The Federal Government’s oil revenues have been slashed by N11.52 billion ($32 million) used for repairing the 87 kilometers crude oil pipeline in the Niger Delta in just 60 days, according to a report.
This financial burden largely bore by the Federal Government through the Nigerian National Petroleum Corporation (NNPC), according to information, was distinct from over $800 million loss to breaches of contracts on surveillance and protection of the same strategic 87-kilometre Trans Forcados Pipeline (TFP).
A document of the Federal Ministry of Petroleum Resources sighted by newsmen, showed that the activities of pipeline vandals have complicated the free flow of petroleum products and crude supply in the entire pipeline system.
This, the document stated, led to a colossal cost of over N174.57 billion in product losses and repairs of products pipelines within the last 10 years.
No part of the over 5, 000 kilometers pipeline network in the country is spared, the document stated.
“Though the combined working capacity of all the 21 Pipelines and Product Marketing Company, PPMC, depots nationwide, excluding holding capacities at the refineries, can provide products sufficiency of up to 32 days for petrol, 65 days for kerosene and 42 days for diesel, the activities of the pipeline vandals have made it impossible for the facilities to function at full blast,” the NNPC said.
Backed with data, the document stated that a total of 16,083 pipeline breaks were recorded within the last 10 years, adding that while 398 pipeline breaks representing 2.4 per cent were due to ruptures, the activities of unpatriotic vandals accounted for 15,685 breaks, which translates to about 97.5 per cent of the total number of cases.
According to records, the System 2E/2EX, which conveys products from the Port Harcourt refinery to Aba-Enugu-Makurdi depots onwards to Yola-Enugu-Auchi, appears to be the haven of pipeline vandalism in the country particularly the Port Harcourt-Aba/Isiala-Ngwa axis.
In all, 8,105 breaks were recorded along the system 2E within the period representing about 50.3 percent of the total number of petroleum products pipeline breaks in the country. The attacks left the NNPC with a cost of N78.15 billion in products loses and pipeline repairs.
The System 2A product pipeline route, which conveys products from Warri-Benin-Suleja/Ore depots ranks second on the scale of pipeline break points with 3,259 cases representing about 20.2 percent of the total volume of products pipeline breaks in Nigeria. The figure also came with a loss of over N20.39 billion in products and pipeline repairs.
The System 2B, which carries products from the Atlas Cove-Mosimi-Satelite-Ibadan-Ilorin depots recorded 2,440 breaks leading to a loss of over N73.6 billion in products and pipeline repairs.
Stating that this led to award of $800 million surveillance contracts on Trans Forcados Pipeline, the NNPC added that incessant attacks on the TFP and a breach of the contract on surveillance had necessitated a new set of contracts
The $800 million loss also affected all the stakeholders in the matrix, which includes: NNPC, its Joint Venture partners and the Nigerian Federation.
Proffering what it called “informed perspective” on the fresh award of oil infrastructure surveillance contract to an indigenous firm, Ocean Marine Solutions for the protection of the strategic 87-kilometre Trans Forcados Pipeline (TFP),” the NNPC explained that the decision to assign the TFP surveillance package to Ocean Marine Solutions was reached after consideration of huge losses on TFP and rigorous appraisal of the company’s impressive record of performance on the Bonny-Port Harcourt and Warri-Escravos crude evacuation lines.
“In 2018, we lost over 60 days of production due to incessant breaches on the TFP despite having a security contract in place,” the NNPC said in a detailed press release by its Group General Manager, Group Public Affairs Division, Ndu Ughamadu.
“In terms of production numbers, this translates to over 11 million barrels of crude oil, which on face value equates to over $800m in lost revenue to all the stakeholders in the matrix which includes: NNPC, its Joint Venture partners and the Nigerian Federation.
“After we lost over 60 days of production, under the old contract, the NNPC and its stakeholders (in 2018) spent over $32m on repairs, protection of the TFP and clean-up. This is a verifiable fact, which makes the new deal not only better but far more rewarding to all stakeholders.”
The Corporation clarified that the new contract, which requires the contractor to pay for any damage to any inch of pipeline under its watch, offers immeasurable benefits to the NNPC, its Joint Venture partners, the host communities and the entire Federation.
According to the NNPC, faced with massive losses in projected revenue, stakeholders in the TFP, which currently account for daily production throughput of over 250, 000 barrels of crude oil were unanimous in the decision to seek better ways of ensuring reliability and availability of the line.