02 October 2016, Abuja – The reopening of the export terminal that carries one of Nigeria’s largest crude oil grades still hangs in the balance eight months after it was shut down, ‘FEMI ASUwrites
More than seven months after it was shut down, the Forcados export terminal remains offline, with the operator, Shell Petroleum Development Corporation, saying it cannot tell when it will be reopened.
September 21, 2016 marked exactly seven months that Shell declared force majeure on the export of Forcados, one of Nigeria’s largest crude oil grades.
The force majeure, a legal clause that allows it to stop shipments without breaching contracts, came a week after the Forcados export line was attacked by militants in the Niger Delta.
The militants blew up a subsea pipeline feeding the terminal, knocking out at least 250,000 barrels per day of the nation’s oil exports.
The country and oil companies that depend on the terminal for exports of their output have taken serious beating since then as their revenues woes have worsened amid persistent low crude prices.
It is still uncertain when the Forcados pipeline will come back on stream as repairs have yet to be concluded.
Government officials had said the terminal was expected to resume in May, but that did not happen. The reopening was pushed back to June and then September.
“The terminal was supposed to come online last week; I don’t know why that announcement has not been made yet,” the Head of Energy Research, Ecobank Capital, Mr. Dolapo Oni, said.
“We can’t afford another one month of having it offline, especially considering our foreign exchange position. The naira is now down to 480 to a dollar,” he added.
No tankers have loaded from the terminal so far, according to Bloomberg’s ship-tracking data.
Eight cargoes are scheduled to load in October, with a further six planned for November, according to loading programmes obtained by Bloomberg.
But the Media Relations Manager, SPDC, Mr. Precious Okolobo, told our correspondent in a telephone interview that he could not tell when the terminal would come back on stream.
“The repairs are in progress; so, we cannot give precise timing on when the pipeline will be reopened,” he said.
The Nigerian National Petroleum Corporation, in its latest monthly report, said its subsidiary, the Nigerian Petroleum Development Company, lost over N27bn in July due to the force majeure declared by the SPDC as a result of the vandalised 48-inch Forcados export line.
The NNPC said crude oil production in the country had in May plummeted to 1.69 million bpd following uptick in pipeline vandalism in the volatile Niger-Delta region.
The NNPC said, “Subsisting force majeure at the Forcados terminal means that about 380,000bopd remain shut-in. Cargoes were deferred until repairs are completed. Also, the nation has lost over 1,500 megawatts to the damage at Forcados, which accounted for 40-50 per cent of gas production.”
One of the companies hard hit by the shutdown of the terminal recently expressed the hope that the force majeure would be lifted later in September.
Seven Energy, an integrated gas company in South-East Nigeria with upstream oil and gas interests in the region, said it lifted no oil from the Mining Leases 4, 38 and 41 during the first half of the year due to the shutdown of the Forcados terminal and declaration of force majeure by Shell from mid-February.
“Current expectations are that the force majeure will be lifted late in the third quarter of 2016,” the company said.
The International Energy Agency had in April estimated that Nigeria could lose up to $1bn in revenue by May, when repairs of the Forcados terminal was expected to be completed.