A Review of the Nigerian Energy Industry

Shell shuts down Nigeria’s crude export pipeline

Trans Forcados pipeline
Trans Forcados pipeline

16 May 2015, News Wires – The Trans Nigeria Pipeline that carries Nigeria’s Bonny Light crude oil to an export terminal has been shut down since May 12, a Shell spokeswoman said on Thursday.

While neither the reason for the shut down nor its expected duration have been disclosed as at the time of filing this report, traders affirmed that Bonny Light loadings have been delayed by up to four days over the past week.

This development is taking place about a week after the Anglo-Dutch oil giant, Shell, declared force majeure on exports of Nigeria’s Forcados crude oil stream.

“Force majeure” is a legal term releasing a company from contractual obligations when faced with circumstances beyond its control.

It declared force majeure on the evening on May 5 following “a series of leaks” in the Trans Forcados pipeline that brings the oil to the export terminal. The pipeline itself is operated by the Nigerian Petroleum Development Company (NPDC).

As at that time, several cargoes of Forcados for May loading were still on offer, with around 189,000 barrels per day (bpd) scheduled for export in six cargoes.

An overhang of light sweet crudes in the Atlantic Basin has depressed differentials to dated Brent and limited the impact of recent supply disruptions on some West African crude oil grades.

Again, the expected increase in oil output from Nigeria during the current month as a result of the completion of key pipelines maintenance works and resumption of crude lifting, might also have suffered setback.

The completion of maintenance work on Nembe Creek oil pipeline in Nigeria by Shell could boost Bonny light export, Ecobank had said in its Middle Africa Market Update/Energy.

The Ecobank report released on May 4 said, “Shell has reopened the Nembe creek oil pipeline after a planned maintenance downtime. The company shut the pipeline on March 19 to carry out maintenance work linked to vandalism damage. The pipeline which transport about 150Mbbl/d of Bonny light crude to Shell’s Bonny Export Terminal was shut down for one week. The rapid return to operation of the pipeline is key to Nigeria’s export as further delay in reopening the pipeline would have impacted Nigeria’s production for April.”
*Sola Alabadan

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