Gas Exports Drop as Shell Declares Force Majeure

Gas Exports Drop as Shell Declares Force Majeure

The nation’s gas exports have suffered a setback as Shell Petroleum Development Company of Nigeria Limited has declared force majeure on gas supply to the Nigeria LNG’s export facility on Bonny Island.

Force majeure is a legal clause that allows companies to cancel or delay agreed deliveries due to unforeseen circumstances.

The Media Relations Manager, SPDC, Mr. Precious Okolobo, told our correspondent on Wednesday that the force majeure was declared on August 8, 2016 following a leak on the Eastern Gas Gathering System pipeline through which Shell supplies the bulk of its gas to the NLNG.

“The pipeline has been shut down for a joint investigation visit into the cause of the leak and for repairs. The SPDC continues to supply gas to the NLNG through other pipelines,” he said.

An industry source told our correspondent that some of the 1.7 billion standard cubic feet of gas per day from facilities associated with the pipeline would be shut-in as a result of the force majeure, meaning less exports for the NLNG and lower revenue for the government.

The country has been struggling to maintain its crude oil production following a spate of militant attacks and technical problems that in May pushed production briefly to 30-year lows.

Shell had on August 4, 2015 declared force majeure on gas supplies to the NLNG following a leak along the EGGS-1.

The NLNG is owned by four shareholders, namely, the Federal Government, represented by the Nigerian National Petroleum Corporation (49 per cent); Shell Gas BV (25.6 per cent); Total LNG Nigeria Limited (15 per cent); and Eni International (10.4 per cent).

It has the capacity to produce 22 million tonnes of LNG a year and has long-term supply contracts with Italy’s Enel, Shell, France’s Engie SA and Portugal’s Galp, among others. It also sells on the spot market.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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