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As Brent crude, the benchmark for Nigeria crude oil, keeps rising, the country is failing to take maximum advantage of this by allowing some detraction that has made it impossible for her to export about 400,000 barrels per day.
The losses incurred on account of repair work carried out on trans forcado trunk line which resulted in the loss of about 250,000 barrels per day while the force majeure placed on the 190,0000 barrels per day trans Niger pipeline that ferries crude to Bonny terminal, the largest oil terminal in the country resulted in the shut in.
The recent trans forcados repair work started after a protest by some communities which kicked against the removal of a certain service company. After the repair works was fixed, Shell Petroleum Development Company reported an oil spill on Trans Ramos pipeline which is also linked to the forcado pipeline. Fixing this repair may require shutting down the pipeline.
The government should be concerned that these two incidents are happening in quick succession and take pre-empts measures so that the country does not lose out this time around in terms of revenue that may accrue from crude now that the price is on the rise again.
By all standards this is a lot of money especially when the country which generates a bulk of its revenue from oil but in now in dire need of money to fix a lot of things. The government should be careful not allow this to be escalated because if does one may suggest that there is sabotage in the offing and it not be allowed this to happened because of the obvious implications to the economy.
After the unfortunate blown up of the trans forcado pipeline which kept the pipeline out of service for about a year as Nigeria loses revenue estimated to be about $3 billion; it was assumed that the government would have been more proactive rather than reactive to avoid this type of situation again. Because allowing vandals to temper with the pipelines at this material time would be another unacceptable to Nigerians.
Aside the fact that the government would lose revenue a good number of people may lose jobs because a lot of companies that push their crude oil through the pipelines would lay off their staff because they would not be able to evacuate their product which would have earn them some money to pay salaries. What this would mean is that the armies of jobless Nigerians would rise again. There is also the environment implication of having crude spill on the right of way is huge.
The recent incident where by suddenly there was repairs works on Tran’s forcado which led to the pipeline to be out for almost two week is suspicious. This happened a few day after a group of communities protested that the contract for the surveillance of the pipeline was taken away by Heritage oil, this was closely followed by another oil spill attributed to leakage from the trans Ramo pipeline.
Proper dialogue should be held among the communities with a robust trust building process that would enhance confidence and obliterate mistrust so that the communities would be able to partner with the government on issue of securing the pipelines. It is better this way rather using military might that may further worsen the crisis. Going back to the situation whereby the country lost about a million barrels of oil a day as it was in 2016 to willful destruction of the pipeline which made the country to start pleading with Organisation of Petroleum Exporting Countries (OPEC) for understanding of our situation is not acceptable.
It would be recalled that the NBS had last Monday released its latest GDP data, which showed that the slight drop in growth from 2.11 per cent year-on-year in the final quarter of 2017 to 1.95 percent in the first quarter of this year, was the first time that the country was recording a slowdown in economic growth since it pulled out of recession last year. Industry watchers point out that despite efforts by the government to boost the non-oil sector, it continues to struggle.
Indeed, the 1.95 per cent growth recorded in Q1 2018 was largely due to higher oil prices. According to the NBS, the oil sector grew 14.77 per cent in the period, higher than the non-oil sector, which rose 0.76 percent between January and March.
Oil production stood at 2 million barrels per day in the quarter, up from 1.95 million in the previous quarter, the NBS said. Last week the National Assembly passed a record N9.12 trillion budget for 2018 as part of ongoing efforts by the President Muhammadu Buhari led-administration to diversify the economy away from oil by boosting the non-oil sector.
Olusola Bello
