- FG, Oil Majors Lose N195bn to Pipeline Shutdown
The shutdown of the Trans-Ramos Pipeline since May has cost the Federal Government, Shell, Total and Nigeria Agip Oil Company Limited at least $640m (N195bn) in lost revenue.
Shell Petroleum Development Company of Nigeria Limited announced on May 25 that it had shut down production following the discovery of leaks on the pipeline, which is located in the swamps of western Niger Delta.
The SPDC is the operator of a joint venture involving the Nigerian National Petroleum Corporation, which holds 55 per cent; Shell, 30 per cent; Total Exploration and Production Nigeria Limited, 10 per cent; and NAOC, five per cent.
The Trans-Ramos Pipeline, which supplies crude oil to the SPDC JV-owned Forcados export terminal, has a capacity of around 100,000 barrels per day.
Using an average oil price of $72 per barrel, the decline of 100,000 bpd in the nation’s oil exports means a loss of $640m or N195bn (using an exchange rate of N360/$1) in three months.
The international oil benchmark, Brent crude, against which Nigerian oil is priced, has been trading around $72 and $76 per barrel since May 25. It stood at $72.64 per barrel as of 5:30pm Nigerian time on Tuesday.
The SPDC said on Sunday that it had recovered over 95 per cent of spilled oil from the recent spill incidents on sections of the Trans Ramos Pipeline in Aghoro community, Bayelsa State, and in Odimodi community in Delta State.
The oil major said the pipeline had remained shut in since the incidents.
“As soon as clean-up and site assessment are completed, we are committed to starting the immediate remediation of the impacted areas in Aghoro and Odimodi,” a spokesperson for the SPDC said.
According to the spokesperson, details of the cause and impact of the spills will be captured in the Joint Investigation Visit reports, which will be released after sign-off by all parties.
“The JIV is a multi-party exercise involving the regulators, the community, representatives of the state government, security agencies, and representatives of SPDC. The outcome is then signed off by the stakeholders to authenticate the findings,” he added.
Meanwhile, Nigerian crude differentials looked to be under pressure on Tuesday because of abundant supply and lacklustre demand, according to Reuters.
Traders were quoted as saying that there were almost 30 unsold cargoes from the August and September programmes, in addition to newly released October underlining plentiful supply.
A Qua Iboe cargo was said to have traded at dated plus $1 or below, a relatively low level for the grade last valued by Reuters at dated plus $1.15.
A Forcados cargo was heard to have traded at about dated plus $1.30, 10 cents above a bid from Vitol on Monday.
More Nigerian loading programmes emerged on Monday, following the release of the three largest supply schedules last week and showed supply in October could well reach its highest in three months.
So far, at least 38 cargoes of Nigerian crude will load in October for a daily rate of 1.12 million barrels per day, up from around the same level for September and the largest supply programme since July’s 51 cargoes.
