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Shell’s threat: Barkindo seeks Defence Minister’s protection

By Oscarline Onwuemenyi
ABUJA—FOLLOWING a threat by the Anglo-Dutch oil firm Shell Petroleum Development Company to shut down its gas facilities over non-evacuation of condensate by the Nigerian National Petroleum Corporation, NNPC, the corporation’s Group Managing Director, Dr. Mohammed Barkindo has written to the Minister of Defence, retired General Godwin Abbe, to provide security for crude oil and gas pipelines in the Niger Delta to save the nation from total power blackout and revenue loss from crude oil export.

Also Chevron Nigeria Limited has indicated its readiness to commence supply of 185million standard cubic feet/day of gas to power plants before the end of next week.

Chevron gas was initially billed to be delivered in the first week of this month but has now been shifted to next week. The assurance came at the weekend after a meeting of members of the gas committee and officials of the Presidency in Abuja.

In the letter, Barkindo said: “The Honourable Minister is, therefore, requested to please note the frequent damages to the Trans Forcados Pipeline, TFP, and the serious implications it has on the reliable supply of both power and petroleum products to the nation.

“It is, therefore, requested that appropriate steps be taken to ensure the urgent recovery and security of the pipeline, especially in view of the prospects for disruption to gas supply to Power Holding Company of Nigeria, PHCN, by 21 February, 2010.”

Strategic pipeline for export of crude oil

The letter dated, February 12, 2010, was also served on the two Ministers of Petroleum Resources, Dr. Rilwan Lukman and Mr. Odein Ajumogobia, their counterpart in the Ministry of Power, Dr. Lanre Babalola, the Governor of Delta State, Dr. Emmanuel Uduaghan and office of the Acting President, Dr. Goodluck Jonathan.

It was noted in the letter that TFP was a very strategic pipeline for export of crude oil with a capacity of over 400,000 barrels per day to the Forcados export terminal.

Shell has indicated that at the current rate of production, it might have no further capacity for condensate storage beyond 21 February, 2010 and, therefore, might have to shutdown gas supply to PHCN with implication of over 1,000MW power generation shortfall.

Last week, Shell, a major supplier of gas to the nation’s thermal generating plants had written to the Minister of Petroleum Resources and his Power Ministry counterpart alerting them on gas supply situation if wet condensate estimated at 400,000 barrels was not quickly evacuated.

The evacuation of wet condensate will create room for sustainable production and supply of gas to the domestic market including the power stations. The letter stressed that if evacuation of the condensate by NNPC and its agency was not done before this week, Shell might be forced to shut down four gas plants in Utorogu, Ughelli, Oben and Sapele.

The implication of lack of gas supply to the nation’s thermal plants, especially in Egbin, Omotosho, Geregu, Olorunsogo, Sapele and Delta is that Nigerians will be starved of electricity.

Under the interim arrangement, Warri and Kaduna refineries are expected to take some of the condensate gas for their operations, but information revealed that the management of the refineries have declined to take condensate.

Shell suggested that NNPC needed to evacuate between 50,000 to 100,000 barrels of condensate daily to create room for further production of dry condensate that will go to the power plants.

Barkindo said: “A shut down of the pipeline has a very significant negative impact on the revenue that comes to the Federation. In addition, this also results in the inability of SPDC to transmit condensate produced together with gas from Ughelli, Sapele, Oben and Utorogu to Forcados export terminal.

A stoppage of the production of the condensate will, in turn, result in the shutdown of gas supply to PHCN from those locations.”

He noted that in the past it had been necessary to transfer the condensate to Warri Refinery tanks for export to ensure the continuity of gas supply to PHCN, adding: “However the corrosive nature of the condensate and the acidic water that comes with it have caused substantial damage to WRPC tanks.”

He said that following the repair of the Escravos to Warri pipeline, crude has been delivered to WRPC, which has now commenced operations. At the same time crude is being further transmitted to Kaduna Refinery for commencement of operations.

The NNPC GMD noted: “As a result, WRPC is not able to handle further volumes of condensate from SPDC, as this would otherwise jeopardize the operations of both the Warri refinery and the Kaduna Refinery and threaten the sustainable supply of petroleum products to the nation.

This is to inform the Minister of damage to the TFP operated by SPDC. The pipeline which transports crude oil and condensate from various locations in the Niger Delta to the Forcados terminal was attacked and damaged on February 7, 2010.”

Attacks and repairs of pipeline

Barkindo explained that the pipeline was severally attacked in February 2006, and the pipeline and crude loading platform were attacked. “The pipeline remained shut down until January 2008 when SPDC completed repairs and commissioned the line.

“The pipeline was again attacked in July 2009 and it took up to 16 November, 2009 for SPDC to finish repairs on the line. Just when they were about to commission it, the pipeline was again blown with dynamite.

This damage took up to 4 February, 2010 for SPDC to complete repairs and commission.”

The GMD pointed out that just three days after Shell had commissioned the line and successfully pumped water, condensate and crude oil, they discovered on 7 February, 2010, damage to the pipeline caused by dynamite attack.


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