FRESH facts have emerged indicating current crude oil shut-in is now one million barrels per day against 600,000 barrels reported early this year by the Nigerian National Petroleum Corporation (NNPC).
From when this figure hit one million barrels per day is not clear even to the auditors at the National Petroleum Investment Management Services (NAPIMS).
This development, The Guardian source said, was due to the unending crisis in the Niger Delta region of the country, which has affected both major and independent oil-producing companies.
Considering the high price of crude in international market, Nigeria and its joint venture partners both in joint venture and PSC may be losing $90 million (N10.8 billion) on a daily basis from this shut-in the countries.
The price of oil has been hovering between $89 and $96 per barrel in the international markets.
The Guardian source noted that an audit of the nation’s oil production profile carried out by NAPIMS shows that the volume of oil in the shut-in wells has peaked at one million barrels per day.
Apart from the major oil companies like Shell Petroleum Development Company of Nigeria (SPDC) whose output level was affected by this development resulting in shut-in of about 600,000 barrels per day, the source said other operators, including the third party producers who rely on the facilities of the major producers for export of their crude oil put together, bring the figure to one million barrels per day.
The source noted further that now, Nigeria does not have spare capacity as the country put all its available producing fields on stream in order to meet production quota allocated by the Organisation of Petroleum Exporting Countries (OPEC).
The officer explained that in actual fact, Nigeria’s capacity hovers around 3.2 million barrels per day but that the situation in the Niger Delta has brought this level down to about 2 million barrels.
“The OPEC quota is 2.1 million barrels per day which the country was able to meet last year but in terms of spare capacity, it is currently not there”, the officer said.
“What the NNPC has done is to look at its operations with the partners both in the joint venture arrangement and Production Sharing Contract (PSC) model and we can say that our capacity is now down by about one million barrels in a day”, the officer said.
According to the source, before the crisis in the Niger Delta got to this stage, Nigeria had spare capacity that it could even overshoot OPEC quota if she so wished but the situation is so bad now that the country has to rely on deepwater fields to be able to build this extra capacity again.
Nigeria’s Minister of State for Energy responsible for petroleum matters, Mr. Odein Ajumogobia, told agency reporter early this year that total shut-in now runs over 600,000 barrels due to the Niger Delta crisis.
Nigeria targets a reserve base of 40 billion barrels and daily production of 4 million barrels for year 2010.
The Guardian reported early last week that the crisis in the Niger Delta may have gotten the country into the black books of the International Maritime Organisation (IMO) with very adverse consequences for the country’s economy.
The body has issued a warning to Nigeria that if the safety of the territorial waters continued to be threatened by the crisis, no foreign vessels will be allowed to come to the country to lift crude oil or gas.
Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Abubakar Lawal Yar’Adua, who disclosed this in Abuja at a Gulf of Guinea oil and gas conference, said if the world body was not satisfied with the security situation in the region, there would be no vessel to lift crude oil.
“A warning has been issued to Nigeria and by April, they will come for final inspection and if the situation persists, we may be blacklisted as unsafe region and no foreign vessels will come to Nigeria”, Yar’Adua stated.
According to him, because of the risk associated with the crisis in the Niger Delta, insurance companies are foot-dragging in insuring vessels coming to Nigeria and since there will be no insurance cover for the vessels coming to Nigeria, then it will be a big problem for the country.
The NNPC boss said though the Federal Government had set up a committee comprising stakeholders in the maritime world, including the NNPC, the IMO would be around again in April to ascertain the security situation in the country.
Yar’Adua said the committee was working hard on this, adding that officials of the NNPC were meeting with other oil companies with a view to addressing the issues raised by the IMO. He stressed that pipeline vandalism; hostage-taking and attacks on vessels on the high sea would worsen Nigeria’s position on this issue.