The Nigerian National Petroleum Corporation (NNPC) yesterday in Abuja defended it decision to award the contract for the protection of the 87-kilometre Trans Forcados Pipeline (TFP) to an indigenous firm, Ocean Marine Solutions (OMS).
Recently, some Niger Delta youths from Ijaw, Isoko, Itsekiri and Urhobo had blocked the gate of the Delta State Government House protesting the alleged hijack of the contract.
But the Group General Manager, Group Public Affairs Division of NNPC, Ndu Ughamadu, said the decision on the contract was reached after consideration of huge losses recorded on the TFP and rigorous appraisal of the company’s impressive record of performance on the Bonny-Port Harcourt and Warri-Escravos crude evacuation lines.
He revealed that the corporation lost over $800 million to poor handling by previous contractors.
Ughamadu said that the new contract which requires the contractor to pay for any damage to any inch of pipeline under its watch, would offer immeasurable benefits to the NNPC, its joint venture partners, the host communities and the entire nation.
According to him, faced with massive losses in projected revenue, stakeholders in the TFP which today account for daily production of over 250, 000 barrels of crude oil, were unanimous in the decision to seek better ways of ensuring reliability and availability of the line.
“In 2018, we lost over 60 days of production due to incessant breaches on the TFP despite having a security contract in place.
In terms of production numbers, this translates to over 11 million barrels of crude oil which on face value equates to over $800millon in lost revenue to all the stakeholders in the matrix,’’ he said in a statement.
The NNPC spokesman noted that no responsible business entity or government would allow the level of hemorrhage to subsist without acting swiftly to protect the enterprise from further bleeding.
“Based on the above scenario, Ocean Marine Solution was assigned to handle the TFP under the proof of concept arrangement which is yielding great results in the Bonny-Port Harcourt and Escravos-Warri crude evacuation lines. Under this package, the surveillance company is obligated to protect the lines and bear the cost of repairs if and when there is any breach to the pipeline.
“This arrangement is totally different from the old order where the contractor gets paid for surveillance duties and totally exempted from repair cost or any form of responsibility in the event of any line break or breach to the pipeline he is paid to watch.”
On the huge cost of the new contract, the corporation described it as insignificant when placed side by side and value-for-money with the old arrangement.
“In 2018, after we lost over 60 days of production, under the old contract, the NNPC and its stakeholders spent over $32million on repairs, protection of the TFP and clean-up. This is a verifiable fact which makes the new deal not only better but far more rewarding to all stakeholders,’’ Ughamadu said.
The NNPC also dismissed the claim that the entry of OMS into the TFP would spell doom for the host community youths currently rendering sundry services to the old service provider.
“Based on our community engagement model for asset protection, OMS is obligated to engage youths in the TFP right-of-way in executing its mandate, thus reports of imminent loss of jobs by host community youths are totally incorrect and mischievous,” the Corporation said.