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Nigeria output outlook shrouded in uncertainty

12 Jun 2017 11:48 (+01:00 GMT)
Nigeria output outlook shrouded in uncertainty

Cape Town, 12 June (Argus) — The Nigerian government's attempt to end disruption in the oil producing Niger delta region faces renewed threat from rebels and criminal groups.

Shell declared force majeure on 200,000 b/d of Bonny Light crude on 8 June after the discovery of a hole drilled by "unknown persons" into the Trans Niger Pipeline (TNP) in the Bodo area of Ogoniland, in Rivers state.

Nigeria produced a six-month high of 1.79mn b/d of crude in May, up from 1.66mn b/d the previous month. The country is exempt from production restraints agreed at the 25 May meeting in Vienna between Opec and 10 non-Opec countries.

The TNP has regularly been targeted by thieves who have used hacksaws to steal crude. The line was last shut on 15 March for seven days because of a leak. Shell in 2015 had to pay compensation to the Bodo community for a series of oil spills.

The latest incident on the TNP comes against a backdrop of rising criminal activity against oil and gas facilities and the emergence of a new rebel group, which has threatened to strike against facilities from 30 June.

State-owned NNPC today warned that pipeline sabotage increased from 49 downstream pipelines vandalized points in February this year to 94 in March. "This represents over 91pc increase relative to the previous months despite federal government's and the NNPC's continuous engagement with the stakeholders," NNPC said.

Pipeline attacks hit a monthly high of 311 in July last year. A total of 2,070 vandalized points were recorded for the 12 months to March this year.

Repairs to the TNP may be carried out quickly and the pipeline restored but criminal and rebel activity has not entirely gone away. A new self-styled militant group called the New Delta Avengers emerged this month in oil and gas producing Delta state and has vowed to carry out 'Operation Cripple Oil and Gas Production'.

"We have agreed to resume attacks on oil facilities, resurrect the spirit of insurgency and to make a demand for a better deal for our people, and by extension our beloved Delta state. We will do this through bloody attacks, crippling of oil industry in the state," the group said in a statement dated 6 June.

The group said rival oil producing states, including Rivers state, had received more funding for "developments" than Delta state.

Another rebel group, the Niger Delta Avengers, on 27 May also indicated it was willing to re-start activities and warned the government that it remained "very active."

The administration of president Muhammadu Buhari last month promised additional funding to the Niger delta amnesty programme,which since 2009 has paid former rebel fighters to stop attacks on oil and gas facilities.

Few attacks have been reported so far in 2017, and Forcados exports resumed last month, with Shell finally lifting force majeure on 6 June, around 16 months after an attack halted production.

NNPC today also highlighted other challenges to production in February. These included deferred production because of leaks on the TNP and the Nembe Creek Trunk Line (NCTL). Leaks and low well-head pressure at the Qua Iboe terminal and lack of "pipeline integrity" were also cited as curbs on production.