FG, oil companies meet on pipeline vandalism

Marginal field operators are meeting with Vice President Yemi Osinbajo, today, 14 November, to discuss pragmatic ways to protect Nigeria’s crude oil pipelines which are vulnerable to attack by Niger Delta militants.

BusinessDay learnt that the operators are proposing the United Kingdom model,nwherein a buffer zone is created around pipelines and incentives are given to the local community whose economic activities may be undermined by restrictions around pipelines.

The marginal field operators are now calling on the Federal Government to develop such initiatives to calm the restive region and engender trust which seems to have been dissipated on account of the Federal Government’s seemingly preference for military action to end the attacks on oil assets.

Marginal field operators including Neconde, Pan Ocean, Seplat Petroleum Development Company, Nigerian Petroleum Development Company (NPDC) Shell, Shoreline Resources Ltd, First Hydro Carbon, Pillar Oil, Mid Western Oil and Gas, Platform Petroleum and Energia, all contribute about ten per cent of Nigeria’s crude output, but have been badly affected by acts of pipeline vandalism carried out by militants in the Niger Delta.

Some of them have not been able to lift crude more than once this year, sources tell BusinessDay. Also, slow recovery of oil prices is forcing operators to cut capital expenditure and place moratoriums on investments, as buyers and sellers are unable to agree on asset values due to price volatility.

High risk exposure to bank loans has stymied chances of attracting funding for projects, further rendering their projections unfeasible. This meeting is coming against the backdrop of a recent attack by the Niger Delta Avengers on the Forcados Export Pipeline in Delta State, which put out the estimated 300,000 barrel per day terminal, affecting the operations of these marginal field operators.

Ibe Kachikwu, minister of state for petroleum resources, expressed grave disappointment over the attack which comes after months of back channel negotiations with community leaders and various interest groups. Industry operators have proposed other methods to protect pipelines, including burying pipelines deep in the earth and building electrified and non-electrified walls round them.

“The first one is building of electrified walls around pipelines, while the second is building of a wall that is non electrified round pipelines. Electrified walls are found to be useful in many of the developed economies,” said Obafemi Olawore, executive secretary, Major Oil Marketers Association of Nigeria (MOMAN) at a recent oil and gas forum in Lagos.

It is also expected that the discussion will focus on ways to check corrosion, as many of the pipelines are old and dilapidated. Nigeria’s pipelines constructed of steel are mainly uncoated and are subjected to internal and external corrosion.

“Mild steel corrodes easily because all common structural metals form surface oxide films when exposed to pure air but the oxide formed on mild steel is readily broken down, and in the presence of moisture it is not repaired. Therefore, a reaction between steel (Fe), moisture (H2O), and oxygen (O2), takes place to form rust,” Yusuf Badmos stated in a paper published in the New York Science Journal.