Setback for Nigeria’s Plan to Raise Oil Production as Aiteo Shuts Nembe Field after Leak

Nigeria’s aspiration to increase oil production significantly in the coming weeks suffered a setback on Wednesday after one of the country’s biggest indigenous hydrocarbons producers, Aiteo Eastern Exploration and Production Company (AEEPCO), announced the shutdown of its oilfield in the Niger Delta.

AEEPCO is the operator of the NNPC/Aiteo Joint Venture (JV) on Oil Mining Licence (OML) 29 in Nembe Kingdom, Bayelsa State.

In a statement on Wednesday, the firm stated that the leak was reported on Monday, June 17, 2024, during routine operations.

It’s unclear how many barrels of oil the asset was producing at the time of the incident, but it was learnt that OML 29 consists of nine fields, including the iconic Oloibiri Oilfield and holds 2.2 billion barrels of oil equivalent, while its hydrocarbon fields could deliver as much as 160,000 barrels of oil per day.

In March 2017, Aiteo Group announced that production levels at OML 29 had peaked at 90,000 barrels, tripling its existing production records for the onshore block at the time.

The latest development is a major setback for Nigeria which gets over 80 per cent of its foreign exchange earnings from the export of crude oil and is therefore highly negatively impacted by either falling crude oil production or prices in the international market.

The country which has struggled to raise output for years, has blamed oil theft, massive oil assets vandalism, deteriorating infrastructure in the country’s Niger Delta as well as years of underinvestment for its persistent inability to increase production significantly.

Nigeria in recent times, has resorted to borrowing to augment the little inflow of foreign exchange into the country’s FX market.

A THISDAY’s breakdown of the production information recently released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed that Nigeria produced 1.42 million bpd of oil in January; 1.32 million bpd in February; 1.23 million bpd in March; 1.28 million bpd in April and 1.25 million bpd in May this year.

This is out of the 1.58 million bpd reviewed Organisation of Petroleum Exporting Countries (OPEC) quota for Nigeria this year.

But in the fresh leak, AEEPCO noted that its oil spill and emergency response team was immediately activated and all production from OML 29 were shut down as a precautionary measure to mitigate the impact of the incident.

“This is a precautionary measure while mobilising additional resources to contain the spill. The cause of the spill is currently undetermined. However, we are proactively engaging with stakeholders to mitigate the immediate effects,” the statement added.

Commenting on the incident, AEEPCO’s Group Managing Director, Victor Okoronkwo, said: “During our operations on Monday, June 17, 2024, the subject leak was detected. A Joint Investigative Visit (JIV) with stakeholders has been initiated to determine the cause of this incident.

” While we regret the production losses to the Joint Venture and the nation and the potential environmental impact, our current priority is to expedite an efficient spill management process in line with regulatory standards and collaborate with all stakeholders to restore production and mitigate associated risks.”

According to the firm, its joint venture partners and the relevant regulators; the NUPRC and the National Oil Spill Detection and Response Agency (NOSDRA) had been notified of the incident.

Meanwhile NOSDRA has confirmed the oil spill, with its head of field office in Yenagoa, Mr Solomon Ukponevi, stressing that the oil firm already reported the incident to the agency.

 Ukponevi explained that the agency had deployed its officials to the spill site to ascertain the cause and volume of crude oil discharged to the environment.

On the extent of the pollution, Ukponevi told the News Agency of Nigeria (NAN)  that the Joint Investigative Visit (JIV) would determine the area, as well as other details.

“I will not be able to provide details until staff deployed for the JIV return from the fields, but I can tell you that Aiteo has reported the spill and investigation is underway,” he said.

It was learnt that the leak occurred on Monday at a section of the 97-kilometre Nembe Creek Trunk line (NCTL) that hitherto fed the Bonny Oil Export Terminal in Rivers.

Following persistent vandalism on the oil export line with the capacity to evacuate 180,000 barrels of crude daily, Aiteo had resorted to using barges to convey crude from the Nembe fields.

The barges are used to transport crude from onshore oil wells to a Floating Production Storage and Offloading (FPSO) vessel from which the company exports the Nembe Crude blend to crude tankers.

Emmanuel Addeh and Olusegun Samuel

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