OIL PRODUCTION AND IMPACT ON FOOD SECURITY AND CLIMATE CHANGE
By John A. Jia, Ph.D. The 1996 World Food Summit defined food security as “when all people, at all times, have physical and economic access to sufficient safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life.” So, Food Security is “the measure of an individual’s ability to access food that is nutritious and sufficient in quantity.” On the other hand, Wikipedia explains Oil and Gas Production as “the process of extracting crude oil and natural gas from underground reservoirs and bringing them to the surface for processing and distribution. It further explains that “The petroleum industry is responsible for the exploration, extraction, refining, transportation, and marketing of petroleum products.” Various components of the process listed here can have impacts on Climate leading to climate change. How then can oil and gas production have direct or indirect impacts on food security – preventing access to sufficient, safe and nutritious food meeting dietary needs and food preferences? Oil and Gas production have key activities that make it possible for it to happen if not well managed namely: •Seismic Operations – in layman’s terms, is the search for oil using various technologies to survey and ‘see’ under the ground to discover reservoirs holding the oil deep in the ground. The “surveys allow professionals to identify prospects, assess potential resources, reduce risk and even quantify reserves – in short, to make well-informed decisions that drive successful exploration efforts.” •Drilling of appraisal wells/Production Wells to confirm that what was ‘seen’ under the ground is good enough for additional investments to develop the field and recover the volumes – the discovery is in commercial quantities. An appraisal Well may be developed into a Production Well. •Field Development – involves the process of drilling, building of non-oil and gas infrastructure (NOGI) and Oil and Gas Infrastructure (OGI) for extraction, processing, handling and exporting or sale of the oil produced. •Production operations – utilization of all the infrastructure (Wells, Flowlines, Pipelines, Flowlines, Production Stations, Gas Plants, and Tank Farms including export facilities) for daily extraction of crude oil/gas, processing and sale/export. •Abandonment – loosely speaking involves management of NOGI and OGI facilities and the environment after the life of the Field. This will not be discussed in this article for lack of space for this article. All the above steps have various aspects that can interact with the environment to impact Food security and Climate change. According to FAO and others, there are 5 dimensions or components of Food Security namely: Availability, Access, Utilization, Stability and Sustainability. While many biological factors like population increase, changing diets, pests and pathogens, environmental changes, conflict, poverty/unemployment, et cetera, can reduce food security, each step involved in the Oil and Gas production can also have direct or indirect negative impacts on availability, access, utilization, stability and sustainability of food security especially in the Niger Delta of Nigeria. Seismic activities for oil and gas exploration can disrupt farming operations. The noise, vibrations, and movement of heavy machinery can affect soil structure, water flow, and crop growth. For example, in Nigeria’s Niger Delta, seismic surveys have been reported to have caused soil compaction and water contamination, reduced agricultural productivity and harming local farmers’ livelihoods. As the activities often involve the use of chemicals that may contaminate surface and ground water sources, there is potential for water contamination. Polluted water can affect irrigation systems, leading to poor crop yields and unsafe drinking water for livestock. Chemical spills during seismic surveys in agricultural areas can lead to contamination of water sources, which then impacts the health and productivity of crops and livestock. Another impact is the Destruction of Natural Habitats. Clearing land for seismic lines can destroy forests, wetlands, and other natural habitats, reducing biodiversity. This loss of biodiversity can impact pollinators, soil health, and natural pest control, which are essential for sustainable agriculture. The Amazon rainforest, a critical ecosystem for global biodiversity, has been reported to have seen significant habitat destruction due to oil exploration, threatening indigenous food systems and biodiversity. Seismic exploration can lead to the displacement of local communities, including farmers. Displaced communities may lose access to their agricultural lands, leading to food insecurity. How does this stage of Oil and Gas activity impact on climate change thus affecting food security? You have Greenhouse Gas Emissions, an occurring decimal throughout the oil and gas production value chain. Seismic activities are part of the oil and gas extraction process, which is a significant source of greenhouse gas emissions. The burning of fossil fuels contributes to global warming and climate change. Methane emissions from natural gas extraction are a potent greenhouse gas, significantly more effective at trapping heat in the atmosphere than carbon dioxide. Seismic surveys often require clearing large areas of land, leading to deforestation and land degradation. Forests act as carbon sinks, and their destruction releases stored carbon dioxide into the atmosphere, exacerbating