AT:Shell-Nigeria: Oil Revenue Dips as Shell Cuts Exports
Nigeria - Nigeria's crude oil exports have suffered a major cut back following declaration by the country's top producers, Shell Petroleum Development Company (SPDC), that it could no longer meet scheduled supply commitment to buyers. The Force Majeure came into effect at noon yesterday and will affect loading of Bonny Light crude oil grades for June and July 2011. Consequent on the development, Nigeria's revenue opportunity from the prevailing strong international prices of crude oil has hit a downtime, wiping off millions of dollars from the government's income channels. The declaration followed production cuts backs due to vandalism and multiple pipeline fire blasts sparked off by crude oil thieves that also thrive on running illegal export routes in the Niger Delta.
Shell said thieves that target crude oil and condensate had hacked into the company's main Trans-Niger Pipeline which transports production from SPDC and third parties in its Eastern operations to Bonny Terminal.
The company stated in a declaration that the pipeline was affected by leaks and five separate fire incidents on both the 24" and 28" lines in Bodo, Bera, Biera and Mogho all in Ogoni land, on June 9.
SPDC said in the statement that it immediately shut the lines, mobilized its pipelines response and fire fighting teams and extinguished the fires by June 11.
"Joint Investigation Visits comprising government agencies, communities and SPDC found that the incidents were caused by hacksaw cuts which indicate third party interference and activities of unknown persons," the statement said.
The statement added that production deferment over the period has affected the loading programme at Bonny Terminal, adding that SPDC would now have to advise customers of a revised schedule.
The volume of production lost to the incident was not disclosed by Shell but sources close to the company said export commitments suffer deficits that run into some millions barrels of crude oil and condensate.
Crude oil yesterday sold at over $117 per barrel in the export market
The leaks have been repaired leading to resumption of production on June 12.
Vice President HSE, Infrastructure & Logistics, Shell Sub Saharan Africa, Babs Omotowa said: "The leaks and fires show a worrying trend not only on the TNP but also on our facilities elsewhere. Sadly, the trend is continuing unabated. At end April, we recorded more than 35 sabotage spills.
"SPDC is continuing to upgrade facilities, replace pipelines and improve oil spill response systems. But no matter how much we improve our performance, until the activities of oil thieves and illegal refiners are brought to an end, the vast majority of oil spills in the Niger Delta will continue."
