Nigeria losing N1.93bn daily as Shell halts oil exports

Nigeria’s revenue woes heightened on Wednesday, as Shell Petroleum Development Company, SPDC, declared a force majeure on the export of Bonny Light crude, as a result of damage to a major crude oil export pipeline, the Nembe Creek Trunk Line.

According to a statement by Shell, the force majeure was declared because of a leak which necessitated the closing of the Nembe Creek Trunk Line, adding that the force majeure had been in force since 12.00 Nigerian time on May 10.

As a result of the shutdown, Shell was forced to defer its Bonny Light loadings, which were scheduled for around 210,000 barrels per day on seven cargoes in the month of May.

With the deferment of 210,000 barrels of crude oil per day, Nigeria is currently losing about $9.631 million, an equivalent of N1.93 billion daily. This is based on the current crude oil price of $45.86 per barrel and an exchange rate of about N200 to a dollar.

The Nembe Creek Trunk Line is a 100 kilometre pipeline, commissioned in 2010 with a capacity of 600,000 barrels per day. It carries Shell-operated Bonny Light crude to the Bonny export terminal.

Shell further stated that repairs on the trunk line are being carried out by Aiteo Eastern Exploration and Production Company, while it gave no details about how long the repairs would take.

Shell, however, stated that gas supply to the 22 million tonnes per year Bonny Island Nigeria Liquefied Natural Gas (NLNG) production facility was not interrupted.

Shell, builder and part owner of the Nembe Creek Trunk Line, had in March last year, completed the sale of its stakes in the facility to Aiteo E&P, in a deal put at $1.7 billion, which also included the assignment of its interests in Oil Mining Lease (OML) 29.

Total E&P Nigeria Limited and Nigerian Agip Oil Company Limited also assigned their interests of 10 per cent and five per cent respectively in the lease, ultimately giving Aiteo Eastern a 45 per cent interest in both the Nembe trunk and OML 29.

Shell had constructed the facility  to enable it evacuate crude oil from OML 29 for export; starting from Nembe Creek to a manifold at the Cawthorne Channel field on OML 18, from where crude is evacuated the short distance to the Bonny oil terminal.

The facility has a capacity of 150,000 barrels per day at Nembe Creek, however, up to 600,000 barrel per day of liquids can be evacuated from the end point at Cawthorne Channel.