Sunday, February 12, 2012

Nigeria loses 4.8mb oil to bunkering in Nembe trunkline

Business Day
7 February 2012

More than 50 rouge oil bunkering  gangs ravaging the Cawthone Channel, between Rivers and Bayelsa states, known as the Nembe Creek Trunkline, have so far wasted 4.8 million barrels of Nigeria’s oil, about double the nation’s two days production capacity, by stealing and spillage arising from theft. The value of this volume of crude is about $480 million, going by yesterday’s crude oil price of $100 per barrel.

This, along with renewed bomb attacks on the nation’s oil installations, by disgruntled splinter elements of the ethnic militia group, the Movement for the Emancipation of the Niger Delta (MEND) is creating anxiety in the local and international oil market.

The said ethnic militia splinter group is thought to be carrying out bombings, in reaction to sentiments arising from the gubernatorial contest in Bayelsa State.

The managing director and country chair of Shell Petroleum Company (SPDC), Mutiu Sunmonu, in a grave voice, reflected the new danger, in an interview in his residence in Port Harcourt, Monday afternoon, saying he was worried by the new development, not just as a Shell CEO, but also as a Nigerian who knows the great harm being done to the economy and the environment.

The havoc, according to SPDC has threatened export of 140,000 barrels of oil per day from the oil-rich Rivers/Bayelsa sea axis, where illegal refining gangs have set up thriving oil theft businesses which  appear to have international connivance.SPDC said some 70,000 barrels of oil per day, were deferred in the December leak which took a month to repair because of the swampy terrain.

Journalists were shown in aerial surveys, boats large enough to contain 40,000 litres, which conveyed stolen crude to vessels in deeper waters which in turn conveyed the liquid loot to ships at sea, to sail away to needy buyers in far-flung countries, to fuel a thriving and stubborn international crude ring

Sunmonu told newsmen that the Nembe Creek Trunkline (NCTL) was damaged during the militancy days (2007) and was repaired 16 months ago. On December 24, 2011, the line was shut down because of leaks caused by two failed bunkering points, only to discover 50 different theft-valves for some 17 illegal bunkering points found within a distance of 3.8km.

Sunmonu said the daily output of the line, put at 140,000 barrels, was apart from third party production, which was transported for export at Bonny Terminal. He made it clear that the industry would hardly survive under the present onslaught, saying it was bigger than previous dangers of shut-in and suspension of production.

This new attack forces SPDC to carry out multiple facility trips due to pressure drops from illegal off-take. “This is more than Nigeria losing money from lost production, costly repairs and clean-up and facility downtime. It is a sad story of consistent pollution of farm lands and rivers by people who are not bothered by the effects of their actions on the environment.”

Inside experts in SPDC said the old 24-inch line was replaced with a new 34 inch line between 2007 and 2010 due to integrity issues from militancy attacks. Apparently, the crude oil thieves took advantage of the repair window to install more bunkering points and fix hoses to take crude to sea vessels and illegal refineries. The vessels transport the stolen crude to waiting motherships, while the refined product is sold locally.

BusinessDay, with the helicopter overflights team Monday, (February 6, 2012) was shown what appeared to be thriving crude theft activities at Tora Manifold, Santa Barbara River , SEGO Manfiold, Awoba, Krakrama, Bille, Cawthorne Channel and Alakiri, all in Rivers and Bayelsa states. Some other connections were made directly to wellheads. Insiders said the theft was more open and massive at night, when SPDC would have stopped work.

Sunmonu said: “It is difficult to sustain production in the circumstance, as we have to shut down when a facility trips and fix the cause before restarting. This happened three times just between the January 26 and 30, 2012. We have increased surveillance of the route, so we can detect crude theft activities and respond early to spills”.

What is urgently needed, he said, is “Robust intervention at federal, state and local government levels. We need increased patrols of creeks and waterways, removal of illegal off-take points and dismantling of illegal refineries.” Sources said more than 75 per cent of all oil spill incidents and more than 70 per cent of all oil spilled from SPDC facilities in the Niger Delta between 2006 and 2010 were caused by sabotage, theft and illegal refining.

BusinessDay gathered that the joint task force (Operation Polo) has attacked and dismantled some refining points, but a source said because it is cheap to set up new ones, these spring up as fast as they were attacked. The criminality and recklessness involved in illegal bunkering and refining have also raised concerns about prospects of militarisation of the deep communities.

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