The Nigerian National Petroleum Corporation (NNPC) and its other major partners lost over $99.8 million from the temporary shutdown of the Trans-Forcados Pipeline (TFP), the second-largest network in Niger Delta, where more than 90 percent of Nigeria’s crude is explored.
The Trans-Forcados pipeline is a major trunk line in the Forcados Pipeline System used by both international oil companies and indigenous oil firms operating in the western Niger Delta to evacuate crude oil from about 15 producing fields to the Forcados export terminal.
In its latest Federation Account Allocation Committee (FAAC), NNPC said the $99.8 million loss comes from 1,456,500 million barrels of crude oil it could not take to the market due to shut-in of pipelines at Trans-Forcados pipeline.
According to the FAAC report, the state-owned oil corporation listed industrial actions, production curtailment due to leaks, and brief repairs as reasons behind production losses of over 1.4 million barrels based on the May 2021 average Brent price of $68.53 in the Trans-Forcados pipeline.
“Maintenance repairs on the Trans Ramos Pipeline, leading to production shut-ins by producers using this pipeline, also affected Forcados terminal’s production,” an official from Nigeria’s Petroleum Ministry told Spglobal on June 14.
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“There was also maintenance at Bonga, as well as pipeline maintenance and repairs at Escravos, resulting in underperformance,” the official said.
The West African country’s crude production has been languishing at only two-thirds of its full capacity this year due to these factors, along with its obligations under the OPEC production cuts.
“The pipeline is long due for replacement and leaks from time to time,” said Collins Edema, a former pipeline contractor familiar with the Trans-Forcados pipelines.
Reports from many of Nigeria’s large oil fields, especially those in the Niger Delta like Forcados, Bonny, Escravos, Brass River, and Qua Iboe, and some offshore fields like Bonga, Usan, EA, have been pumping much below their normal levels due to either technical or maintenance issues.
A further breakdown from the FAAC report showed Seplat’s production shutdown cost about 90,000 bpd, production curtailed due to leaks on TFP along with Odidi cost 120,000 bpd, while Pan-Ocean lost a combined total of 6,500 bpd as a result of industrial action and production shutdown.
“Some stations were shut down on 11/03/2021 for Trans ramos pipeline repairs which led to a production shutdown of 1,240,00 bpd,” the NNPC report said.
Aside from the Trans-Forcados terminal, nine other terminals had one issue or the other leading to shut-ins that cost Nigeria 1.6 million barrels of crude oil in May.
For instance, at the Akpo facility, there was production confinement of 35,000 barrels due to what NNPC’s report referred to as a “detection of gas at starboard riser”, while at the Erha terminal, about 560,000 barrels of crude oil was lost due to deferred production and later shut down for the repairs of epoxy pipe.
The Brass terminal lost about 13,500 bpd due to industrial action by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), while IMA terminal and Yoho terminal lost about 31,000 bpd and 210,000 bpd, respectively, due to shut down for maintenance.
For Egina terminal, power failure due to turbo generation cost about 15,000 bpd while another shutdown due to trip on separator cost production loss of 50,000 bpd.
At Bonny terminal, the decision of Aiteo to close some wells due to flowline leak led to a production loss of 589,000 bpd. Also, Ohaji shut down due to a leak on TNP to Bonny terminal, while a tank top at Waltersmith led to a production loss of 9,000 bpd.
Nigeria has the capacity to produce around 2.2 million-2.3 million bpd of crude and condensate, but production has averaged around 1.64 million bpd so far in 2021, according to S&P Global Platts estimates.
Under the latest OPEC+ deal, Nigeria has been allowed to increase crude production to 1.535 million bpd and 1.554 million bpd in May and June, respectively. For July, its quota will rise to 1.579 million bpd.
