Nigeria’s oil production revival faces a setback due to pipeline sabotage. Despite improved security measures leading to a 40% output increase, acts of vandalism threaten investments. President Tinubu’s state of emergency addresses local political instability. Renaissance Africa Energy continues operations but confronts investigation challenges.
Nigeria’s ambition to revitalize oil production and attract investment is jeopardized by recent sabotage within its crude pipeline infrastructure. Enhanced security measures had previously propelled a 40% increase in oil output, having risen from over half of its historical peak. Notably, in January, Nigeria surpassed its OPEC quota, marking a significant recovery for Africa’s largest oil producer.
The disruption on a segment of the Trans-Niger Pipeline, responsible for approximately 15% of Nigeria’s exports, poses a considerable challenge for the government. In response to ongoing acts of sabotage, President Bola Tinubu declared a state of emergency in Rivers State, attributing failures to local officials in addressing militant activity that undermines security.
Clementine Wallop, director at Horizon Engage, remarked on the implications of this sabotage, stating that it undermines the Tinubu administration’s recent progress in increasing oil output through security reforms. Additionally, the vandalism sends a negative investment signal at a critical time when the government appeared to be making headway.
Renaissance Africa Energy, which recently acquired assets including the Trans-Niger Pipeline from Shell Plc, announced its intention not to declare force majeure against Bonny Light crude exports, with two tankers prepared for loading at the Bonny terminal. Security issues in 2022 saw illegal taps on the pipeline at around 150 locations, drastically limiting the volume producers received.
With security enhancements on oil pipelines, there has been a noted shift of thieves targeting gas conduits instead. However, the resurgence of vandalism and sabotage presents substantial obstacles for Nigeria, which heavily depends on oil and gas revenues to support roughly half of its budget.
The political turmoil surrounding the emergency declaration adds another layer of complexity. Following a fallout between Rivers State Governor Siminalayi Fubara and his predecessor Nyesom Wike after the 2023 elections, localized factions emerged, raising the potential for violence. Wallop anticipates further unrest in this context.
Last month, Nigeria’s supreme court ruled Fubara’s governance without a legislative majority was illegal, leading to heightened tensions as it directed the central bank to withhold revenue. Consequently, President Tinubu suspended Fubara and his deputy for six months, appointing a retired military administrator to oversee the state.
Renaissance is undertaking a joint investigation into the pipeline vandalism, which signals a significant challenge for the local consortium despite its decision not to invoke force majeure. Mansur Mohammed of Wood Mackenzie emphasized that Renaissance’s approach will be pivotal in addressing the infrastructural hurdles faced by indigenous operators in Nigeria’s oil and gas sector.
In summary, recent pipeline sabotage in Nigeria significantly threatens the nation’s efforts to restore oil production and attract investments. The government’s response, including a state of emergency, reflects the urgency of addressing security lapses. While Renaissance Africa Energy maintains export operations, the political instability and rising acts of vandalism underscore the complexities that must be managed for Nigeria to stabilize its oil and gas sector.
Original Source: www.rigzone.com
