• As  Shell suspends export of 150,000 bpd over vandalism

Against the backdrop of supply disruptions in the Niger Delta region, refineries from India and the United States are backing away from buying Nigerian oil amid heightened uncertainty about deliveries.

Their reluctance to buy is limiting the prices Nigeria can get for its oil even as there is less of it, another hit to the finances of a country battling its worst economic crisis in decades, Reuters reported on Wednesday.

The PUNCH had exclusively reported last week that the country risked losing some of its traditional buyers to rival producers such as Iran and Saudi Arabia following the spate of production disruptions largely caused by the recent upsurge in militant attacks on oil infrastructure in the Niger Delta.

A group calling itself the Niger Delta Avengers has staged a number of attacks on installations belonging to Shell, Eni and Chevron, pushing output in what is usually Africa’s largest crude exporter down past 20-year lows last month.

Some oil facilities have clawed back output, but the militant attacks have continued and the group has vowed to bring Nigerian production to zero.

“Not everybody wants to be caught up in that, so they will avoid it,” the Managing Director of PetroMatrix in Switzerland, Olivier Jakob, said, adding, “The refineries will walk away from it.”

India’s Hindustan Petroleum Corporation Limited was forced last month to cancel a vessel it chartered to carry two million barrels of West African crude due to the Qua Iboe force majeure.

The state-run Indian Oil Corporation Limited, a major buyer of Nigerian grades over the past year, has stated in its recent tenders that it would not take grades under force majeure.

Qua Iboe, Nigeria’s largest crude oil stream, remained off the list in its latest tender, according to a document seen by Reuters, an extremely unusual development in its requests for sweet crude.

Indonesia’s Pertamina, another frequent buyer, also chose not to buy Nigerian grades in its recent tenders, favouring Congolese Coco, Angolan Girassol and Saharan Blend from Algeria instead.

Traders said Pertamina had shifted its preferences since the violence and uncertainty in Nigeria escalated, although the Senior Vice-President, ISC Pertamina, Daniel Purba, told Reuters that the firm was “monitoring” Nigeria, but “currently it’s still not affecting crude purchasing.”

Four of Nigeria’s oil grades, including the largest stream, Qua Iboe, have in the past month been under force majeure, a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances.

ExxonMobil, which declared force majeure on Qua Iboe in May due to an accident, lifted the declaration last week, but the unpredictability is too much for some buyers.

The reduced demand means Nigeria is not benefiting as much as others from a rebound in Brent crude prices, which is partly driven by its own oil outages.

In the meanwhile, exportation of about 150,000 barrels of Bonny Light, the nation’s premium crude oil grade has been suspended following the discovery of a leakage in the Trans Niger Pipeline. The leakage discovered on Wednesday has affected oil export to the global market. Consequently, Shell Petroleum Development Company, SPDC, the owners of the facility has shut it for maintenance.

The company confirmed that the pipeline has been shut down due to a leak but declined to comment further. Investigations showed that the shutdown comes just as repairs were completed on the Nembe Creek Trunk Line that also moves the major export grade.

The company, which has suffered several attacks in recent times in the hands of the Niger Delta Avengers, NDA, had to declare Force majeure on Bonny Light exports after the NCTL was closed in early May. NDA, which has claimed a string of attacks on oil pipelines in the Niger Delta, said yesterday the region might break away.

“We want our resources back to restore the essence of human life in our region for generations to come because Nigeria has failed to do that,” the group said on its website. “The world should not wait until we go the (way of) Sudan,” it said, referring to South Sudan’s secession in 2011.

Investigations showed that the country’s export that hovered at about 2.0 million bpd at the beginning of 2016 has dropped to 700, 000 bpd as a result of repeated attacks.

Shell disclosed in its latest report that security in the Niger Delta remains a major concern with persisting incidents of criminality, threats from militant elements, violent host community agitations and most recently, offshore piracy. The company indicated that crude oil theft and related damage to oil and gas facilities in particular continue to present significant security concerns. It stated that oil and gas operations in parts of the region are severely impacted by these criminal activities. The company noted that armed robbery and kidnapping for ransom are also ongoing threats.

“The safety of staff and contractors in Nigeria remains a top priority – Shell Nigeria closely monitors the security situation and continues to take all necessary measures to ensure safety and continues to actively implement the Voluntary Principles of Security and Human Rights, VPSHR. “Theft of crude oil on the pipeline network was 25,000 barrels of oil per day (bbl/d) in 2015, which is less than the 37,000 bbl/d in 2014. The number of sabotage-related spills declined to 93 incidents compared with 139 in 2014.

“In 2015, the decrease in theft and spills was also in part due to divestments in the Niger Delta. However, theft and sabotage are still the cause of 85 per cent of spills from SPDC JV pipelines. “A key priority for Shell globally is to achieve the goal of no spills. Regrettably, in addition to spills caused by criminal activities, there were 16 operational spills of more than 100kg in volume from SCiN facilities during 2015.

This number is less than the 38 spills in 2014, partly due to divestments but also reflecting continued progress on preventing operational spills. “The total volume of oil spilled in operational incidents also fell to 0.2 thousand tonnes from 0.3 thousand tonnes in 2014,” it added.

Meanwhile, Commissioner of Police in Ogun State, Abdul-Majid Ali yesterday warned that pipeline vandalism in the Arepo axis of the state could snowball into insurgency. Ali raised the alarm, while speaking during the grand finale of the one-week-long Police Community Relations Committee, PCRC, programmes which came to an end yesterday in Abeokuta, the state capital. The commisswho called for concerted efforts towards warding off the emerging security threat posed to the state, hinted that the vandals are now colluding with suspected militants to unleash mayhem on innocent residents of Arepo.

He recalled that many lives, including that of officers of Nigerian National Petroleum Corporation, NNPC, and Department of State Services, DSS, have been lost in some of the attacks in the area.
Ali, however, expressed the determination of the police to work with other security agencies towards reducing crime to the barest minimum in the area.

While emphasising that the police was not relenting on its efforts, Ali further stated that the governor of the state, Ibikunle Amosun had called for security meeting with all security agencies for which an update of the realities of things in Arepo were made available to him.
“That place is turning into a lawless area to the extent that people are being scared away from their houses. So, action has to be taken,” he said.

Ali expressed optimism that with the support of PCRC and other stakeholders, the state police command would effectively combat armed robbery, cultism, kidnapping and other crimes.
Speaking with reporters on the abducted wife and daughter of the former Deputy Speaker of the state House of Assembly, Dr Tokunbo Oshin, the commissioner stated that the police command was closing up on the suspected kidnappers.

Oshin’s wife, Bola, who is the Director of Information in Odogbolu Local Government, and his 15-year-old daughter, Afolabi, were kidnapped on Thursday, last week, in Ijebu-Ode.
Governor Amosun had also reportedly made necessary contacts with the police and DSS towards ensuring the rescue of the ex-lawmaker’s wife and daughter.

Upshot with additional report from National Mirror