A Review of the Nigerian Energy Industry

Shell shuts 28-inch Bomu-Bonny oil trunkline in Nigeria

*Defers 150,000/d oil production

30 September 2012, Sweetcrude, ABUJA – Shell Petroleum Development Company, SPDC, a subsidiary of Shell Companies in Nigerian has shut its Bonny oil pipeline and deferred 150,000 barrels per day of production after oil thieves caused a fire, the company claims.

In a statement released earlier today, Shell announced it has shut the 28-inch Bomu-Bonny Trunkline after discovering a fire on it early this morning.

The company also claimed that a burning vessel, thought to be involved in the theft of crude oil from the line, was sighted near the site of the incident.

Shell said it was mobilizing to fight the fire and would investigate the cause and carry out repairs as soon as possible.

Bonny Light is Nigeria’s benchmark crude, used to price other grades of oil, and makes up around 10 percent of the total oil exported out of Africa’s biggest producer.

Additional reporting by Reuters says Nigeria was due to export around 205,000 bpd of Bonny Light in November and 229,000 bpd in October, according to provisional loading programs.

The grade is gasoline-rich and is popular with U.S. refiners.

Oil theft is a major problem in the Niger Delta wetlands region in southern Nigeria, where the majority of its oil is produced. The thousands of kilometers of winding waterways and creeks are difficult to police, although there is also evidence that security officials have been complicit in theft.

Shell estimates more than 150,000 bpd of oil is being stolen by gangs who tap into pipelines and siphon off industrial quantities of oil. Some of it is refined locally, while the rest is ferried out to larger ships offshore.

(Reporting by Joe Brock; Editing by Dale Hudson and Maureen Bavdek)

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  • The deferment of 150,000 barrels per day production is quite unfortunate considering that Nigeria is largely dependent on oil export revenue for the bulk of its foreign exchange earnings. It is however becoming increasingly difficult to accept Shell’s explanation hook line and sinker, especially in view of the Bonga spill wish the company explained away rather glibly. There’s been other incidents and the company has not shown any disposition towards accepting responsibility for any failing on its part. We therefore urge the authorities to investigate this incident to determine the immediate and remote causes.