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How NPDC was humbled by vandalism
30 Aug 2017
Author:
Country: Nigeria

The Nigerian National Petroleum Corporation (NNPC) January 2017 monthly report gives a very good insight into how vandalism of oil assets in the Niger Delta impacted significantly on the operations of its subsidiary, the Nigeria Petroleum Development Company (NPDC). The report puts the cumulative crude oil production of NPDC from January to December of 2016 at approximately 17 million barrels of crude oil and this came to an average production per day of 46,496, which comes to just an average of 2.93 percent of the country’s total crude oil production.

However, a deeper look into NPDC operations in 2016 shows that it could have done far better than it did but for the vandalisation of oil assets in the Niger Delta which impacted on its operations. The NNPC report shows that NPDC recorded total crude oil production of 3.64 million barrels in January of 2016 but this dropped sharply to 1.85 million barrels in February of 2016 and the company’s production remained at below 1.5 million barrels per month for the rest of 2016.
Forcados pipeline, which is critical to NPDC’s production was vandalised in February of 2016 and remained largely out of service throughout the year.

Our analysis shows that if the NPDC had been able to sustain the January production levels of 3.64 million for the remaining part of 2016, the company could have recorded total production of approximately 44 million in 2016 almost three times higher than the achieved production of 17 million in 2016. This means that NPDC only achieved only about 39 percent of its potential production capacity in 2016. Even at an average crude oil price of say US$35 in 2016, NPDC lost about US$945 million from shut in production in 2016 taking into consideration the approximately 27 million barrels of crude oil it could not produce in the year.

The NNPC notes that its subsidiary was mainly hampered by vandalism in 2016 which kept production below its capacity. Obviously, NPDC was significantly impacted by the vandalisation of the forcados pipeline. But there is some optimism ahead. The company is projected to ramp up production to 250,000 barrel per day “after the completion of an on-going re-kitting project and repairs of vandalised facilities.” This could help the company regain its lost capacity and even surpass it, especially if the current peace in the Niger Delta is sustained.

Link: https://www.businessdayonline.com/how-npdc-was-humbled-by-vandalism/

 

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