The attacks on Forcados export line by militants in the Niger Delta have left a total of 79 million barrels of crude oil shut in since February, causing oil firms and the nation a huge loss of revenue.
The Forcados export terminal was shut down after Shell Petroleum Development Company of Nigeria Limited declared force majeure – a legal clause that allows it to stop shipments without breaching contracts – on February 21.
Militants had a week earlier blown up a pipeline feeding the Forcados export terminal, knocking out at least 250,000 barrels per day. Since then, the terminal has not come back on stream.
The Nigerian National Petroleum Corporation, in its latest monthly report, said crude oil production in Nigeria plummeted to 1.69 million bpd in May, following uptick in pipeline vandalism in the volatile Niger-Delta region.
The NNPC said, “The subsisting force majeure at Forcados terminal means that about 380,000 bopd remains 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 per cent to 50 per cent of gas production.”
The corporation noted that force majeure was declared on May 10 for repair work on Nembe Creek Trunk Line and the resultant shut-in of about 275,000bopd, adding that other far-reaching incidents included production shut-in at Usan, Que Iboe and Brass terminals.
It is still uncertain when the Forcados pipeline will come back on stream, although one of the companies hard hit by the shutdown expects the force majeure to be lifted later this month.
Seven Energy, an integrated gas company in the South-East 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 the declaration of force majeure by Shell from mid-February.
“Current expectations are that the force majeure will be lifted late in the third quarter of 2016,” the company said.
On Wednesday, global credit rating agency, Fitch Rating, downgraded Seven Energy International Limited’s Issuer Default Rating to ‘CC’ from ‘B-’. It also downgraded the senior secured rating of the Seven Energy Finance Limited to ‘C’ from ‘CCC’.
Fitch noted that the company’s oil business in Nigeria had been hampered by security issues, leading to the prolonged shutdown at the Forcados oil terminal, and the weak financial position of the Nigerian Petroleum Development Company.
The International Energy Agency had in April estimated that Nigeria could lose an estimated revenue of $1bn (N197bn) by May, when repairs of the Forcados terminal were 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 stands to lose an estimated $1bn between February, when force majeure was declared, and May, when repairs were expected to be completed.”
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 June. Other groups have also claimed some of the attacks.
The groups have primarily targeted pipelines belonging to oil majors such as Shell, ENI and Chevron, the NNPC, and Nigerian company Aiteo.
Former group managing directors of the NNPC had at the end of a meeting with the current GMD of the corporation, 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.
“If the current situation remains unchecked, it could lead to the crippling of the corporation and the nation’s oil and gas sector, the mainstay of the Nigerian economy,” the NNPC reported to have said in a statement.
They urged the corporation and the government to implement necessary reforms in order to prevent the nation’s oil and gas industry from being brought to a grinding halt.
The Chief Executive Officer, Seven Energy, Phillip Ihenacho, said, “The macro-environment in Nigeria and the ongoing issues within our industry present our company with an extremely challenging environment. So far, during 2016, we have received no revenue from our interests in OML 4, 38 and 41 as a result of the shutdown of the Forcados terminal.”
source: http://punchng.com/vandalism-nigeria-loses-79-million-barrels-crude/
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