an Ijaw community in Warri South-west Local Government Area of Delta State by the military Joint Task Force (JTF) penultimate Thursday.

Mend had three Sundays back attacked Shell pipelines at Adamakiri and Kula, both in Rivers State in the Eastern Niger Delta.

It said it had also attacked the Afremo offshore oilfields, which it believed were operated by Shell, and which it said were 14 miles (23 kilometers) from an export terminal through which oil from Shell's Forcados fields was pumped.

The attacks are the first to strike Rivers State, the Easternmost of the three main states in the Niger Delta, since the militants launched their latest campaign of sabotage following a military offensive in the western delta last month.

Persistent attacks by Mend over the past three years have cut oil output in the OPEC member, the world's eighth biggest oil exporter, to less than two thirds of its installed capacity of 3 million barrels per day.

MEND first burst onto the scene in 2006, knocking out more than a quarter of Nigeria's oil output -then around 2.4 million bpd -in a matter of weeks.

Italian oil giant, Agip had said that a pipeline attack in Bayelsa State had halted production of around 33,000 barrels of oil and 2 million cubic meters of gas per day.

Similarly, Shell said some oil production had been halted following an attack on the Trans Ramos pipeline penultimate Wednesday at Aghoro-2 community in Bayelsa State.

Chevron shut down its operations around Delta State after Mend's first attack in its latest campaign on 24 May, halting around 100,000 bpd.
MEND had dubbed its offensive "Hurricane Piper Alpha" after the North Sea oil platform that blew up in July 1998 and was the worst offshore oil disaster, and warned that it might attack deep-water facilities off the Nigerian coast.

In all, about 132 oil fields were said to have been shut while the country is currently losing 1.9barrel of crude oil per day. Its current production is within the region of 1.1 barrel per day of crude and thus puncturing the country's quest to realize 4million barrel of crude oil by 2010.

Recently, the Department of Petroleum Resources released the performance chart of the nation's downstream and upstream industry for the first quarter of the year, January to March.

According to it, the nation's average daily production rate was 2,080,132 bopd and 2,o24,418bopd for the months of January and February 2009.

It said 174 fields were on production while 127 remained shut in. The agency also said the non-reconciled production deferment for January and February 2009 was 1,101,488;translating to 475,705bopd deferred in January while 625,783bopd was deferred in February.

The agency explained that the large deferments figure resulted from militants activities and operational hitches. Shell Petroleum Development Company, it said recorded the highest volume of deferment of 434,280bopd due to insecurity and gas flaring restriction while Mobil lost 87,752bopd due to attack in QIT.

According to the agency, during the period under review, the average capacity utilization of the nation's refineries was a paltry 18.9percent.
Nigeria's output, according to the Minister of State for Petroleum Resources, Odein Ajumogobia, had dropped drastically.

"It is something we are all sad about. Nigeria has a production capacity of 3.2 million barrels per day. Today, we are down to about less than half of that in terms of production, with over one million barrels per day down in production shut-ins," the minister lamented.

Analysts said the situation had cost the country its position as the seventh largest supplier of hydrocarbon to the United States of America, with the latest disclosure by the United States Energy Department Africa and Middle East Affairs, George Parson, that Angola was now the fifth supplier of hydrocarbon to the US, while Nigeria had dropped to number eight from its seventh position.

The period after the first quarter witnessed a large scale attacks on oil installations, kidnapping of oil workers, withdrawal of oil workers from field and the deployment of soldiers to the zone, 12 of whom were killed in the fracas.

The latter's retaliation resulted in some "clean up" of villages in Gbaramatu and suburbs in the Niger Delta.

That is why when NNPC [Nigerian National Petroleum Corporation] recently admitted that it had shut down Warri and Port Harcourt refineries, no one was surprised.

The NNPC also said the pipeline that supplied Kaduna refinery was also vandalized indicating that the refinery would also soon be short of crude supplies for refining.

Besides, it is predicted in some circles that with the 1.1 current production, the nation would soon shiver.

Group Managing Director of NNPC, Mohammed Barkindo said the average production output from its Joint Venture Companies stood at barely 1.3million barrels per day, stressing that the Port Harcourt and Warri refineries had run out of crude and were closed due to the damages on the Nembe-Port Harcourt and Escravos-Chanomi pipelines.

He said, "Yes, what we currently have will last for 15 days and after that it will finish. The consequence is that no refining would take place and no product would be available from Kaduna because the pipeline that would have supplied crude to Kaduna was vandalized and until it is repaired, we cannot pump crude."

It is evident at this juncture that energy crisis looms in the country.

An unnamed official of a Petroleum Marketing Company told Sunday Trust that the volume of importation would increase geometrically due to the development, even as he expressed reservation on whether marketers would want to partake in importation following the undefined stand of the federal government on deregulation.

He said marketers were still in a fuss over some money owed them under the Petroleum Support Fund.

"I think this is not a favourable period for Nigeria if you ask me. With the crisis, the nation cannot even gain anything as a result of the rising price of crude at the international market. What we will gain at that end would doubly exit itself due to the attacks. And I'm not sure whether marketers would be eager to import product now," he stated.

Speaking on the implication of the continuous strikes on oil installations, President of the National Association of Petroleum Explorationists (NAPE), Victor Agbe-Davies said the development was capable of truncating the nation's quest to grow.

BBC Monitoring. Copyright BBC.