A Review of the Nigerian Energy Industry

Delays in crude oil exports from Nigeria persists

20 November 2012, Sweetcrude, Lagos – CRUDE oil export delays in Nigeria have prolonged, traders have said, a sign that a raft of recent output problems caused by oil theft and flooding are increasingly holding back supplies from Nigeria, Africa’s biggest producer.

The authorities said last month, major oil theft incidents and the country’s worst floods in 50 years caused oil output to drop by a fifth, but days later said things were back to normal.

Since then, fresh oil spills and warnings by foreign oil companies suggest Nigeria’s 2 million barrel per day, bpd, crude export business is suffering acutely from the outages. Exports of Nigeria’s top crude stream and benchmark, Qua Iboe, are delayed by 12 days, compared with seven to nine, a week ago, traders said.

US oil major, ExxonMobil, shut a pipeline that feeds Qua Iboe exports on Novomber 9, due to a leak. Shell still has in place a force majeure on Forcados and Bonny Light crude oil grades after a tanker being used to steal oil was set ablaze on September 30, spreading fire across several oil and gas installations.

In a separate incident, Shell shut down its Imo River oil pipeline on October 31, due to damage caused by thieves and deferred 25,000 bpd of oil production.

Italy’s Eni said last week it had declared force majeure on the Brass River oil, due to flooding and since then loading delays have increased to around 15 days, traders said.

France’s Total has restarted oil and gas production from its 90,000 barrel per day OML 58 block of which it holds a 40 percent stake and which was shut a month ago due to severe flooding. Total still has a force majeure in place on its gas supplies to Nigeria’s Liquefied Natural Gas, LNG, company.

However, gas supplies to the Nigeria LNG are recovering. Shell said last Friday it had lifted its force majeure on gas supply to Nigeria LNG, a six-train plant with a capacity of 22 million tonnes a year, around 9 percent of global supply.

A force majeure on exports from the plant remains in place. Force majeure frees a company from meeting contractual obligations due to circumstances out of its control.

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 kilometres of winding waterways and creeks are difficult to police, although there is also evidence that security officials have been complicit in theft.

Nigeria LNG stakeholders are: the state-run energy firm NNPC with 49 percent, Shell (25.6 percent), Total (15 percent), and Eni (10.4 percent).

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