25 December 2016, Lagos – With global oil prices trading above the $50 per barrel mark since November 30, the shutdown of the Forcados terminal, through which the nation’s largest crude oil grade is exported, has led to a loss of at least N115bn in 24 days.
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. It has yet to be lifted as of the time of filing this report.
The Presidency had in late October quoted the Shell Director, Mr. Andrew Brown, as saying that the oil major had resumed crude exports from the facility following repairs. He reportedly said this at a meeting with President Muhammadu Buhari.
In early November, there was another attack on the Trans Forcados oil pipeline carrying crude oil and gas to the Forcados export terminal.
According to the Nigerian National Petroleum Corporation, at Forcados terminal alone, about 300,000 barrels of oil per day have been shut in since February 2016 following the force majeure declared by Shell Petroleum Development Company.
“A number of crude oil lifting was deferred until the repair is completed. Other major terminals affected by the renewed spate of vandalism include Bonny, Usan, Qua Ibo, and the recently attacked Nembe Creek trunk line,” the NNPC said in its latest monthly report.
The International Energy Agency had in April estimated that Nigeria could lose about $1bn (N197bn) in revenue by May, when repairs of the Forcados terminal were expected to have been completed.
The IEA said, “The Forcados terminal in Delta State, one of Nigeria’s biggest terminals, was scheduled to load 250,000 barrels of crude per day. At $40 per barrel, Nigeria could lose about $1bn between February, when force majeure was declared, and May, when repairs are expected to be completed.”
But as of Friday December 23, the force majeure had not been lifted.
At an average oil price of $53 per barrel and exchange rate of N305 to the dollar, the country lost at least N115.2bn from December 1 to 24.
The Media Relations Manager, SPDC, Mr. Precious Okolobo, told our correspondent in a telephone interview on Friday that he could not tell when the terminal would come back on stream.
“Forcados terminal is still shut down. I cannot give precise timing on when the pipeline will be reopened,” he said.
Oil exports account for about 80 per cent of the Nigerian government revenue, and exports sales are accrued to the government’s account two or three months later.
The nation’s oil output plummeted to near 30-year lows of around 1.4 million barrels per day in May from 2.2 million bpd earlier in the year as attacks on oil facilities in the Niger Delta rose at an alarming rate.
Reuters reported that trading was thin on Thursday with the approaching holidays, with Nigerian crude still in overhang while some programmes were slow to emerge due to strikes at ExxonMobil’s fields.