- Govt, Oil Firms Lose $674m to Pipeline Shutdowns
The shutdown of two pipelines since last month may have caused oil firms and the nation a huge loss of revenue estimated at $674.25m.
Shell Petroleum Development Company of Nigeria Limited, on May 17, 2018, said it had declared force majeure on exports of Bonny Light crude, one of the country’s major sources of oil revenue.
Force majeure is a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances.
The SPDC, the Nigerian subsidiary of Royal Dutch Shell, said the shutdown of the Nembe Creek Trunk Line had prompted the force majeure.
The NCTL, operated by Aiteo Eastern Exploration and Production Company, feeds the Bonny export terminal in Rivers State. Its shutdown has taken a toll on Shell and some indigenous firms who depend on the pipeline for exports.
Exports of Bonny Light were expected to run at around 195,000 barrels per day this month, according to Reuters.
On May 25, the nation’s crude oil exports suffered another setback as the SPDC shut down production following the discovery of leaks on its Trans Ramos Pipeline in the swamps of western Niger Delta.
The pipeline, which supplies crude oil to the Forcados export terminal, has a capacity of around 100,000 barrels per day.
Using an average oil price of $75 per barrel since Brent crude, against which Nigerian oil is priced, has been trading around $70 and $80 in recent months, the decline of 295,000 bpd in the nation’s oil exports means a loss of $674.25m in a month.
When contacted for an update on the force majeure on Bonny Light exports and the shutdown of Trans Ramos Pipeline, a Shell’s spokesperson, Mr Bamidele Odugbesan, said the Bonny terminal was not shut.
He added, “There is a force majeure on exports of Bonny Light because the NCTL is down. So, we are not getting supply from the NCTL, which means we cannot operate at full capacity to meet outstanding obligations. So, there is still subsisting force majeure on Bonny Light exports, and this is so because Aiteo’s force majeure on the NCTL is still subsisting.
“The Trans Ramos pipeline is still shut following the leaks announced, and joint investigation visits are ongoing at the two major areas, namely Aghoro in Bayelsa State and Odimodi in Delta State. We are getting close to the completion of the JIVs, which will give us an idea of the cause and the impact, in terms of how much volume was spilled.”