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FG loses N74.6bn to pipeline vandalism

By on January 27, 2014

Nigeria lost N74.76bn as a result of gas pipeline vandalism last week Saturday, an investigation conducted on Friday has shown.

The loss, it was learnt, followed the shutdown of the Escravos-Warri stretch of the Escravos Lagos Pipeline System which produced 190 million cubic feet of gas per day; the Trans-Forcados crude pipeline,  offering 230mcf/d; and the shortfall of 60mcf/d at Utorogu gas plant due to maintenance issues.

Our correspondent gathered from the Nigerian National Petroleum Corporation that the shutdown resulted in the loss of 480 million cubic feet of gas that day.

The NNPC said the loss in gas led to power outages in many states across the country.

It was also learnt that the cost of gas per cubic feet to power firms was $1. Hence, for the 480mcf that was shut in on that day, a total of $480m was lost.

Therefore, at the official exchange rate of N155.74 to a dollar, the country lost a whopping N74.76bn.

The General Manager, Media Relations Department, Group Public Affairs Division, NNPC, Dr. Omar Ibrahim, told our correspondent that the 480mcf/d lost gas represented one third of the country’s daily gas production.

He said “Our current daily production is 1.5 billion cubic feet per day and about 480 million, which is about a third of the daily production, was shut-in last weekend as a result of blasts on the pipelines. Electricity supply, therefore, was supposed to go down because of shortage of gas.

“Some months ago, we had stranded gas which was so much that the plants could not take it. But now with this crisis, we’ve been forced to shut-in about a third of our production which automatically affected some of the power plants that are relying on those lines.”

The NNPC’s Group Managing Director, Mr. Andrew Yakubu, had stated that the drop was over 30 per cent of the country’s installed gas supply capacity.

According to him, the lost gas is the equivalent to what is required to generate about 1,600 megawatts of electricity.

Meanwhile, Ibrahim explained that although the gas was not stolen, the fact that it was not being produced meant that it was lost.

He added, “It is an opportunity cost and definitely it is lost to the system. For instance, in crude oil theft, when we say 400,000 barrels is lost, what this really means is that maybe 150,000 barrels had actually been stolen. But because that pipeline has the capacity of moving 400,000 barrels, we just have to shut it down, which therefore means that we are losing the whole quantity.

“This is because we don’t want to continue to pump when we know that it is going to be stolen, it is going to have environmental effect and the pressure will not be there for the crude to move. So, when we do that, we say we have lost 400,000 barrels of crude oil. It is not that we have pumped 400,000 barrels to devastate the environment, but because we have shut production.

“When we shut production, Nigeria is losing, not because the product has been stolen but because we have already done our budget based on regular production.”

The NNPC spokesman said there had been series of rupturing of gas pipelines in the past and the incidence of last weekend was the latest.

The management of the corporation had on Monday explained what warranted the recent drop in gas supply for power generation.

It blamed it on the rising incidents of sabotage of some crucial gas pipelines which had significantly eroded available gas supply to the power plants.

According to the NNPC, on June 25, 2013, an explosion rocked the ELPS and further investigations showed that dynamite had been used on four ruptured points.

The corporation’s boss had stated that engineers from the Nigerian Gas Company were mobilised immediately to commence repair works but as repairs progressed, more points of rupture emerged.

Yakubu had said, “At the last count, 20 ruptured points have been identified, all due to deliberate dynamite explosion. NGC completed repairs in November and on commissioning in December, rapid pressure loss was experienced indicating further rupture in weakened locations. We have since effected repair of these new points and re-commenced commissioning activities.”

The NNPC GMD noted that all things being equal, gas supply would be restored in the weeks ahead.

He said, “The cumulative effect of the above interruptions is a real degradation of power supply to Nigerians. The Ministry of Petroleum and the NNPC continue to make efforts to ensure gas supply in a difficult environment. It is expected that a major improvement in power supply would be achieved in the weeks ahead when the various repairs are completed.”

The NNPC noted that beyond the repairs, many other projects were ongoing to bring in additional supply to satisfy the growing demand in the power sector.

Yakubu said, “By the end of second/third quarter of 2014, additional 200mmcf/d of gas is expected from two NPDC projects at Utorogu and Oredo. In addition, with the planned completion of the Omoku and Alaoji NIPP power plants, further boost in generation is expected as both plants have gas supply available awaiting completion of the power plants.”

He stated that in 2015, other projects are expected to mature progressively and by 2016 when the East-West pipeline is ready, a major boost in supply will be attained as over 250mmcf/d of gas stranded in the East will be diverted to meet the power demand.

“If the occurrence of pipeline attacks is arrested, we expect nothing but a continuous and steady upward growth in gas supply to power from the end of this month, with a noticeable increase in electricity,” Yakubu said.

 

 

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