Crude: Nigeria Loses 800,000 Barrels Daily To Pipeline Vandalism – Kachikwu | Independent Newspapers Limited
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Crude: Nigeria Loses 800,000 Barrels Daily To Pipeline Vandalism – Kachikwu

Nigerian Oil Minister Emmanuel Ibe Kachiwku arrives at an oil-producers' meeting in Doha, Qatar, on Sunday, April 17, 2016. Oil-producing countries are meeting in Qatar to discuss a possible freeze of production to counter low global prices, but Iran's last-minute decision to stay home could dilute the impact of any agreement.  (AP Photo/Jon Gambrell)
Posted: May 17, 2016 at 5:07 am   /   by   /   comments (0)


…Nigeria To Save $1bn quarterly On Subsidy Removal




Dr. Ibe Kachikwu, Minister of State for Petroleum Resources, on Monday said Nigeria’s crude oil production had fallen from 2.2 million barrels per day to 1.4 million barrels per day due to pipeline vandalism.

This, he said, translated to loss of 800,000 barrels of oil by the country daily.

Kachikwu stated this while addressing lawmakers at a special session of the House of Representatives convened over the recent petrol price hike.

His comments come amid a resurgence of militancy in the Niger Delta region which produces most of the crude oil that Nigeria relies on for around 70 percent of national income.

Attacks by the Niger Delta Avengers, a new militants group, have driven Nigerian oil output lower. The group has carried out a wave of attacks in the last few weeks that have hit platforms belonging to Chevron and Shell.

“Because of the incessant attacks and disruption of production in the Niger Delta, as I talk to you now, we are now producing about 1.4 million barrels per day,” Kachikwu told the House of Representatives.

He condemned the incessant attacks on oil installations in the country, saying, “We declined from 2.2 million barrels which was the focus of the 2016 budget to 1.4 million barrels as of today”.

He, however, expressed the ministry’s commitment to ensuring that destroyed facilities were repaired and effectively protected.

“We are going to work hard to see how we will get these issues resolved and get our production back,” the minister said.

Kachikwu restated the need to develop infrastructure, which he described as “key” to promoting increased and efficient crude oil production.

“There are still a whole lot of things we need to pay attention to, infrastructure is key but we have not as a country over the last 20 years invested in infrastructure in the oil sector.

“Our pipelines are 35 years old and none has been replaced; we have not been able to put gas infrastructure in place, our refineries are next to comatose and old and we are working hard on them.

“Our critical facilities are at a breakdown stage, so no serious infrastructure has taken place.

“No country in the world will expect that the price system in the country will benefit its citizens if it doesn’t invest in infrastructure.”

Responding to a question as to why NNPC fuel stations which get locally refined products at little or no cost are selling almost the same price as independent marketers who sell at N145 and above, Kachikwu said: “That is being looked at”, adding that he cannot guarantee that he would monitor all the NNPC stations to know what they are doing.

“The NNPC mega stations are supposed to sell at a much lower price than the other marketers, but right now, some of them are selling between N143 and N145. But that is something we are looking at correcting, but I cannot guarantee what the NNPC stations do all over the country”, he said.

Kachikwu’s response to the question, however, contradicted page 10 of his presentation in which he told the House that the NNPC fuel stations are selling at the same price with the majors so as to “reduce nuisance value potential of the stations in the metropolis while stations in the hinterland are to sell at N135 per litre”.

This response elicited questions from lawmakers who expressed doubt in the sincerity of the policy, asking the minister to state the obvious by telling Nigerians that there was no deregulation of any kind but a price increase resulting from foreign exchange differential since the government still controls the price.

Kachikwu told the House that the decision taken was aimed at curbing the teething problems of product diversion, hoarding, under-dispensing and pipeline vandalism.

“We first looked at the number of litres on which subsidy was being paid. The new policy is to address subsidy issues as well as product availability and distribution which is saving Nigeria about $1 billion quarterly”, he said.

He explained that the earlier arrangement where the NNPC was importing 50 percent of local consumption requirement while the independent marketers handled the rest was being frustrated on the claim that they couldn’t source forex to import the 50 percent shortfall which kept the queues in an incessant manner with 800,000 barrels of oil being lost to vandalism.

“But what we have done has opened up the importation to all marketers as they can source for forex from alternative sources so as to bring in the product.

“We also try to understand how much effort is needed in trying to manage a very complicated issue. With subsidy, almost 80 percent of our foreign exchange earning was being eliminated due to the fall in oil price when the economy has not been diversified”, he added.

The House, however, suspended its resolution on the matters as it set up a 17-member ad-hoc committee to interface with the organised labour with a view to making it halt every plan to embark on strike.

The Alhassan Ado Doguwa-led ad-hoc committee has five days to submit its report to the House for further legislative inputs.