• Sunday, May 19, 2024
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BusinessDay

Nigeria’s oil production at risk as helicopter operators insist on strike action

Oil production (1)

Nigeria may lose over 700,000 barrels of oil per day if helicopter operators providing services on oil rigs insist on carrying out their threat by grounding operational activities in response to the newly imposed charges on their operations by the federal government through the Ministry of Aviation.

Nigeria’s oil and gas production by terrain is mainly split between swamp (13%), land(25%), offshore (29%) and deep offshore (32%), where helicopters are the only viable means of transporting personnel and equipment, critical for maintaining operations in the country’s oil-rich delta region.

A recent memo by the Ministry of Aviation and Aerospace Development directed helicopter operators to compulsorily pay helicopter landing fees at all Nigerian aerodromes, helipads, airstrips, floating production storage and offloading (FPSO) units, floating storage and offloading (FSO) units and other oil platforms.

According to the memo signed by Festus Keyamo, minister of aviation, the landing fees would exclusively be collected by a private company, NAEBI Dynamic Concept Limited.

“It is imperative that all operators and stakeholders fully comply with this mandate, by granting total access to Messrs NAEBI Dynamic Concept Limited for the collection of the levy, effective immediately, Non-compliance with this directive will constitute a breach of this mandate and will be met with appropriate sanction,” the memo stated.

However, helicopter operators have threatened to ground their operations if the federal government insists that they must pay the landing fees.

Ado Sanusi, the managing director and CEO of Aero Contractors,  whose company pioneered the helicopter shuttle for oil and gas services in Nigeria, explained that helicopter operators may likely shut down their operations or go to court.

He said that there is no basis for the landing charge because the operators pay for services rendered to them and the helipads where helicopters land and take off in offshore operations and elsewhere are owned by international oil companies and therefore, not property of the Federal Government, adding that the operators pay their due charges to aviation agencies.

“I don’t think it is a good thing to do because the International Civil Aviation Organisation (ICAO) recommended that service providers in the aviation industry, which are government agencies, should engage in cost recovery, but unfortunately the government has turned the agencies to profit-making organisations in the aviation industry,” he said.

Keyamo in a recent TV interview explained that he inherited the process and approved it because it would generate more revenue for the federal government.

He further stated: “The company will put the infrastructure in place, employ personnel and remit to the Federal Government. So, everything will be going to the Federation Account and the company will get their cut.”

But helicopter operators have vowed to resist the payment and threatened to ground their operations if the federal government insists on the payment of the landing fees.

“What is the landing levy for and does it replace the industry standard landing fee? What services are being provided currently and not paid for by helicopters?” Roland Iyayi, former managing director of the Nigerian Airspace Management Agency and president/CEO, of Top Brass Aviation Limited, said.

He added, “For the avoidance of doubt and contrary to the minister’s assertion on national TV, helicopter operations are fully regulated in Nigeria; from licensing to helideck approvals to flight plans and landing fees. This Landing Levy is an arbitrary charge that is not doused in reality and has a chance of crippling the whole industry if not completely cancelled.

700,000 bpd faces shutdown

Data from the Nigeria Civil Aviation Authority (NCAA) showed oil and gas production helidecks constitute at least 90 per cent of the 127 approved heliport certification list as of May 10 2024.

Iyayi said for instance, Escravos is the operational base for Chevron and it hosts a few of their contracted helicopters.

“The single Bell 407 or light twin Bell 427 helicopter does an average of 70 landings per day. At $300 per landing, it comes to $21,000 per aircraft per day. There are usually 4-6 contracted aircraft at any time. So, if we assume five helicopters as an average, that would amount to a total of about $105,000 per day for the five aircraft. If we then assume a 25-day month, that would amount to a gross earning of $2,625,000.00 as Landing Levy per month, only for the Chevron Escravos operations,” Iyayi said.

A top official of a major helicopter company in Nigeria, said that the landing charge is unknown to the law, noting that it is even a user charge because the operator is expected from the place the helicopter took off to the place it lands, adding that the charge is not regulated by Nigeria Civil Aviation Authority.

“They also insisted that the payment should be done in dollars but our currency is the naira. They call it a landing charge but when I land on the rig I should pay them. Then the Minister’s directive that everybody should give access to the company so that they monitor you, raises another question: what is that payment for?” he said.

Data gleaned from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed Nigeria’s average crude oil production declined to 1.23 million bpd in March, with offshore assets accounting for at least 700,000 bpd.

BusinessDay’s findings showed Nigeria’s seven deepwater fields output an average of 415,392 bpd in March 2024, one of the lowest performances in the last three years.

According to the Nigerian Upstream Regulatory Commission (NUPRC), Shell’s Bonga field, the country’s flagship deepwater asset, led the decline by dropping from 124,115bpd to 95,363bpd.

TotalEnergies’ (deepwater) Akpo field shed 17,000bpd or 18 per cent of the output gap between February and March 2024.