Evacuation Constraint Has Halted Oil Production, Storage Tanks Now Full to Brim, PENGASSAN Laments
By Peter Uzoho:
In a fresh revelation, oil workers under the aegis of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) have declared that oil companies have been forced to stop production due to evacuation challenge and the running out of storage capacity resulting from oil theft and pipeline destruction.The revelation came at a time Nigeria was in dire need of growing its oil production in order to benefit from the current high crude oil price hovering around $100 per barrel as well as to boost the nation’s foreign exchange earnings and the economy.
The Chairman of PENGASSAN, Lagos Zone, which is made up of the six South-west states and Kwara State, Mr. Eyam Abeng, told THISDAY during a phone chat while giving update on the union’s nationwide rally against oil theft, that, “production can no longer continue because tanks are filled to the brim.”Warning that oil thieves and vandals might soon migrate from their Niger Delta base to Lagos State, which is now an oil producing state, Abeng, however, blamed government’s failure to punish identified perpetrators of oil theft and pipeline vandals through consequence management and enforcement of intelligence reports for the persistent of the criminal activity.
PENGASSAN is currently observing its nationwide rally against oil theft and pipeline vandalisation, which it started last week, to prevail on government at all levels and other relevant stakeholders to urgently address the menace.The union through their National President, Mr. Festus Osifo, had also given the federal government 30 days ultimatum to tackle oil theft and pipeline vandalisation challenge or risk withdrawal of their services through an industrial action by oil workers.Nigeria’s performance in oil production has continued to worsen on month-on-month basis, with the poorest under-production in 40 years recorded in August where the country produced below one million barrels per day against over 1.8 million bpd allocated to the country for the month by the Organisation of Petroleum Exporting Countries (OPEC).
According to recent data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), oil production in August 2022 fell to 972,394 bpd against 1.826 bpd OPEC quota.The deficit standing around 853,606 bpd, represented more than 10 per cent drop compared to the July 2022 production of 1.083 bpd.The last time Nigeria produced that low amount of oil was in 1983, about 40 years ago, when average production stood at 675,000 bpd, tradingeconomics.com, a reservoir of global industry information, has shown.
Worried by the multiplicity of challenges bedeviling the nation’s oil and gas industry and economy,including oil theft, underproduction, high production cost, insecurity, ageing and decaying infrastructure as well as sabotage of critical oil infrastructure, NUPRC had recently called for the declaration of emergency on the industry.
“The imperative is on Nigeria to declare some sort of emergency for the oil and gas industry. Aside energy transition, other issues bedevil our industry — such as oil theft, security, ageing and decaying infrastructure, amongst others. All these contribute to high production costs, which must be minimised,” Chief Executive Officer of NUPRC, Mr. Gbenga Komolafe had stated.
However, in the chat with THISDAY, the Lagos Zonal chairman of PENGASSAN, who confirmed that oil companies now adopt non-traditional means to evacuate their product as a way of survival, since the traditional oil pipelines are no more safe for the movement of their products to the export terminals.Most of the major oil transportation facilities including the Shell-run Trans- Forcados Pipeline (TFP) with capacity of 258,000 barrels bpd and the 180,000 bpd Trans Niger Pipeline (TNP) have been shut down for months due to constant attacks by vandals and oil thieves.
Abeng said the burden of oil theft and pipeline vandalisation were impacting heavily on the operating expenditure (OPEX) of the oil producing companies, pointing out that the situation had led to the technical cost per barrel becoming so high due to the additional unsolicited costs of fixing sabotaged infrastructure.He said, “Life is all about survival. If the pipeline that is the traditional means of exporting your crude from the wellhead to terminal becomes impassable, you have to survive, and one of the ways of survival is that, you use any available means of conveying your crude, either through trucks, through badges, through gallons or any other means as long as you can convey the product from the tank to the terminal and you sell.
“The reality before us is this: production today can no longer continue because tanks are filled to the brim. And if you do not pay your bills, you run out of business. But it has an impact on the OPEX cost, that is why the technical cost per barrel is becoming so high because of this additional unsolicited costs.”He said the union, having realised the current status of Lagos, as an oil producing state, was engaging the state government and the legislators through the PENGASSAN top hierarchy to draw their attention to the oil theft menace, warning that oil thieves and pipeline vandals might soon migrate to Lagos if no measures were taken to stamp out the criminality.
“So, if the criminality of oil theft in the Niger Delta is not stamped out, it can migrate to affecting the production of crude in Lagos State. We also have (refined petroleum products) pipelines within Mosimi that run across the Lagos axis and today, the Nigerian National Petroleum Company (NNPC) cannot pump petrol through the pipeline because they are daily punctured,” he stated.
Describing oil theft and pipeline vandalisation as an “organised crime”, Abeng, who explained that the activity was not done by lazy Nigerian youth, stated that it was an operation heavily funded and driven by high sophisticated tools and technology.He maintained that the perpetrators deliberately go into the illegal operation because of their selfish greed, noting that PENGASSAN cannot fold its hands at this material point in time.
The PENGASSAN chairman, however, blamed government’s failure to punish identified perpetrators of oil theft and pipeline vandalisation through consequence management and enforcement of intelligence reports for the persistent criminal activity.According to him, PENGASSAN as an institution had laid out sustainable and achievable milestones towards resolving this menace, saying one of such milestones was engagement with the community as the community is the first victim and the first beneficiary.Abeng stated that the second solution put forward by the union was roundtable discussion by all stakeholders including the security agencies, traditional institutions, pressure groups and government.
He further said the third solution proffered by the oil workers to address the challenge was the application of consequence management where identified perpetrators are punished.He said the body had observed that the failure of government to punish security agents, who committed infractions when deployed to guard oil assets had emboldened them and led to the continuation of the criminal activity.
According to Abeng, instead of punishing the culprits out of consequence management, they are just transferred to other locations and another batch deployed to replace them, noting that when there is no consequence management, there is this notion that it’s business as usual.“So, PENGASSAN is canvassing for consequence management. Wherever there is infraction, investigate it, give everybody a fair hearing, the ones found culpable for it, let them be punished. Once there is consequence management, this trend will stop,” he noted.He said the fourth solution proffered by PENGASSAN was the adoption of technology, insisting that the industry must use technology in such a way that from the wellhead to the terminal, the product is being seen in real-time.
He maintained that the industry was vulnerable in the area of enforcement of intelligence during the breaking of pipeline and stealing of product.On the rally by the union, Abeng said the Lagos Zone of PENGASSAN was in full compliance and was ready to even carry out the 30 days notice given for the withdrawal of their service whenever their national president gives the directive.
He added that the Nigerian economy was bleeding as a result of the oil theft menace and was impacting on the federation’s revenue, warning that if there was no improvement, there would be no money to be shared by the federal, state and local governments in October.With the capacity of producing 2.5 million bpd, Abeng lamented that Nigeria was currently struggling to produce one million barrels, not for lack of capacity to produce but because the oil is stolen at every point in time and thereby impacting the federation’s account sharing done every month.
