A Review of the Nigerian Energy Industry

Nigeria’s Bonny Light falls to 30-month low on force majeure

03 July 2012, Sweetcrude, HOUSTON – THE premium of Nigeria’s Bonny Light crude to Dated Brent has fallen to a 30-month low, dipping below $1.00/barrel for the first time since 2009, as a nearly two-month force majeure on the crude’s export continues.

Platts assessed Bonny Light on Friday at Dated Brent plus $0.995/b, the first sub-dollar premium and the lowest for the differential since December 15, 2009, when it was at plus $0.925/b.

Shell spokesman Jonathan French confirmed the force majeure was “still in force” Monday, nearly two months since it was declared on May 4.

Since May 10, when Bonny differentials peaked post-force majeure at plus $1.525/b, assessed values have steadily dropped nearly every trading day a cumulative 53 cents.

The length of the force majeure has surprised some in the market. “It’s not normal at all,” a market source said. “We used to see 10 days, 15 days, but two months?”

Force majeure typically has a bullish impact on values, since it means less crude available to the marketplace.

But in Bonny Light’s case, the act of repeated swapping and switching lifting dates has translated into difficulty of marketing and guaranteeing delivery of the crude, and hence lower values.

“Many refiners for sure … think twice before buying a Bonny cargo,” particularly given the availability of alternative crude in the Mediterranean, a market source said.

Repairs to the damaged Nembe Creek trunkline in Nigeria’s Niger Delta region are “still ongoing,” French said Monday.

French declined to disclose a target completion date, or the current throughput rate for Bonny.

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