Experts: Nigeria Risks Shaky Return as Africa’s Top Oil Producer

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Niger Delta not Sambisa forest, IYC tells presidency
Chineme Okafor in Abuja
Nigeria may have to remain Africa’s second largest crude oil producer after Angola for now until it is able to find solutions to emerging security challenges threatening the industry in the Niger Delta, according to industry experts.

The experts said following the country’s loss of its position to Angola last week emerging trend in security breaches on export pipelines and other facilities in the region posed great setbacks to the country clawing back lost output levels in the immediate future.

They told THISDAY yesterday in Abuja that the cost and time needed to restart production from the shut-ins at affected oil facilities were considerable factors that could also keep Angola’s production above Nigeria’s for now.

Their response to the development also came on a day the Ijaw Youth Council (IYC) told the federal government that its reported plan to designate oil vandals in the Niger Delta as terrorists and deal with them like it is doing with Boko Haram terrorists was ill-mannered, stressing that the region was not Sambisa forest and so does not need such measure.

Latest data from the April Monthly Oil Market Report (MOMR) of the Organisation of Petroleum Exporting Countries (OPEC) showed that Nigeria’s crude oil production fell by 67,000 barrels per day (bpd) in March from 1.744 million bpd to 1.677mbpd, while Angola saw its oil output rise to 1.782mbpd within the same period.

The report reflects the continued shut-in of Nigeria’s popular crude oil grade Forcados following sabotage on the subsea Forcados pipeline and export terminal.
While Vice-President Yemi Osibanjo last week put the total loss per day at 250,000 barrels, Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, earlier said it was 300,000bpd.

However, one of the experts, Dr. Timothy Okon, who is the Group Chief Executive Officer of an economic think-tank, the International Institute for Petroleum, Energy Law and Policy (IIPELP), said the government would have to sort out the prevalent governance issues in the Niger Delta region to allow for a steady production level.
Okon, however, noted that other oil producers would be glad Nigeria is experiencing such production shut-ins.

 “The loss is temporary and has to do with the break in Trans Forcados line and the force majeure that had been declared. However, the issue that surrounds production losses in Nigeria is multifaceted and this particular instance has to do with militancy which is related to some issues surrounding the region and the president,” said Okon.

He further explained that: “I think anytime you lose 250,000bpd of production, it is significant especially in terms of the current price levels, and so it is important for the income of the state, and to deal with the issues immediately.

“Pipeline vandalism didn’t just start, it emanated from the failure in politics and governance in the Niger Delta, and without making excuses for criminality, I think those issues have to be tackled at ground zero level which is the interaction of the local authorities with the state authorities.”

On the remote causes of the current security challenges and how long it could take to ramp up production levels, Okon said: “They are complicated. These are issues of pipeline protection which some of them are actually rackets that the government has stepped in to stop; issues around one of the militants facing corruption charges and then there are fundamental issues facing the pipeline security system.

“It is just loss of revenue, and in an oversupplied market, your competitors are glad that you have less to bring in, but I also do think that where you have shut down a production facility, restarting usually takes some times, so if we’ve shut facility for this long, restarting takes long and cost money.”
Meanwhile, the President of IYC, Udengs Eradiri, in a phone conversation with THISDAY said recent reports that the government plans to give to pipeline vandals the kind of treatment it gives to Boko Haram terrorists was not the best way to get over pipeline vandalism in the country.

Eradiri who faulted government’s repeated claims that pipelines in the region were often broken by militants, said there was no basis for such allegation and the planned military offensive.
According to him, “The Niger Delta region is not Sambisa forest, and so the presidency cannot just declare that it would treat the people living there as terrorists.”
Eradiri also chided the government for such ‘risky’ declaration at a time it is looking for investments for the country.

“His utterance is risky especially as he goes about wooing investors to invest in the country. Any pledge he is making to the international investors are indirectly premised on the country’s oil resources which are all in the Niger Delta region.

“If he goes on with such talk about deploying the military to the region and treat its people as terrorists, he is in fact telling the investors he is courting that their investment would not be safe because such declaration could mean war on the region,” Eradiri stated.

He explained that the government has refused to understand that the issue was not about the people in the region but about its big political friends who are mostly involved in acts of vandalism.
Eradiri: “He is blaming the pipeline breaks on the militants, which of the militants is he talking about? The ones that are in the amnesty programme or the ones that are their friends. Has he even made efforts to find out who these people are? He is quick to blame the breaks on militants.”