Oil Storage Tanks Now Full Due To Evacuation Restriction, Says PENGASSAN

Oil workers working under the auspices of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) have made a new admission, claiming that oil companies have been forced to halt production due to evacuation difficulties and the exhaustion of available storage space as a result of oil theft and pipeline vandalism.

The information was made public just when Nigeria was in desperate need of increasing its oil output to take advantage of the high price of crude oil, which is now hovering around $100 per barrel, as well as to strengthen the country's economy and foreign exchange profits.

While providing an update on the union's nationwide rally against oil theft, Eyam Abeng, Chairman of PENGASSAN, Lagos Zone, which includes the six South-West states and Kwara State, said that "production can no longer continue because tanks are filled to the brim."

Abeng, however, blamed the government's failure to punish identified perpetrators of oil theft and pipeline vandalism through consequence management and enforcement of intelligence reports for the persistence of the criminal activity while warning that oil thieves and vandals might soon migrate from their Niger Delta base to Lagos State, which is currently an oil-producing state.

PENGASSAN is now holding its statewide protest against oil theft and pipeline vandalism, which it began last week, in an effort to persuade all levels of government and other relevant stakeholders to take immediate action against the problem.

The union had also set the federal government a 30-day deadline to address the issue of pipeline vandalism and oil theft, through the National President of the union, Festus Osifo, or risk having oil workers withdraw their services through industrial action.

Nigeria's performance in oil production has gotten worse month after month, with the worst underproduction in 40 years being recorded in August when the country produced less than one million barrels per day compared to the over 1.8 million bpd that the Organization of Petroleum Exporting Countries (OPEC) had allotted to it for the month.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) recently reported that oil output in August 2022 decreased to 972,394 bpd compared to the 1.826 bpd OPEC allotment.

The deficit, which was around 853,606 bpd, marked a decrease of more than 10% from the 1.083 bpd production in July 2022.

Nigeria last produced that little oil in 1983, or almost 40 years ago, when average production was 675,000 bpd, according to tradingeconomics.com, a repository of statistics about worldwide industries.

Concerned about the plethora of issues plaguing the country's oil and gas industry and economy,

NUPRC had lately advocated for the declaration of emergency on the industry due to a number of issues, including oil theft, low production, high production costs, instability, ageing and deteriorating infrastructure, and sabotage of vital oil infrastructure.

“The imperative is on Nigeria to declare some sort of emergency for the oil and gas industry. Aside from energy transition, other issues bedevil our industry — such as oil theft, security, ageing and decaying infrastructure, amongst others.

"All these contribute to high production costs, which must be minimised,” Chief Executive Officer of NUPRC, Gbenga Komolafe had stated.

However, in a conversation with THISDAY, the chairman of PENGASSAN's Lagos Zonal acknowledged that oil corporations are now using unconventional methods to transport their product out of the country because the standard oil pipelines are no longer secure for this purpose.

The majority of the major oil transportation facilities, notably the 180,000 bpd Trans Niger Pipeline (TNP) and the 258,000 bpd Trans-Forcados Pipeline (TFP) operated by Shell, have been closed for months as a result of frequent attacks by thieves and vandals.

The cost of oil theft and pipeline vandalism, according to Abeng, is having a significant influence on the operating expenses (OPEX) of the oil-producing businesses, and as a result, the technical cost per barrel has increased due to the unexpected expenditures of repairing sabotaged infrastructure.

“Life is all about survival. If the pipeline that is the traditional means of exporting your crude from the wellhead to the terminal becomes impassable, you have to survive, and one of the ways of survival is that you use any available means of conveying your crude, either through trucks, through badges, through gallons or any other means as long as you can convey the product from the tank to the terminal and you sell.

“The reality before us is this: production today can no longer continue because tanks are filled to the brim.

"And if you do not pay your bills, you run out of business. But it has an impact on the OPEX cost, that is why the technical cost per barrel is becoming so high because of these additional unsolicited costs.”

He claimed that the union, having recognised Lagos' current status as an oil-producing state, was contacting the state legislature and the state government through the PENGASSAN top hierarchy to alert them to the oil theft threat and issue a warning that pipeline vandals and oil thieves might soon move to Lagos if no action was taken to stop the criminal activity.

“So, if the criminality of oil theft in the Niger Delta is not stamped out, it can migrate to affecting the production of crude in Lagos State.

"We also have (refined petroleum products) pipelines within Mosimi that run across the Lagos axis and today, the Nigerian National Petroleum Company (NNPC) Limited cannot pump petrol through the pipeline because they are daily punctured,” he stated.

Oil theft and pipeline vandalism are operations that are extensively sponsored and directed by very sophisticated tools and technology, according to Abeng, who called them "organised crime" and said that the activity is not carried out by slack Nigerian youngsters.

He insisted that the offenders intentionally engage in the illegal activity out of personal greed, adding that PENGASSAN cannot simply throw in the towel at this crucial juncture.

The PENGASSAN chairman, however, attributed the ongoing illegal activities to the government's reluctance to prosecute those responsible for pipeline and oil theft through consequence management and enforcement of intelligence reports.

He stated that PENGASSAN had established sustainable and attainable milestones for addressing this problem and that one of those milestones was community engagement because the community is both the first victim and the first benefactor.

According to Abeng, the union's second proposal called for a roundtable conversation amongst all interested parties, including the government, pressure organisations, traditional institutions, and security services.

He added that applying consequence management, where recognised offenders are penalised, was the third approach put out by the oil workers to address the problem.

The government's refusal to discipline security agents who broke the law while assigned to protect oil assets, he claimed, had given them more confidence and encouraged them to carry out their illicit behaviour.

Abeng claims that instead of penalising the offenders as part of consequence management, they are merely relocated and replaced by a new batch, noting that when there is no consequence management, it is assumed that things are continuing as usual.

“So, PENGASSAN is canvassing for consequence management.

"Wherever there is an infraction, investigate it, give everybody a fair hearing, the ones found culpable for it, and let them be punished.

"Once there is consequence management, this trend will stop,” he noted.

He asserted that the industry must deploy technology in such a way that the product is being observed in real-time from the wellhead to the terminal, which was PENGASSAN's fourth suggested solution.

He argued that the industry was weak in the area of intelligence enforcement during pipeline theft and product theft.

In response to the union's march, Abeng said that PENGASSAN's Lagos Zone was fully compliant and prepared to even implement the 30-day notice given for the termination of their service anytime their national president gave the order.

He continued by stating that the oil theft problem was hurting Nigeria's economy and the federal government's revenue, and he issued a warning that if nothing changed, there would be no money available for the federal, state, and local governments to share in October.

Abeng noted that despite having a production potential of 2.5 million barrels per day (bpd), Nigeria was only able to produce one million barrels per day because the oil was always being stolen, which affected the federation's monthly account sharing.