Barges and smaller vessels used to transport crude are becoming an increasingly common sight at the heart of creeks and swamps of the Niger Delta, the home of Nigeria’s oil industry.
These vessels, once a secondary expensive option for moving oil, are growing as domestic producers turn to barges to take tens of thousands of barrels at a time directly from wellheads to alternative terminals, according to interviews with executives and industry participants.
Indigenous producers that control the majority of onshore output from Seplat and Shoreline Energy to Neste Oil and Niger Delta Petroleum exposed to the Eastern Delta have endured more challenges, particularly from evacuation.
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“The number of companies that have had to resort to barging is amazing,” said one local oil producer.
“They’re barging because of the lack of trust and confidence in the pipelines, and this is because of the leakage.”
Compared with using a pipeline, volumes are smaller and the rate of loading is twice as long. Barging is four times more costly, bears more environmental risks and transporting more crude by vessels might make them prone to militant targets, analysts say.
Another oil executive said, “For us, we are looking at about $18 to $20 a barrel in terms of barging costs. It’s very expensive. Whereas, if you are going through a pipeline, it’s a fraction of that, and that eats into what the government gets by way of taxes at the end of the day.”
BusinessDay findings showed losses along the export system (Bonny & Brass and their associated infrastructure) have been higher (10-20 percent) compared to losses in the Western Delta terminals (Forcados & Escravos), which have averaged (1-10 percent) in 2024.
“Aside from the losses due to crude theft and sabotage, the aging legacy export lines exacerbate the situation due to infrastructure downtime (all of which are operating well beyond their shelf life of 20-30 years),” Welligence Intelligence, a global market intelligence firm focused on the upstream oil and gas sector, said.
Companies have been aggressively exploring other alternative export options.
Analysts at Welligence Intelligence said trucking/barging has been used as a stopgap, and although it is very expensive (about 4-5× pipeline costs), “it has helped mitigate losses and reduce reliance on traditional export lines.”
“But barging is limited to small quantities and is not sustainable in the long term,” analysts at Welligence Intelligence said.
Eroton (partner in OML 18) had initially planned to progress a new dedicated export pipeline called the Alternative Crude Oil Evacuation System (ACOES) as a long-term solution.
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“However, the project has experienced significant delays, and timing for start-up remains uncertain,” according to Welligence Intelligence.
Similarly, Aiteo (operator of OML 29) commissioned the Nembe oil terminal in 2023.
The independent has stepped up its work programme since the start-up of the new terminal and its annual production has been up by over 50 percent.
A BusinessDay survey showed the cost of oil production per barrel of $48.71 ranks Nigeria among the countries with the highest cost of producing crude oil globally.
For instance, Saudi Arabia has some of the lowest production costs in the world, with estimates ranging from $2 to $8 per barrel. The country benefits from vast oil fields and low extraction costs.
Iran has relatively lower production costs, estimated to be around $10 to $15 per barrel. However, the country has faced challenges due to economic sanctions.
In Brazil, the country’s pre-salt oil costs roughly $35/barrel to produce, according to Schreiner Parker at consultancy Rystad Energy.
Oil theft
Nigeria is one of Africa’s leading oil exporters. But the industrial-scale oil theft has posed a major threat to oil companies, communities and the wider economy.
Oil theft costs Nigeria millions of dollars each month. About $23bn in oil revenue was lost in 2022 – one of the highest in recent years.
Oil export is Nigeria’s mainstay as crude production averaged 1.8 million barrels per day compared in November last year with 1.3 million (bpd) in March, though the country can export close to 2 million bpd.
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Mele Kyari, group chief executive officer of Nigerian National Petroleum Company, has attributed the increased production to improved security measures and the support of joint venture partners.
“We have reached a new peak in production that we haven’t seen in the last three years. This is related to the sustained efforts by the armed forces and other security agencies to protect our critical assets,” Kyari said in Nigeria’s capital, Abuja.
