FG Wants Damaged Forcados Terminal Fixed To Boost Power

Prof Yemi Osinbajo on Forcados damaged terminal The Nigerian government has called for an expedited repair of the Forcados Export Terminal operated by Shell, and the activation of an alternative process to ameliorate the gas supply deficit and boost power.

Vice President Yemi Osinbajo told officials of the Nigerian National Petroleum Corporation (NNPC) and Shell in Forcados, Delta State, that President Muhammadu Buhari was concerned about the damage done to the terminal in February.

He said that his visit was to assess the situation which he claimed was responsible for the recent drop in electricity supply.

The damage had brought loss of gas supply to power plants and significant loss of potential revenue.

Professor Osinbajo said that the president was equally concerned that the gas projects under the disposal of Shell meant to beef up domestic supply of gas in Nigeria needed to be speedily completed.

‘A Real Problem’

The Vice president, who met on Friday with top officials of Shell that runs the terminal and senior NNPC officials after they flew over the location of the terminal, told the officials that “what is going on here affects the Nigerian people and the economy,” referring to the loss of gas supply to power plants and the loss of potential foreign exchange earning arising from the inability to produce over 250,000 barrels of oil per day, due to the damage done to the terminal.

“The damage done to Forcados affects our oil earnings but also as important is the power aspect. It (Forcados) is a major source of gas. About 40% of our gas supply is affected leading to the problem of power supply in the country,” the Vice President told Shell officials led by Country Chairperson, Mr Osagie Okunbor and NNPC officials led by the Chief Operating Officer for Upstream, Mr Bello Rabiu.

Professor Osinbajo said that at a point few months ago power supply in Nigeria had peaked at an unprecedented 5000 megawatts, but now has dropped significantly including instances of system collapses, showing that the Forcados damage was “a real problem.”

He said: “I came here on the instruction of the President who is concerned about the damage done to Forcados. I came here to see for myself and underscore the great implication for the nation’s economy. Many people don’t even know that power supply is hampered by what is going on here”.

While expressing gladness at the seriousness of purpose he observed from the plans drawn up by Shell and the NNPC, the Vice President asked Shell to do “whatever else can be done and do it as expeditiously as possible,” to repair the damaged terminal.

Repair Plan

A repair plan presented to the Vice President during the visit by Shell indicated that the repair work, which is in three phases, is about concluding its first phase with expectation that the repair would be concluded in May. Meanwhile, the NNPC also presented an interim alternative plan to supply gas to the plants including trucking condensate.

The Vice President further expressed the concern of the Federal Government that IOCs that seat on 80% of gas deposits had not been as forthcoming regarding gas supply to the domestic market.

Professor Osinbajo encouraged the IOCs to do a lot more for domestic gas supply considering the gas supply problems in Nigeria, stressing that “we are clearly suffering in terms of domestic supply”.

He stressed the need for Shell to speedily complete the Bonga and Forcados/Yokri gas projects in order to assuage the plight of the Nigerian people.

According to him, “the president is particularly concerned about this outstanding gas projects”.

The Bonga Gas Diversion project would provide 120 million of standard cubic feet (mmscf) per day when completed by the second quarter of this year, while the Forcados/Yokri gas project would provide 80 million of standard cubic feet per day at completion expected at the same timeline. There is also the Assa North/Ohaji South project which can also provide 500 million of standard cubic feet per day.

Experts say currently, gas production into domestic network in Nigeria had fallen to 601mmscf/d from usual 1.1bcf/d.

The implication is that Nigeria is now losing about half a billion cubic feet per day, which roughly accounts for about 2000 megawatts of electricity.

Permanent Pipeline Security

A statement by the spokesman for the Vice President, Laolu Akande, said that the Professor Osinbajo further told reporters that “there are efforts being made by the Federal and State governments as well as communities to tackle current vandalism challenges”.

He stressed that the government was also looking beyond the present situation into what could be done in the future to prevent pipeline vandalism.

One of the future steps the Buhari’s administration could take to forestall the perpetration of vandalism, according to Professor Osinbajo, is to establish “a permanent pipeline security force.”

He said such a force, if formed, “would be armed with sophisticated weapons to ensure we contain the vandalism, and overhaul security.” He said a permanent pipeline security force was an option to look at.

Also commenting on the issue, the Delta State Governor, Ifeanyi Akowa, who accompanied the Vice President all through the visit lamented that “the Forcados terminal was important to Delta State and the nation.

The Forcados is where Shell Petroleum Development Company (SPDC) evacuates its products for sale. Now, all the production on land by SPDC is shortened.”

NNPC Says No Fresh Petroleum Subsidy In 2016

Petroleum Subsidy The Nigerian National Petroleum Corporation believes there will be no fresh subsidy in the 2016 budget.

At a media interaction in Abuja, the Group General Manager, Corporate Planning, Mr Bello Rabiu, explained that a new framework was being worked on for the management of subsidy on petrol.

Mr Rabiu said that the new template would eliminate subsidy in the next few months, leaving the price of petrol at a capped price of 97 Naira.

He, however, insisted that the 2016 budget would only capture arrears of subsidy payments.

Petrol Price Modulation

On Thursday, the Minister of State for Petroleum, Dr Ibe Kachikwu, told reporters that contrary to speculations, the government was not interested in the removal of subsidy on petroleum products, but that a price modulation that would reduce its involvement in pricing starting 2016 would be introduced.

The Minister of State for Petroleum, Dr Ibe Kachikwu, briefed reporters of the government’s position on Thursday.

Dr Kachikwu said a periodical review of the Petroleum Pricing Template and a flexible management of the pricing system would be considered.

He said the review would allow marketers to trade freely and reflect prevailing international price of crude.

According to him, the review will be the key focus in the first quarter of the coming year.

At the moment, the nation is facing shortage of petrol, with queues seen at different service stations across the oil-rich nation.