Stakeholders list dangers of crude oil lifting in barges

Stakeholders in the oil and gas industry say attempt to use barges as alternatives to pipelines in conveying crude oil to the Floating Production, Storage and Offloading (FPSO) at the export terminals will endanger operators and increase unit cost of production.
They argue that the implication is that exporting crude oil from the onshore field to the outside world for the much needed foreign exchange will remain a challenge.
Some industry operators are of the opinion that with the continued vandalism of the nation’s pipelines by militants, barges should be used to transport the crude to the various terminals before exports.
A Floating Production, Storage and Offloading (FPSO) unit is a floating vessel used by the offshore oil and gas industry for the production and processing of hydrocarbons, and for the storage of oil.
It is from the FPSO that the crude would be transferred to the tanker that would load the crude to the international market.
Ibe Kachikwu, minister of state for petroleum, recently approved such an arrangement for some critical operations as a temporary measure.
But they argue further that even government intakes from companies such as royalty, which is a first line charge and taxes, have reduced drastically from the arrangement.
Nigeria has so far lost over N162 billion to the shut-in of the pipeline, which took effects from February 2016.
Specifically, a total of 3,213 vandalised points have been recorded between August 2015 and July 2016.
The Nigerian National Petroleum Corporation (NNPC) has attributed the loss to Force Majeure declared by Shell Petroleum Development Company (SPDC), as a result of vandalised 48-inch Forcados export line.
However, Austen Avuru, managing director of Seplat, says using barges to transport crude is not completely bad provided the oil producer can take care of the attendant security and environment implications. He said: “It will cost you more doing so.”
Eddy Wikinna, managing director, Treasure Energy Resources, and former external affairs manager for Shell Nigeria Exploration and Production (SNEPCO), says engaging in such a venture by an oil producer means that the company will pay heavily to secure transporting its crude to the FPSO.
Wikinna says from the wellhead to the terminal the militants would have extorted heavy amount of money from the operators to the extent that the unit cost of production per barrel would have been so high that they would not be able to break even.
The amount that would also be paid to the security agencies to secure the crude from the creeks to the terminals could also be very high, he says.
‘’You would pay different militants before they allow you the right of passage through the creeks, and if you have to be accompanied by security agents to secure the barges to the export terminal you must also pay something,” he says.
If the militants are not happy with the company they may even decide to seize the barge and there would be nothing the company would do, he says further, adding that the best option is the pipeline, as it is not easy to switch from pipeline to barges.
He therefore urges the government to find a way of getting these militant out of the creeks, saying that would be the only solution to resolve the issue of pipeline vandalism.
Another industry operator, who does not want his name mentioned, says those who are seeking the use of barges as alternative to evacuate crude oil to the terminal are just trying to avoid closing down of their businesses completely, but adds that the security of the crude to the FPSO is a major concern.
But, the corporation states that the activities of pipeline vandals and oil thieves are taking heavy toll on operations of the oil and gas industry with over 500,000bpd lost as of May 2016.
“In June 2016, there was additional shut in of about 50,000bopd, as a result of sabotage/attack on the delivery pipelines to Escravos Terminal. At Forcados Terminal about 300,000bopd remained shut-in and cargoes were deferred until repairs are completed. The Force Majeure declared on 10th May 2016 for repair works on Nembe Creek Trunk Line (NCTL) and the resultant shut-in of about 275,000bopd subsists,” the operator says.