Shell Nigeria is investigating a possible leak on its 180,000 barrels per day Trans Niger pipeline that traverses the Bodo community in Rivers state.
This is according to an August 21 news report by Reuters.
According to the report, Salt Abimbola Essien-Nelson, a media spokesperson for Shell Nigeria said the company blames most spills o pipeline vandalism and illegal crude oil tapping.
A part of the news report states:
- “We are working with the community and other stakeholders to ensure we can safely look into and resolve this situation,” spokesperson Bola ‘Salt’ Essien-Nelson told Reuters following an inquiry.”
It is important to note that the 180,000-barrel-per-day pipeline is one of two conduits that export Bonny Light crude.
The Trans Niger Pipeline, operated by Shell Petroleum Development Company (SPDC), evacuates crude from oil fields in Rivers and parts of Bayelsa to the Bonny Crude Oil Export Terminal.
Six months ago, there was an explosion at the Rumuekpe section of the pipeline on Friday, March 3, 2023, in the Emohua Local Government Area of Rivers State, Nigeria.
The explosion resulted in a massive fire that burned for several hours and destroyed several houses in the area.
The fire was eventually put out, but not before it had caused significant damage.
The cause of the explosion was initially unknown, but the SPDC’s investigation revealed that it was caused by oil thieves who had illegally tapped into the pipeline.
The theft of oil from pipelines is a common problem in Nigeria, and it is estimated that the country loses billions of dollars each year to oil theft. Just last month, Shell Nigeria had to shut down operations at its Forcados terminal due to a sheen discovered at the facility.
This led to a decline in Nigeria’s crude production for the month of July 2023, which also affected output for OPEC-13.
Crude oil theft is still a major problem affecting Nigeria’s crude oil production and the Nigerian National Petroleum Company Limited as well as other stakeholders are working to fight the menace. However, there are cases of crude oil theft and spills every week.
Nairametrics has reported that just between the last week of July 2023 and the second week of August 2023, there were no less than 500 cases of crude oil theft in oil-producing areas of Imo, Delta, Bayelsa, Rivers states, resulting in millions of revenue losses for the country.
Backstory
The Trans-Niger pipeline was inactive as of April 2022 due to oil theft. As of August 2022, a joint investigation visit carried out by the National Oil Spill Detection and Response Agency (NOSDRA) revealed that a leak on the Trans-Niger Pipeline in Bodo Community, Rivers State, was caused by third-party interference.
According to NOSDRA, the pipeline discharged crude oil into the environment and spread to farmlands. In the past, there have been reported pipeline leaks in several communities in Rivers State.
Reliable sources told Nairametrics that as far back as July 2013, there have been over a hundred pipeline leaks on the Trans-Niger Pipeline, across various communities in Rivers State, due to bunkering activities.
Way back in October 2022, a crude oil analyst told Nairametrics that Nigeria recorded huge financial losses due to the past inactivity of the Trans-Niger pipeline.
According to him, the TNP line sends about 180,000 barrels per day to Bonny Terminal, which is 15% of Nigeria’s daily production.
The lowest average price of crude at the time was $86 per barrel.
86 x 180,000 = $15,480,000 daily
86 – 40 = $46 as profit margin
46 x 180,000 = $8,280,000 daily
$40 is operational expenditure and other costs.
$8,280,000 x 30 days = $248,400,000 per month.
For the period between May to September 2022 (5 months);
248,400,000 x 5 Months = $1,242,000,000.
To sum it up, with a daily production of 180,000 barrels per day, the estimated loss at a price of $86 per barrel amounted to $1.2 billion at the time.
