Nigeria loses N2.36bn daily as Shell shuts down pipeline

NIGERIA’s daily crude oil output declined by 150,000 barrels, as Shell Petroleum Development Company of Nigeria Limited, SPDC, joint venture, Thursday, said it has shut the Trans Niger Pipeline (TNP) following an explosion and fire at a crude theft point on the 28” section of the facility at Bodo West in Ogoni land.

To this end, the country is currently losing about $14.73 million (N2.357 billion) daily, pending when the pipeline is restored.

A statement by Mr. Tony Okonedo, Corporate Media Relations Manager, said that prior to the incident, SPDC had shut down the 28” TNP to remove crude theft connections, and has now closed the 24” TNP as a precautionary response to the fire. This means that the entire TNP system, comprising the 28” and 24” pipelines have been shut-in. The 24” TNP will be reopened when it is safe to do so, while the 28” TNP will remain shut-in until the fire has been extinguished, and investigation and damage assessment completed.”

Damage assessment
Also speaking, Mr. Mutiu Sunmonu, Managing Director, SPDC and Country Chair, Shell Companies in Nigeria, said: “This is another sad reminder of the tragic consequences of crude oil theft. Unknown persons continued to reconnect illegal bunkering hoses at Bodo West even as our pipeline team were removing crude theft points. It was, therefore, not surprising that the fire occurred from the continuing illegal bunkering even as a previous crude oil theft point was being repaired by the team.

“So far, there is practically no spill from this event as the oil is burning off. What is visible in the water is from an earlier oil spill which was also as a result of oil theft. The explosion also triggered a fire on a nearby barge. Crude theft continues to pose significant challenges to people, the environment and the local and national economy, and all stakeholders must work together to stop this criminal activity.”

The current shut down is a confirmation of the International Energy Agency report, which predicted a drop in Nigeria’s crude output this quarter, stating that Nigeria’s crude oil output declined to a six-month low of 1.96 million barrels per day. The agency attributed the decline to oil theft and pipeline vandalism, which had bedeviled the industry for a long time.

Amnesty International and Holland’s National Contact Point for the Organisation for Economic Co-operation and Development, OECD, had, Wednesday, faulted Royal Dutch Shell’s claims on incidences of oil spills in Nigeria, urging it to be prudent when publishing spill investigation data. Shell had blamed most spills in the Niger Delta on thieves hacking into pipelines, a crime known as ‘bunkering’.

However, an independent investigation into how the Organisation for Economic Co-operation and Development’s guidelines are enforced found discrepancies between Shell’s story and other accounts of the size and cause of spills. Holland’s National Contact Point for the OECD told the oil giant to exercise prudence when publishing spill investigation data and also called on Shell to publish figures from before January 2011, when the company began putting information about leaks on its website.

It also repeated the United Nations concerns that investigators are at the mercy of the oil companies when assessing the size and severity of spills. The report follows a complaint by Friends of the Earth and Amnesty International, which submitted evidence of spill investigations it said were heavily influenced by the company.

Also speaking, Audrey Gaughran, of Amnesty said “Shell has repeatedly stated operational spills are going down and sabotage is going up. This is all based on a process where the investigator is being investigated.” She called for more independent assessment to offset weakness in local regulation.

Shell has pointed to improvements in the way it reports spill information since 2011. But Gaughran urged Shell to publish all investigations carried out prior to 2011, potentially exposing the company to multi-million pound lawsuits. Shell had disclosed that its Nigerian subsidiary SPDC has been found to be in compliance with the OECD Guidelines for Multinational Enterprises.