January 21, 2016

Attack on Escravos pipeline: N470m lost daily on gas, electricity losses

Attack on Escravos pipeline: N470m lost daily on gas, electricity losses

vandalised petroleum pipeline at Ijedodo in Ojo Local Government of Lagos State on Monday (3/6/13)

Following the bombing of a major gas pipeline in the Niger Delta last weekend, the Petroleum ministry said yesterday that the Power and Gas Sectors have incured multiple losses in repairs, electricity shortage and gas sales resulting in a loss of N470million daily. As security agencies intensify the search for culprits behind the act, it has been established that the weekend’s attack on the Nigeria Gas Company’s pipeline connected to Chevron Nigeria Limited’s facility at Escravos, will impact negatively on the Olorunsogo NIPP plant (capacity 600MW), and other Power Plants.

The sabotaged gas pipeline which contributes to the Escravos Lagos Pipeline System (ELPS) has led to a loss of 160mmsfcd of gas daily. At a cost of $2.50 per thousand scf, this loss means about $400,000 loss to the country on a daily basis (N78,800,000 daily) in gas volume. A statement signed by Hakeem Bello, Special Adviser, Communications to the Minister said “This is in addition to losses to be incurred daily from affected Power generation ($1,988,223 or N391,680,000 daily). The total daily loss to the country is therefore estimated at N470,479,931. Repairs of the damaged pipeline is estimated as costing ($609,137 or N120,000.000).

“The real sector of the economy has also been counting its losses as some cement companies around Olorunsogo like Ewekoro and Ibese are also affected. “The latest incident has occurred just as the Federal Government through the Ministry of Power, Works and Housing and the Ministry of Petroleum Resources along with allied agencies has been making concerted efforts to improve gas supplies to the Power Plants. Such efforts led to previously offline plants like Ihovbor and Sapele coming back online and the subsequent output  making up for the loss in power. The pipelines are being actively monitored for further attacks or other unforeseen impacts.

“Available records show that six incidences of vandalism from December 2014 to February 2015 which affected the Trans Forcados Pipeline (at Oben, Sapele, Oredo ) and Escravos Lagos Pipeline System (CNL) led to a loss of 1,100 MMScfd. According to industry experts, a loss of 200 MMscd is equivalent to a Power reduction of 700MW. “While the industry is currently generating about 4120Mwh/h on average (as at 17/01/2016), it is without doubt that performance would have been better without the additional setback caused by the weekend’s Incident.

“It would be recalled that during the monthly meeting of the Minister of Power, Works and Housing, Mr Babatunde Fashola SAN with operators in the Power Sector last week, the  Nigeria Gas Company (NGC), the Nigerian National Petroleum Corporation (NNPC) and the GACN led by the Minister of State of Petroleum, Dr Ibe Kachikwu shared information on significant gas projects that will improve gas supply which are scheduled for completion in Q2 of 2016 and also highlighted some of the challenges especially related  to security affecting delivery of gas to the power sector.

In response to this, NNPC is forming a committee of NNPC, Police, JTF (which includes Army, Airfoce and Navy) and also community vigilante groups, who have been tasked with the responsibility of securing these pipelines. Meanwhile, the Chief of Naval Staff, Vice Admiral Ibok Ibas has said that attacks on gas and oil platforms would henceforth be treated as terrorist attack by the Nigerian Navy rather than mere pipeline vandalism.

Describing the Delta incident as unfortunate, the CNS who spoke during a lecture he delivered to Course 24 participants at the National Defence College titled Nigerian Navy: Challenges and Future Perspectives’ noted that the Navy was not taking the sabotage lightly, because the act was capable of undermining the Navy’s recent push in sanitizing the nation’s maritime sector. His words, “The incident that just happened recently is rather unfortunate and of course that cannot be taken lightly by any serious nation and of course the Nigerian Navy is not going to take it lightly as well.

“We have made it clear that it goes beyond just mere vandalism for the purpose of making any gains; this is absolute sabotage, something that can even be termed terrorism. “If the guys were doing that to derive benefit from the destruction then one will say it is vandalism but that is not the case”. Admiral Ibas also advocated the establishment of special courts to address the menace of maritime crimes even as he explained that conventional courts had failed to arrest the situation.

Emphasizing that in the past, many of the suspects arrested by the Navy had oftentimes exploited lapses in the nation’s judicial system to evade prosecution, the CNS said, “Over 163 suspects were arrested by the Navy for various crimes and handed over for prosecution by relevant law enforcement agencies between Jan. and Dec. 2015. “Experience has shown that suspects explore lapses in our judicial system to evade prosecution. We believe that the establishment of a special court or tribunal that is mandated to address all the outstanding cases with respect to the seizures and arrests made by the Navy will reduce the incidences of the illegality in the maritime sector”.

Speaking further, the CNS noted that his administration was working on enhancing the operational capacity of the Nigerian navy in line with his vision and the content of the Navy’s transformation plan. While noting that the response capability of the Nigerian Navy was being enhanced by the acquisition of more vessels such as logistics ships, patrol boats among others, Ibas identified inadequate funding, poor industrial base, inadequate barracks accommodation for personnel and contemporary threats to maritime security as some of the challenges militating against the actualization of the Navy’s broad objectives.