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.”
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