Five months after it was attacked and shut down,
Shell’s Forcados export line remains offline, causing the country a loss of
about $1.6bn (N356.6bn) in revenue.
It is still uncertain when the pipeline
would come back on stream, although the Minister of State for Petroleum
Resources, Dr. Ibe Kachikwu, had said earlier this month that repairs would be
completed by the end of July.
In February 21, Shell declared force majeure – a
legal clause that allows it to stop shipments without breaching contracts – a
week after militants blew up a pipeline feeding the Forcados export terminal,
knocking out at least 250,000 barrels per day.
The International Energy Agency had in
April estimated that Nigeria could lose an estimated $1bn (N197bn) in revenue
by May, when repairs of the Forcados terminal was expected to be 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 stand to lose an
estimated $1bn between February, when force majeure was declared, and May, when
repairs are expected to be completed.”
At an average oil price of $40 and exchange
rate of N197 to the dollar, the country lost at least N246.4bn as of June 19
and N110.2bn from June 20 to July 27 (using $290/$).
The Nigerian National Petroleum Corporation
had said the deficit and low revenue recorded by its exploration and production
subsidiary, Nigerian Petroleum Development Company, from February to April, was
due to production shut-in, resulting in loss of entire NPDC’s revenue from
crude oil sales of about N20bn occasioned by vandalism of Forcados export line.
The corporation said recent upsurge in vandalism
had negatively impacted on the Nigerian crude oil production output, losing its
African top crude oil producer to Angola.
It said, “About 380,000barrels per day
remained shut in due to vandalism of the 48-inch subsea export line on February
15, 2016.
“Also, the nation has lost over 1,500MW of
power supply to the damage as gas supply from Forcados, which is Nigeria’s
major artery, accounts for 40 to 50 per cent of gas production. Incessant
pipeline vandalism poses the greatest threat to the industry.”
Nigeria’s oil production is now 700,000
bpd lower as a result of persistent militant attacks on oil pipelines and
infrastructure, Reuters reported, quoting the NNPC.
In addition to Forcados, Qua Iboe and Brass
River are also under force majeure, while Escravos and Bonny Light are facing
significant loading delays.
The militant group, Niger Delta Avengers,
has claimed most of the strikes, which continued even during a one-month
ceasefire announced by the government in late June. Other groups have also
claimed attacks.
The groups have primarily targeted
pipelines belonging to oil majors Shell, ENI and Chevron, NNPC itself, and
Nigerian company Aiteo.
“As one terminal comes back online,
another goes offline,” analysts at Barclays wrote in a note, adding that “with
militants wanting a greater share of the country’s oil wealth, outages are
likely to prevail until any agreement can be made.”
This month, Shell shut the Trans Niger pipeline,
which is one of the pipelines that carry crude to the Bonny light export
terminal, following a leak in Ogoniland.
While crude export was briefly reduced to
30-year low at the peak of the attack, Nigeria’s export has recovered sharply.
Analysts at Ecobank Capital, led by Mr.
Dolapo Oni, in a report said, “However, indigenous operators in the country are
expected to be significantly affected by the shutdowns. Most of the country’s
indigenous producers operate onshore fields which require the loading terminals
for export.
“The local producers could see 2016
financial performance worsen considerably due to the security challenges of the
region.”
source: punch Nigeria
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