ANALYSIS: Nigeria Loses N146m To Oil Spillage As Pipeline Vandalism Rises

ANALYSIS: Nigeria Loses N146m To Oil Spillage As Vandalism Rises

Vandalism of pipelines and other facilities of oil companies in Nigeria has led to the loss of N146.16 million revenue due to the spillage of large volumes of crude oil this year.

Nigeria has suffered 129 oil spill incidents this year, according to data obtained by BizWatch Nigeria on Sunday from the National Oil Spill Detection and Response Agency (NOSDRA).

The volume of crude oil lost during this period amounted to a loss of 4,805.15 barrels of crude oil.

Analysis of the data indicated that 95.4 per cent of the oil spill was caused by sabotage, theft and vandalism while other causes are equipment failure, corrosion and operational or maintenance error.

Shell, however, accounted for 56.7 percent of the total loss of crude oil during these incidents from January 2021 till June 2021.

The oil spill incidents over the years have led to the destruction of farms, contamination of water and total stoppage of the means of livelihood of people living in the host communities in the Niger Delta region.

Using Brent crude oil price of $74.19 per barrel as of Sunday and an average exchange rate of N410 to a dollar, the loss of 4,805.15 barrels of crude oil translated to a loss of $356,494 or naira equivalent of N146.16 million for the country.

In the oil spill by company category, NOSDRA data showed that Shell recorded the highest volume of oil spill incidents during the period under review, with 2,724.05 barrels of crude oil spilled in 45 incidents.

READ ALSO: Agip Shuts Down Idu Well 11 in Bayelsa Due To Oil Leak

The data showed that 93 per cent of the oil spillage incident from Shell was caused by sabotage, theft and vandalism of its pipeline and accounted for about 99.8 percent or 2,717.83 barrels of oil lost this year.

Other causes of the incidents from Shell include corrosion and equipment failure.

The company over the years has struggled to contain spills in the Niger Delta region. Shell attributed the spills to operational incidents, theft and sabotage and had constantly reiterated its commitment to minimizing spill and cleaning it up.

National Petroleum Development Company (NDPC) followed with 1,072.04 barrels of crude oil spilled in 6 incidents and Nigerian Agip Oil Company (NAOC) with 39 incidents that led to the loss of 766.55 barrels of crude oil.

The report stated that 97.3 percent of oil spillage from NDPC was cause​d​ by sabotage, theft and vandalism of the company’s pipeline while other spills reported were as a result of equipment failure.

The data showed that 94.7 per cent of the oil spillage from NOAC facilities was caused by sabotage, theft and vandalism of its pipeline and others causes include corrosion, operation or maintenance activities and equipment failure.​

According to NOSDRA data, Heritage Energy Operational Service Limited recorded 8 incidents in which a total of 180 barrels of crude oil were spilled into the surrounding environment while Seplat Petroleum Development Company Limited recorded 5 incidents and 36.01 barrels of spilled crude oil during the period under review.

Eroton Exploration and Production Limited followed with 8.46 barrels of crude oil spilled in 6 incidents and Enageed Resources Limited (ERL) with 2 incidents that led to seven barrels of oil spills.

Chevron Nigeria Limited recorded 5 incidents with 2.22 barrels of spilled crude oil while First Hydrocarbon Nigeria recorded 0.18 barrels of crude oil spillage this year.

Mobil Producing Unlimited recorded 27 oil spill incidents with only 1.26 barrels of crude oil spilled, while Midwestern Oil and Gas Corporation had only 2 incidents of oil spillage that led to loss of 0.5 barrels of crude oil.

Neconde Energy Limited followed with 5 barrels of spilled crude oil in one incident and Platform Petroleum Limited followed with 1.01 barrels of spilled crude oil in 2 incidents.

Total Exploration and Production Nigeria had two incidents that led to 1.01 barrels of oil spills.

Pipeline Vandalism Affecting Nigeria’s Oil Production

BizWatch Nigeria had reported las week that Nigeria’s crude oil production output has been affected by technical and operational issues as well as pipeline vandalism.

Oil companies in Nigeria had only been able to produce only two-thirds of its full capacity of between 2.2 million to 2.3 million b/d of crude oil.

Crude oil production in Nigeria is estimated to be around 1.64 million b/d in 2021, according to S&P Global Platts.

Also, agreement reached with other OPEC+ members to cut production volume is also affecting Nigeria’s production performance.

Nigeria has been allowed to increase crude production quota to 1.535 million barrels per day in May, 1.554 million b/d in June, and 1.579 million b/d in July as part of the OPEC+ deal.

READ ALSO: Shell Shuts Down Facility Over Oil Spillage

Analysts added that with the fiscal and security uncertainties ahead, the outlook for the country’s oil sector is likely to come under pressure despite the implementation of some reforms.

Court Judgement Received For Shell’s Historic Oil Spillage

In January this year, farmers in the Niger Delta region received a court judgement in their favour against Shell Nigerian for widespread pollution on their land after 13 years of legal battle.

An appeal court in The Hague passed a judgment compelling Shell’s Nigerian branch to settle farmers affected by oil spillage that its exploration activities caused.

It also held the Anglo-Dutch parent company, Royal Dutch Shell, liable for installing new pipeline equipment to prevent further devastating spills in the Niger Delta region.

The amount of damages would be determined later, it said. It did not specify how much the four farmers would receive as compensation.

The plaintiffs, consisting of four Nigerian farmers first sued Shell 2008 over pollution in their villages Goi, Oruma and Ikot Ada Udo, in Southeastern Nigeria, in a case backed by the Netherlands arm of environment group, Friends of the Earth.

About Author

Ife Ogunfuwa is an award-winning reporter who is versed in reporting business and economy, technology, gadgets reviews, telecoms, tax, and business policy review, among others. She loves telling stories behind the numbers. She has professional certifications in business and financial reporting. You can reach her via – [email protected]

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