Pipeline shutdown: FG, IOCs lose N543bn in six months

Six months after the Trans-Ramos Pipeline was shut down, the Federal Government, Shell, Total and Nigeria Agip Oil Company Limited have lost around $1.5bn (N543bn) in potential revenue from the sale of crude oil.

Our correspondent, however, gathered that the pipeline had been repaired but had yet to come back on stream.

Shell Petroleum Development Company of Nigeria Limited announced on May 25 this year that it had shut down production following the discovery of leaks on the pipeline, which is located in the swamps of western Niger Delta.

The SPDC is the operator of a joint venture involving the Nigerian National Petroleum Corporation, which holds 55 per cent; Shell, 30 per cent; Total Exploration and Production Nigeria Limited, 10 per cent; and NAOC, five per cent.

The Trans-Ramos Pipeline, which supplies crude oil to the SPDC JV-owned Forcados export terminal, has a capacity of around 100,000 barrels per day.

Calculations of potential lost revenue by our correspondent showed that the decline of 100,000 bpd in the nation’s oil exports in six months meant a loss of $1.51bn or N545.6bn (using an exchange rate of N360/$1).

Bonny Light, the nation’s reference crude grade, traded at an average of $75.38 and $74.72 per barrel in June and July respectively, according to latest data obtained from the Central Bank of Nigeria on Tuesday.

The international oil benchmark, Brent crude, against which Nigeria’s oil is priced, averaged $72.53, $78.89, $81.03, $64.75 and $58.92 in August, September, October, November and December respectively, according to the US Energy Information Administration.

A Shell’s spokesperson, Mr Bamidele Odugbesan, told our correspondent on Monday that the pipeline had been repaired and “is undergoing extensive testing prior to restart.”

“We cannot give precise timing yet for the restart of the line as it depends on the outcome of the testing. Statutory post-JIV (joint investigation visit) activities are ongoing, which include site assessment, remediation, and payment of compensation to people and communities impacted by the spills,” he said in an emailed response to an enquiry by our correspondent.

The SPDC said in August that it had recovered over 95 per cent of spilled oil from the recent spill incidents on sections of the pipeline in Aghoro community, Bayelsa State, and in Odimodi community in Delta State.

The oil major said the pipeline had remained shut in since the incidents.

“As soon as clean-up and site assessment are completed, we are committed to starting the immediate remediation of the impacted areas in Aghoro and Odimodi,” a spokesperson for the SPDC said.

According to the spokesperson, details of the cause and impact of the spills will be captured in the JIV reports, which will be released after sign-off by all parties.
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