climate change. Example, in the Congo Basin, deforestation for oil exploration has released large amounts of carbon dioxide, contributing to global climate change. Healthy ecosystems such as forests, wetlands, and grasslands sequester carbon dioxide from the atmosphere. Seismic activities that damage these ecosystems reduce their ability to absorb carbon, increasing atmospheric carbon levels. An example is the destruction of mangroves for oil exploration which reduces their capacity to sequester carbon, thus contributing to higher atmospheric CO2 levels. Also, climate change, driven in part by fossil fuel extraction, leads to more frequent and severe natural disasters such as floods, droughts, and hurricanes. These events can devastate agricultural systems, further threatening food security. Rising global temperatures contribute to more intense droughts in agricultural regions, affecting crop yields and food availability. Drilling involves land take, utilization of drilling mud, generation of drill cuttings which may be oily depending on the depth at which the cuttings are generated. The land taken (and in some cases may be significant) is no longer available for food production. The land may have been rightly acquired but is
Host Communities Threaten To Shutdown Oil Production Over 3% PIA Fund
Oil communities in Bayelsa State at the weekend warned that oil production across the state may be halted if Nigerian Upstream Petroleum Regulatory Commission (NUPRC) fails to refrain from actions that could potentially reduce or create bottlenecks for the three percent host community fund under the Petroleum Industry Act (PIA). The warning was contained in a statement jointly signed by a foremost youth leader, Mr Christopher Tuduo, His Royal Highness, Theophilus Moses, chairman Dodo River Rural Development Authority, Francis Amamogiran, Hon. Target Segibo of Oporoma Rural Development Authority and former Chairman of Koluama Clan Oil and Gas Committee, Engr Ebimielayefa Dick- Ogbeyan. The communities, in the statement declared their readiness to take decisive action and escalate their efforts to address the concerns of the oil and gas communities if the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) fails to treat the matter as an emergency. Emphasizing their proactive engagement in pacifying the youths across various communities since the signing of the Petroleum Industry Act (PIA), the communities stated that the stability of oil operations could be compromised if NUPRC allows the situation to deteriorate further. The communities asked NUPRC to recognize the urgency of the matter and take immediate, substantive steps to resolve the concerns at hand. They warned that improper handling of host community issues could have negative repercussions on Nigeria’s oil production and economy. The communities stated that the NUPRC must reverse any action and regulations adversely affecting the host community to avoid a severe backlash. He noted that host communities are often excluded from the decision-making process, which results in the use of public resources to defend decisions in newspapers. They criticized NUPRC’s intention, outlined in a letter dated 9th October, 2023, and signed by Capt. John R. Tonlagha for the Commission Chief Executive, which proposed participation in various activities related to the host community fund, such as BOT nominations, selection and inauguration, Management Committee Advisory Committee nomination and selection, and facilitation of NEEDs assessment. He argued that this would be too much for the three per cent to fund. The group maintained that while NUPRC’s oversight function is essential, over-involvement in the activities of the HCDTs is counterproductive and financially burdensome. “They are getting into the operations arena, and this will not augur well for the industry because each participation by the NUPRC will be funded from the HCDT trust.” The also criticized the mandate for HCDTs to hire lawyers and accountants with a minimum of 10 years’ experience, stating that it would be impossible to pay such professionals from the five per cent administrative fund, which comes from the three per cent. They argued, “In reality, no NGO organizations, including those like Accord or the Nigerian Conservation Foundation, which is one of the most successful NGOs in Nigeria, employ full-time lawyers, let alone one with 10 years experience. The HCDTs are styled as NGO organizations and should be expected to act according to the best practices and standards of that sector,” The statement stressed further that by insisting that NUPRC must stop overstepping its boundaries, avoid acting as operators, and cease deducting expenses from the three per cent in cunning ways. The group supports transparency and accountability, but the HostComply portal being developed by NUPRC to manage the administration of the fund should not be funded from the three per cent, as per Sele-Epri. He stated that the regulator should bear the financial burden for the application, which enables it to monitor activities of different players more effectively. Additionally, the group accused the regulator of insensitivity to the host communities’ concerns, particularly the allocation in the PIA and the criminalization of oil and gas asset destruction against communities lacking surveillance contracts. They questioned the timing of NUPRC’s review of host community regulations, suggesting that the focus should be on setting up HCDTs and prioritizing benefits to the community.
