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Nigeria’s federal government, alongside its partners has commenced the deployment of tiny tankers for the transportation of crude oil through the creeks of the Niger Delta, following a protracted inability to fix the often-vandalised pipelines in the region.
Specifically, the fleet of small river-going tankers is expected to help boost the country’s Organisation of Petroleum Exporting Countries (OPEC) quota, which the country has failed to meet since the COVID-19 pandemic started easing in late 2020.
Bloomberg reported that Africa’s top producer, racing to lift output before OPEC decides new oil-production quotas, has now started using the unorthodox vessels to get a new grade of oil, Nembe Creek, up the Niger River Delta.
The crude is subsequently loaded onto an ocean-going ship that’s stationed off the nation’s coast, the report said.
It’s unclear if the new mode of moving crude was responsible for the marginal gains in crude oil production in September, wherein the country recorded production of 1.34 million barrels per as against the 1.74 million OPEC quota. It was Nigeria’s biggest output since January 2022.
However, despite September’s increase, a THISDAY report last week estimated that Nigeria’s total losses to underproduction were as high as $3.89 billion in the third quarter of 2023.
The figure followed an analysis of the monthly industry report recently released by the NUPRC for September.
The crude oil, which is now channelled through other means of transportation, was previously transported via the Nembe Creek Trunk Line (NCTL) to the Bonny terminal, which is operated by Shell.
That conduit, operated by Aiteo Group and previously running at about 150,000 barrels a day, has not piped crude oil to Bonny since February 2022, according to people with knowledge of the matter.
The switch in the mode of transportation of crude is seen as a new development, since the Nigerian National Petroleum Company Limited (NNPC), the federal government’s representative in all contracts, had in the past clashed with partners that insisted on deploying barges rather than using the problematic pipelines.
The new logistics setup uses a floating storage offloading vessel called Galilean 7, which is anchored near the Brass terminal, according to a terminal information sheet seen by the news organisation.
Shuttling Nembe Creek oil, which is owned by Nigeria and Aiteo, is a significantly more expensive method than by pipeline, but a better option than not producing at all.
The river’s depth limits the size of the ships that can sail up it, meaning about 24 individual deliveries are needed to get enough oil to fill a standard ocean-going ship.
A Shell spokesman declined to comment. Aiteo and NNPC didn’t immediately respond to requests for comment.
A 1-million-barrel Suezmax tanker Maran Orpheus, lifted the first cargo of the new grade from Nembe Creek terminal on October 10, the tanker tracking data compiled by Bloomberg showed.
Nigeria is scheduled to load approximately 65,000 barrels a day of the new Nembe Creek grade this month and next, according to export loading programmes seen by Bloomberg. That would replace most, but not all, of the reduction in flows from Bonny.
Recall that in 2021, a Nigerian company, Eroton stopped evacuating its crude through the NCTL, citing massive crude oil theft activities by vandals.
Between October 7 and 13 alone, the NNPC reported that 205 incidents of crude oil theft were recorded across the oil-producing areas of the Niger Delta region.
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