…Kachikwu’s back channel diplomacy may be paying off
…NPDC loses N60bn to Forcados pipeline break in three months
The federal government’s efforts to restore peace in the troubled oil-rich Niger Delta region recorded a significant gain as the Niger Delta Avengers, the group that had been responsible for recent serial attacks on oil and gas pipelines in the region, said it was ready to discuss its grievances with the government.
The militant group’s turning of a new leaf, Thisday learnt Monday, was largely due to pressure from the back channel contact made by the federal government’s negotiating team, headed by the Minister of State for Petroleum, Ibe Kachikwu.
THISDAY had reported monday that the heavy loses to the nation’s purse, arising from the violent activities of the NDA had forced the federal government to explore the use of back channels to reach out to the militants for dialogue.
The group’s offer of dialogue was, however, predicated on International Oil Companies (IOCs) operating in the region committing to send independent mediators to the dialogue, saying that was the only way it could have confidence in talk that is expected to chart the way forward for peace in the region.
The federal government’s team, which also include the National Security Adviser, Maj-Gen. Babagana Monguno, is mandated to reach out to the militants and other stakeholders in the region and find a way to end the violence that had adversely affected oil production output of the country, which had dwindled from 2.2m bpd to about 1.6m bpd.Only yesterday, the Nigerian Petroleum Development Company (NPDC), a subsidiary of the Nigerian National Petroleum Company (NNPC), said it had lost N60 billion in three months, owing to the break in its Forcados pipeline bombed by the NDA.
The NPDC’s loss is only a part of the general loss to the nation’s overall revenue loss manifested in the shut-in of over 800,000bpd since the NDA hostility began in February.
But in a statement by Mudock Agbinibo, the group’s spokesperson, it said it would cease fire to enable it discuss with the federal government’s team. It, however, demanded absolute sincerity on the part of government, warning that it would not allow the discussion to be turned into a political jamboree.
“We are warning this government of President Muhammadu Buhari not to turn the essence of genuine peace talk and dialogue to political jamboree that is prevailing now where all manner of social media agitators and criminals have been sponsored by the job seeking corrupt political class to save faces before the government of the day,’’ the NDA said.
As guarantees, the group said while it would not blow up more pipelines, it insisted that repairs to all bombed trunk lines must be put on hold until the dialogue is over, threatening to sink in the deep waters two large vessels belonging to the oil companies if its conditions were disregarded.
THISDAY had reported exclusively yesterday that the federal government, using its back channel communication had established contact with the militants with a view to urge them to embrace its offer of peace.
The approach had been preceded by the government’s stand-down order given to the military that had been deployed in the Niger Delta to enforce law and order.
The immediate gain of the approach was the buy-in by the Movement for the Emancipation of the Niger Delta (MEND), which in a statement yesterday said it was accepting the federal government’s offer of dialogue and invited the NDA to follow suit.
The MEND, in fact, set up a negotiating team to be headed by a former Minister of State for Petroleum, Odein Ajumogobia, to hold talks with the government team on the way forward for peace to reign in the region.
NPDC Losses N60bn in Last Three Months
Meanwhile, the NPDC has lost about N60 billion oil sales revenue in the last three months due to the delay in the repair of vandalised Forcados crude oil export line, the NNPC has said.
The NDPC is the exploration and production subsidiary of the NNPC. The corporation, however, disclosed this in the April 2016 edition of its monthly operations and financial report which was released last week.
It maintained that up till now, the export line which was vandalised in February with 300,000bpd of crude oil production deferred was still down, three months after.
The Shell Petroleum Development Company of Nigeria Limited (SPDC) had on February 21, 2016, declared a force majeure on oil liftings from Forcados following the February 14, 2016 disruption in its terminal’s subsea crude export pipeline.
But following NNPC’s disclosure in its latest publication that NPDC was still unable to earn N20 billion monthly oil income because of the development, in addition to the last two publications in February and March which THISDAY reviewed, it was discovered that NPDC may have cumulatively lost N60 billion within the last three months.
In February, NNPC said in the report: “The huge deficit in the month of February 2016 was due to production shut-in occasioned by vandalism of Forcados export line. This situation denied NPDC the opportunity to earn revenue from crude oil sales of about N20 billion.”
In March, it stated: “The recent declaration of force majeure by SPDC due to vandalism of 48-inch Forcados export line resulted in production shut-in of about 300,000bpd. This adversely impacted on the nation’s February 2016 production, leading to a loss of about N20 billion of NPDC oil revenue.”
And in April, it explained that: “The NPDC’s crude sale for the month is still hampered by Forcados pipeline vandalism which continued to deny NPDC of monthly crude oil revenue of about N20 billion.”
While Shell said in February that it was intensifying efforts to repair the damaged pipeline, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, stated in March that repairs on the line might take up to May.
NNPC also said in the report that its leadership was already diligently addressing its key business and operational challenges.
Meanwhile, the Organisation of Petroleum Exporting Countries (OPEC) has said the timing that Nigeria and Canada began to see unplanned oil production outages in their oil fields is ideal to buoy market sentiment.
OPEC, which kept its world oil demand unchanged in its June Monthly Oil Market Report (MOMR) which was released monday, reiterated that outages in Nigeria and Canada helped to keep oil futures for May on a bullish trend.
“Oil futures surged sharply again in May to close to $50/b on bullish market sentiment coming from supply outages, both planned and unplanned.
“Wildfires knocked out some 700,000 b/d of Canadian production in May, while Nigerian output slumped to levels not seen in over a decade on the back of a wave of militant activity coupled with some technical issues,” said the MOMR.
It then stated: “The timing of these unplanned outages was ideal to buoy market sentiment, as they came just ahead of a seasonal, and therefore widely expected, global period of tightening in 3Q16.”
It noted that world oil demand growth for 2016 remained unchanged from the previous report at 1.20 million barrels per day (mbpd) to average 94.18mbpd.
The report said Asia, led by India, is anticipated to be the main contributor to oil demand growth in 2016, with the bulk of growth coming from transportation fuels, supported by healthy vehicle sales and the low oil price environment.
It also said the forecast for non-OPEC oil supply in 2016 remained unchanged, with a contraction of 0.74mbpd expected to average 56.40mbpd.