Minister of State for Petroleum Resources, Dr. Edmund Daukoru has said that the seemingly intractable crisis in the Niger Delta region costs the nation’s economy a whooping N7.8 billion daily.
Speaking yesterday in Vienna, ahead of the ministerial meeting of the Organisation of Petroleum Exporting Countries (OPEC), Daukoru said the country was losing about 872,000 barrels per day of crude oil to attacks on pipelines.
“In monetary terms, the Federal Government and its joint venture oil partners might have been losing, on the average, about $61.04 million or N7.8 billion to down oil revenue”, he said.
This situation may, however, be further aggravated following a directive yesterday by the National Union of Petroleum and Natural Gas Workers (NUPENG), and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), that oil workers should begin gradual shut down of production facilities ahead of the three-day warning strike which begins tomorrow.
Daukoru disclosed that volume of oil losses came from production shut in due to militant attacks and pipeline leaks.
The figure appeared sharply higher than recent industry estimates of around 600,000 barrels per day shut in but Daukoru did not elaborate on the figure.
Nigeria’s oil production was put at around 2.28 million bpd last month, showing a further drop from the 2.3 million bpd level in July, according to Central Bank of Nigeria (CBN’s) report.
Daukoru who is also OPEC’s president said production from Shell’s Forcados oil terminal and EA platform will restart within three to six months. About 477,000 barrels of oil equivalent per day production from those facilities have been shut-in since attacks in February.
A further 100,000 bpd from other producers using the Shell infrastructure there was also shut in.
Incidentally, the joint national executive council of PENGASSAN and NUPENG said its strike, called to protest government’s inability to restore peace to the Niger Delta region and guarantee the safety of oil workers in the area must hold as scheduled.
NUPENG president, Comrade Peter Akpatason told THISDAY yesterday that members have already been directed to begin gradual shut down of production facilities.
“The strike must come to pass. We have instructed our members to begin gradual shut down of facilities for technical and safety reasons,” said Akpatason.
Akpatason said government’s pleas for a stay of action, notwithstanding, the strike which will disrupt both crude oil exports and petroleum products supply in the country, would hold to serve as “strong warning to government that we mean business.”
“Government is fond of calling for dialogue, and after we reach an agreement they go back on their promise. We said the strike should be total, involving both the upstream and downstream activities,” said the union chief.
Akpatason said government’s position at the meeting and its response to the strike would determine the next phase of the unions’ planned action.
The unions had Friday threatened an indefinite strike if the government failed to resolve the Niger Delta crisis.
Meanwhile, the OPEC yesterday agreed to keep production quotas unch-anged, though members of the cartel are beginning the difficult process of reducing their output to limit any further fall in world oil prices.
Yesterday, oil prices continued their slide, falling 65-68 cents to trade at $65.57 a barrel on the US futures market and at $64.68 in London. Prices have retreated more than $10 since mid-July as demand has slowed.
The decline has come as a supply interruption from Iran, which was thought possible because of the country’s diplomatic standoff with the west over Tehran’s nuclear ambitions, has failed to materialise, at least for now.
But, inventories are relatively full and demand is dropping as US drivers shift to covering shorter distances again as they return to work after their summer holidays.
Last week’s announcement that BP would be able to fully restart by October its Alaskan Prudhoe Bay field, which produces 8 per cent of US oil, also helped ease lingering concerns about supply shortages.
At the meeting, OPEC members voiced different levels of concern over the price slide and the overall slowdown in world demand growth. Ali Naimi, Saudi Arabia’s energy minister, shrugged off the fall in prices, calling it “a blip”.
In contrast, Daukoru, said: “I am very concerned about the drop in prices. We do not know how much further they can go, and we need to review that in depth.”
Analysts estimated OPEC would need to reduce its supply by 1m barrels a day, beginning in January. This would keep the market in balance in the second quarter of next year, when demand usually drops as the northern hemisphere’s winter ends, but its driving season has yet to begin.
To do this, the group, which controls about 40 per cent of the world’s oil supplies, is beginning discussions now, ahead of its next meeting in December, analysts said.