NNPC/Aiteo JV Launches Nembe Crude Oil Grade, Exports Double 950,000 Barrels
The NNPC/ Aiteo Joint Venture has announced the introduction of Nembe Crude Oil Grade, a new crude oil grade into the international crude oil market. According to a statement signed by Chief Corporate Communications Officer NNPC Ltd, Olufemi O. Soneye, the announcement of the Nembe Crude Oil Blend, produced by Aiteo, the Operator of the NNPC/Aiteo Oil Mining Lease (OML) 29 Joint Venture (JV), was made at the ongoing Argus European Crude Conference in London, on Tuesday. OML 29, an asset located onshore Nigeria, is operated by Aiteo Eastern Exploration & Production Ltd, Africa’s leading indigenous hydrocarbon producer, following a historic acquisition from Shell in 2014. The Nembe Crude was previously blended with the popular Bonny Light grade and exported via the Bonny Oil & Gas Terminal. The unique selling point of the Nembe Crude Oil grade with an API gravity was highlighted by both the Aiteo E & P and NNPC Limited Leadership at the Argus Conference in London. The Nembe Crude Oil grade also has a low sulphur content and low carbon footprint due to flare gas elimination, fitting perfectly into the required spec of major buyers in Europe. Two cargoes of 950,000 barrels each of the Nembe Crude Oil grade have since been exported to France and the Netherlands. With its attractive Assay of API 29 and low sulphur content, the Nembe Crude Oil grade commands a premium to the global Brent benchmark. With the NNPC-Aiteo OML 29 JV back onstream, Nigeria now boasts of an additional crude oil export of 2 Cargoes at 950,000 barrels each per month and 1.2 Bcf of export gas monthly. This remarkable achievement signals the commencement of activities at Nigeria’s newest crude oil terminal, the Nembe Crude Oil Export Terminal (NCOET), which was licensed in line with the extant laws and Crude Oil Terminal establishment regulations. The terminal was conceived as a Floating Storage and Offloading Vessel (FSO) with a storage capacity of two (2) Million Barrels and the ability to offload crude oil to any export tanker from AFRAMAX to Very Large Crude Carriers (VLCC). It has a loading capacity of 25,000 barrels per hour and will be exporting over 3.6 million barrels of Crude oil monthly at full scale of operation. Currently, hydrocarbon production from OML 29, which was hitherto constrained due to evacuation challenges owing to the security issues around the Nembe Creek Trunk Line (NCTL) corridor, has now been debottlenecked through a collaborative and creative approach that led to the innovation of the Alternative Crude Oil Evacuation Solution. The Argus European Crude Conference 2023 in London is a gathering of energy majors, refiners, NOCs, traders, financial institutions, and other representatives from across the global oil markets. The event also provides a critical opportunity for business leaders to connect, discuss, share and learn from one another.
Crude production plunges to 1.22mbpd in Q2 2023 -Report
Hope for increased crude oil production deemed with second quarter figures plunging to 1.22 million barrel per day (mbpd), Nigeria’s statistics bureau, has said. The decrease is coming in spite of the restoration of fragile peace in the Nigeria Delta region; the second quarter of 2023 recorded an average daily oil production of 1.22 million barrels per day (mbpd). This according to the Nigerian Bureau of Statistics (NBS) was much lower than the daily average production of 1.43mbpd recorded in the same quarter of 2022 by 0.22mbpd and lower than the first quarter of 2023 production volume of 1.51 mbpd by 0.29mbpd. The real growth of the oil sector was 13.43 per cent (year-on-year) in the second quarter of 2023, indicating a decrease of 1.66 per cent points relative to the rate recorded in the corresponding quarter of 2022 (-11.77 per cent). Growth also decreased by 9.22 per cent points when compared to the first quarter of 2023 which was –4.21 per cent. On a quarter-on-quarter basis, the oil sector recorded a growth rate of -14.12 per cent in the second quarter of 2023 and contributed 5.34 per cent to the total real Gross Domestic Product (GDP) in the second quarter of 2023, down from the figure recorded in the corresponding period of 2022 and down from the preceding quarter, where it contributed 6.33 per cent and 6.21 per cent respectively. The statistics bureau further said the non-oil sector grew by 3.58 per cent in real terms during the reference quarter (Q2 2023). This rate was lower by 1.19 per cent points compared to the rate recorded in the same quarter of 2022 and 0.81 per cent.
