Shell, FG Voice Doubts Over Forcados Operations

More than seven months after it was shut down, the Forcados export terminal remains offline, with the operator, Shell Petroleum Development Company (SPDC) and the Federal Government, represented the Nigerian National Petroleum Corporation (NNPC), saying they are unsure when the facility near Warri, Delta State, will resume crude oil lifting to international markets.
It would be recalled that September 21, 2016, had marked exactly seven months that Shell declared force majeure on crude lifting for export from Forcados terminal.
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 the Niger Delta Avengers.
During the attack, the militants blew up a subsea pipeline feeding the terminal, knocking out, at least, 250,000 barrels per day of the nation’s oil exports.
Government officials had said the terminal was expected to resume in May, but that did not happen, as the reopening was pushed back to June, and again, to September.
But while responding to inquiries by newsmen, Corporate Media Relations Manager, Shell Nigeria, Mr. Precious Okolobo, said he could not tell when the terminal would come back on stream.
According to him, “The repairs are in progress; so, we cannot give precise timing on when the pipeline will be reopened”.
Similarly, the Nigerian National Petroleum Corporation (NNPC), in its latest monthly report, said its subsidiary, the Nigerian Petroleum Development Company (NPDC), lost over N27billion in July due to the force majeure declared by the SPDC as a result of the vandalised 48-inch Forcados export line.
The representative of the Federal Government in the joint venture operations of the oil and gas business, did not also state when the Forcados export terminal will resume crude oil lifting.
The NNPC, rather, said crude oil production in the country had in May plummeted to 1.69 million bpd following uptick in pipeline vandalism in the volatile Niger Delta region.
The NNPC said, “Subsisting force majeure at the Forcados terminal means that about 380,000bopd remain shut-in. Cargoes were deferred until repairs are completed.
“Also, the nation has lost over 1,500 megawatts to the damage at Forcados, which accounted for 40-50 per cent of gas production,” the NNPC added.
It is still uncertain when the Forcados pipeline will come back on stream as repairs have yet to be concluded.
According to the Head of Energy Research, Ecobank Capital, Mr. Dolapo Oni, “The terminal was supposed to come online last week; I don’t know why that announcement has not been made yet.
“We can’t afford another one month of having it offline, especially considering our foreign exchange position. The naira is now down to N480 to a dollar,” he added.
According to Bloomberg’s ship-tracking data, no tankers have loaded from the terminal so far since mid-February, 2016.
It revealed that eight cargoes are scheduled to load in October, with a further six planned for November.
Seven Energy, an integrated gas company in South-East Nigeria with upstream oil and gas interests in the region, said it lifted no oil from the Mining Leases 4, 38 and 41 during the first half of the year due to the shutdown of the Forcados terminal and declaration of force majeure by Shell from mid-February.
The International Energy Agency had in April estimated that Nigeria could lose up to $1billion in revenue by May, when repairs of the Forcados terminal were expected to be completed.
The IEA had 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 $1billion between February, when the force majeure was declared, and May, when repairs are expected to be completed.”
It would be recalled that the Niger Delta Avengers, had claimed responsibility for Forcados pipeline attack, and many other attacks in the region.
Other groups have also claimed responsibility for some attacks, including Niger Delta Greenland Justice Mandate (NDGJM).
The groups have primarily targeted pipelines belonging to oil majors Shell, ENI and Chevron, the NNPC itself, and the Nigerian company, Aiteo.
Exports of multiple crude oil grades, including Bonny Light, Forcados, Brass River and Qua Iboe have been under periods of force majeure since the beginning of this year, meaning that companies are released from export obligations as a result of circumstances beyond their control.
Former group managing directors of the NNPC had, at the end of a recent meeting with the current GMD, Dr. Maikanti Baru, and the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said the attacks were putting the nation’s oil industry at risk of total collapse.