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NPDC workers threaten to shut down crude oil production again

By BusinessNews Staff on June 25, 2015

In a renewed move to blackmail the federal government into reversing the withdrawal of the operatorship of some of the oil blocks sold by Shell and other International Oil Companies (IOCs) from the Nigerian Petroleum Development Company (NPDC) to the new buyers, the workers of the company have threatened to shut down crude oil production.

THISDAY gathered that the workers who resolved to embark on an indefinite strike on Monday, on Tuesday said the strike would now last for three days to give the present administration the final warning to reverse the decision taken by the administration of President Goodluck Jonathan on the operatorship of the acreages.

Insiders within the workers’ unions, however told THISDAY that the workers were really seeking a pay rise and were also using the operatorship tussle as a bargaining tool.

Based on a recent recommendation of the Department of Petroleum Resources (DPR), Jonathan’s administration withdrew the operatorship of some of the divested oil blocks from NPDC, a subsidiary of the Nigerian National Petroleum Corporation (NNPC) to the new buyers, citing the need to offer training and understudy opportunities for NPDC to further develop its capacity in all areas of petroleum operation and compliance.

In protest, the workers of all the NNPC’s subsidiaries and their colleagues in the NPDC last month embarked on a strike during which they shut down oil production to protest the transfer of the operatorship of Oil Mining Leases (OMLs) 40 and 42 to the new buyers.

The action of the workers under the aegis of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the National Union of Petroleum and Natural Gas Workers (NUPENG), which crippled economic activities for one week as it later caused acute scarcity of petrol was later suspended by the workers.

NPDC’s Manager (External Relations), Mr. Ugochukwu Atugbokoh, could not be reached on his mobile phone as at press time.

THISDAY however gathered that the unions met on Monday morning and resolved to embark on an indefinite strike, which was yesterday reviewed to a three-day action to give the new administration final warning to reverse the operatorship of assets, failing which the workers will shut down crude oil production and cripple the supply of petroleum products across the country.

NPDC was relieved of the operatorship of the blocks as it is said to lack the financial and technical capacity to operate the assets and has allegedly been using other contractors, particularly Operations and Maintenance (O &M) contractors to run the oil blocks.

Though the NPDC is the operator of the assets, the company allegedly hires other contractors to run the assets due to lack of financial, technical and competent human capital resources to operate the acreages.

For instance, sources close to some of the divested assets informed THISDAY that the O &M personnel at some of the flow stations were actually sub-contractors employed by Century Energy Services Limited, Lee Engineering and Construction Limited and other companies.

The new buyers have argued that this arrangement is more expensive for the NPDC and the federal government than using the new buyers of the assets to operate the blocks.

The unsatisfactory performance of NPDC in the operatorship of the assets is also said to have resulted in low production and poor returns on investment, as the company has failed to deliver on production revenue, despite years of promises.

According to sources familiar with the operation of the assets, of the five divested assets – OMLs 26,30,34,40 and 42, the gross production in 2015 to date averaged only 40,841 barrels of oil equivalent per day (bopd).

The 2014 average was said to be about 47,862 bopd, out of which 18,378 bopd was allocated to the private companies that were in partnership with NPDC, while the investors who staked about $2.85 billion to buy the assets continued to suffer financial losses due to poor operatorship.

NPDC’s alleged financial recklessness was also said to have contributed to the poor revenue from the divested assets as Longitudinally Submerged Arc Welding (LSAW) pipe, Seamless Steel Pipe and SMLS pipes of various diameters and thickness, for instance, which are sold in China for $500 per tonne are allegedly delivered to NPDC in Nigeria for over $4,000 per tonne.

[ThisDay]

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