Iran to boost oil production by 3.4mbpd
The Islamic republic expects to boost production to 3.4 MMbpd by the end of summer, according to Oil Minister Javad Owji. That would put output near Iran’s capacity limit of 3.8 MMbpd. According to Bloomberg, Iran has already boosted production by about 50 per cent over the past two years, according to comments Owji made to the Iranian parliament’s energy committee reported by the ministry’s news service, Shana. Owji’s remarks come amid diplomatic efforts between the U.S. and Iran that have raised speculation about whether aspects of the nuclear deal abandoned by former President Donald Trump in 2018 could be revived. The two nations recently reached agreements that would see captive Americans released and some frozen Islamic republic funds freed for transfer. Further talks could set the stage for Iran to boost its already surging oil exports. The nation shipped 2.2 MMbpd of crude and condensates during the first 20 days of August, with monthly exports poised to reach the highest this year, according to TankerTrackers.com Inc., which provides data on oil cargo shipments, Bloomberg said. At the same time, the country’s boom in oil sales, most of which are flowing to China, has complicated efforts by OPEC to support oil prices, with Iranian barrels partially countering recent output cuts agreed by Saudi Arabia and Russia. That’s weighed on oil prices, with global benchmark Brent crude trading below $85 a barrel. The revival in Iran’s output has coincided with the nation reaching a preliminary accord with regional adversary Saudi Arabia in April, as well as the latest US diplomatic talks. The Persian Gulf state that was once the second-largest producer in the Organization of Petroleum Exporting Countries saw its energy industry starved of investment under successive rounds of sanctions, while its crude exports were throttled under Trump’s policy of maximum pressure. While Iranian exports are very hard to track — with vessels turning off satellite tracking systems to mask their routes — the data TankerTrackers indicates that Iran is drawing crude out of land-based storage tanks. The country processes roughly 1.8 MMbbl of crude at domestic refineries each day.
Lokpobri vows to ensure Nigeria meets OPEC’s production quota
The new Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobri, has said his mission to the ministry is to ensure Nigeria’s crude oil is ramped up on a sustainable basis. Lokpobri, who said this when he met chief executives of the ministry on Monday in Abuja after his swearing-in at the Presidential Villa, added that he was not in the ministry to sit in the office but rather to ensure that Nigeria meets its Organisation of Petroleum Exporting Countries (OPEC) production quota. According to him, everybody has to work together to increase production. “This is not time for speeches. There is only one agenda that I have come to this ministry to achieve and that is to ramp up crude oil production on a sustainable basis for the benefit of all Nigerians,” Lokpobiri said. Lokpobri, who will be in charge of ensuring the country’s crude oil production meets OPEC’s quota, stressed that he is a creek boy and would ensure through constant visit to the creeks that he provides the leadership that would ramp up crude production. According to him, with everybody working together, “we will write a new story for the oil industry,” he added. Earlier, the Minister of State Petroleum Resources (Gas), Ekperikpo Ekpo, said that the full utilization of the Compressed Natural Gas (CNG) by Nigerians would help cushion the adverse effect of petrol subsidy removal by the government. Ekpo insisted that with its abundance of gas deposits, it was time the country maximises its use in order to provide a better life for the citizenry. He said he would with collaboration with stakeholders work strategically to translate Nigeria’s enormous gas resources into reality to address the challenge of power. In his introductory remarks, the Permanent Secretary in the Ministry, Gabriel Aduda said the breakdown of the minister is part of the requirement of the Petroleum Industry Act of 2021. “This shift has ushered in a new era of transparency and independence,” he said. He noted that with the present challenge of ramping up production, the new leadership the two ministers will bring to the sector will help the country navigate the challenge.
Current oil output unlikely to change as OPEC meets Friday
The Organization of Petroleum Exporting Countries (OPEC) is not likely going to make any changes to the current oil output policy as tighter supplies and resilient demand drive an oil price rally. Ministers from the OPEC and allies led by Russia, known as OPEC+, meet on August 4 and the panel, called the Joint Ministerial Monitoring Committee, can call for a full OPEC meeting if warranted. Oil has rallied to a three-month high this week above $85 a barrel for Brent crude, as tighter supply and rising demand outweigh concern that interest rate hikes and stubborn inflation could hit economic growth.The Six OPEC+ sources said the Committee would probably not make any changes to existing policy during Friday’s online meeting as one of them cited the rising oil price as a reason to take no action.The OPEC and the Saudi Energy Ministry did not immediately respond to requests for comment on Tuesday.In the latest comments from an OPEC member about the market, the energy minister for the United Arab Emirates told Reuters on July 21 that current OPEC+ actions were sufficient for now and the group was “only a phone call away” if any further steps are needed. The UAE minister sits on the JMMC, which is chaired by Saudi Energy Minister Prince Abdulaziz bin Salman. Still, a surprise cannot be ruled out. The Saudi minister in July said OPEC+ would “continue the effort at surprising markets”. In April, several OPEC+ members announced cuts just ahead of a JMMC meeting that was expected to take no action. At its last policy meeting in June, OPEC+ agreed on a broad deal to limit supply into 2024 and Saudi Arabia pledged a voluntary production cut for July that it has since extended to include August. Analysts told Reuters last week they expected Saudi Arabia to extend the voluntary cut for another month to include September. National Australia Bank said in a report on Tuesday that it expected the Saudis to announce an extension of their voluntary cut at the committee meeting on Friday.