Oil Companies Shut down Fields for 180 Days Annually

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Chineme Okafor
A former Director of the Department of Petroleum Resources (DPR) and Lead Consultant to the National Assembly on the Petroleum Industry Bill (PIB), Mr. Osten Olorunsola has disclosed that oil and gas companies operating in the country shut down producing fields for up to 180 days yearly as a result of the operational challenges in the Niger Delta.

Speaking yesterday at a roundtable meeting on the PIB organised by the Nigeria Natural Resource Charter (NNRC) and Media Initiative on Transparency in Extractive Industries (MITEI) in Abuja, Olorunsola, explained that Nigeria’s situation was unlike what was obtained in other oil producing destinations across the world.

Olorunsola, who is a member of the Expert Advisory Panel (EAP) of the NNRC, stated in a presentation he made at the meeting that most oil producing countries record just about 30 and 45 days of production downtime, and produce oil for an upward of about 330 days.

This, he explained was not the case in Nigeria, where he noted that frequent pipeline breakages and uncertainties on security of assets were responsible for the lengthy operational downtime the country currently records.
“You can imagine being in business and you can’t do anything for two years, and you have staff and you just pay them salaries for two years, you must be a generous Non-governmental organisation (NGO).

“In terms of real operational shutdowns, we are seeing something between 80 and 160 days, which is not good,” Olorunsola said.
He further explained: “There are operations around the world where productions days, you can almost guarantee 330 days, you can’t do all through the year because you have scheduled maintenance and all that, but usually it is not more than 30 and 45 days, anything more than that is not good.”
He indicated that there was a time the Trans Forcados oil pipeline was down for two years, shutting in production from oil fields.
He also stated that in 2018 alone, some trunklines were shut down for up to 84 days, thus impeding oil production.

He also spoke about the level of works done so far on the various bills created from the PIB, all of which include the Petroleum Industry Governance Bill (PIGB), Petroleum Industry Host Community Bill (PIHCB), Petroleum Industry Fiscal Bill (PIFB) and Petroleum Industry Administration Bill (PIAB).
On the PIGB, he explained the bill which is now reportedly with President Muhammadu Buhari, for assent on, has in it a philosophy that insists that holders of upstream oil block licences would either drill their oil blocks immediately or drop them for fresh awards.
Olorunsola, also stated that the 1993 royalty concession given to operators in the country’s deepwater operations should not have been structured the way it was structured.

According to him, it should have been a suspended royalty structure and not the zero royalty that was granted to operators in deepwater oil operations.
Further, he noted that the National Assembly has created a fifth bill from the PIB, to address issues of oil revenue management, but that the bill has been largely held back by the provisions of Nigeria’s constitution on revenue management.
“A lot of things around sharing money in our country is guided by the constitution. You can’t write any bill that will override the constitution and this is the issue. There are certain things we wanted to put in this bill, but there was the talk that we should go and cure that in the constitution and then come back.
“Countries around the world have revenue management laws, and we just have to do it because it is the right thing to do,” he added.