At least a fifth of Nigerian oil
production, equivalent to almost 400,000 barrels a day, has been shut down as a
pipeline closure added to disruptions caused by militant attacks.
Royal Dutch Shell Plc declared force
majeure — a legal clause that allows it to stop shipments without breaching
contracts — on exports of Bonny Light crude following the discovery Tuesday of
a leak on the Nembe Creek Trunk Line, according to a statement Wednesday.
The incident comes amid escalating
attacks by militants operating in the Niger River delta, which have already
halted shipments from the Forcados terminal and the Okan oil platform.
“‘We don’t know if it’s an attack or
sabotage” on the Nembe Creek line, Lagos-based Sola Omole, a spokesman for
Aiteo Exploration and Production Co., the operator of the pipeline, said by
phone. “It is only when the contractor gets to the site and takes a look at it
that we can say definitively that this is the cause of the problem. ”
A resurgence of attacks on oil
infrastructure caused Nigerian production to drop to the lowest in 20 years
last month, compounding the impact of slumping crude prices on Africa’s largest
economy. Formerly the continent’s largest oil producer, the nation has slipped
into second place after Angola, according to data compiled by Bloomberg.
Production Halt
The Nembe Creek Trunk Line runs for
100 kilometers (62 miles) through the Nigeria’s oil producing region to the
Bonny crude oil terminal and has a capacity of 600,000 barrels a day, according
to Shell’s website. At least 78,000 barrels a day of Aiteo’s crude output
has been shut down because of the leak, Omole said. Shell said the force
majeure covers all Bonny Light shipments — scheduled at 217,000 barrels a day
next month — without specifying how much production could be disrupted.
The shutdown last week of Chevron
Corp.’s Okan platform, which feeds the Escravos export facility, affected
90,000 barrels a day of production. About 200,000 barrels a day of output has
been halted at Shell’s Forcados terminal since February.
Oil futures recouped losses following
the Bonny Light force majeure, with international benchmark Brent crude gaining
as much as 1.3 percent to $46.13 a barrel on the London-based ICE Futures
Europe exchange.
Delta Avengers
A group calling itself the Niger Delta
Avengers said on its website that it was responsible for the attack on the
Chevron facility. The authenticity of the claim could not be verified by
Bloomberg News.
Nigeria’s armed forces are aware of a
new group “who have vowed to cripple economic activities,” Brigadier General
Rabe Abubakar said in a statement on Tuesday. “The military will employ all
available means and measures within its rule of engagement to crush any
individual or group that engages in the destruction of strategic assets and
facilities of the government.”
International producers including
Shell and Chevron began evacuating non-essential workers and contractors from
major oil production facilities as part of safety measures, Chika Onuebgu,
Rivers state chairman of the Trade Union Congress of Nigeria, said by phone Tuesday.
“It is not a lock-down, it is just a precautionary measure” and oil operations
continue in areas not affected by attacks.
The current attacks echo a similar
wave of violence between 2006 and 2009, which ended after militants accepted an
amnesty from late-President Umaru Musa Yar’Adua, disarming in exchange for cash
payments. The militants have been frustrated by current President Muhammadu
Buhari’s decision to scale back the allowances.
The International Energy Agency
estimated last month that Nigeria could lose an estimated $1 billion in revenue
by May, when it expects repairs on Forcados to be completed. The terminal may
not restart until June, Kachikwu said April 20.
“The government needs to address this
very quickly,” Onuegbu says. “Insecurity is becoming a big problem in the Niger
delta with the return of these attacks.”
Read more at www. bloomberg.com
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