Nigeria’s Oil Export Declines With Force Majeure Declaration By Shell

Yemisi Izuora
Shell Force Majuere
Crude oil export capacity is now hindered with foreign exchange earnings negatively affected as Shell Petroleum Development Company (SPDC), in response to its facility damage declared a force majeure on Forcados.

The oil company’s action was sequel to the disruption in production caused by the spill on Forcados Terminal subsea crude export pipeline.

The operator of the SPDC Joint Venture comprising NNPC, Shell, Total and NAOC, however stated that it was intensifying efforts on containment and oil recovery from the February 14, 2016 spill, while also finalising repair plans.
In 2014, Shell-operated ventures in Nigeria produced an average of 739,000 barrels of oil equivalent per day (boe/d), with 578,000 barrels coming from the Shell Petroleum Development Company Joint Venture (SPDC JV).

The SPDC JV is the major supplier of gas to Nigeria LNG. SPDC’s Afam VI power plant supplied approximately 18 per cent of the nation’s grid-connected electricity in 2014.

The facility had experienced several attacks in the past few months.

For instance, a few weeks ago, the company embarked on investigation to determine the source of oil spill in Forcados, after observing crude oil spill on water around Forcados Terminal penultimate Sunday.

The SPDC had maintained that the initial investigation would enable the company to quickly determine what suitable response is further needed, adding that all SPDC JV and third party production into the terminal was being suspended as a precautionary measure.

As a further precautionary measure, the company also hinted that it had activated its Emergency and Oil Response teams to manage the incident, while booms and other oil containment resources are being deployed to the area to try to stop the spread of spilled oil.

The company said the support of industry group, Clean Nigeria Associates, CAN, has been secured for a comprehensive response to the spill, while relevant authorities, including security agencies, had also been informed of the incident, preparatory to a joint investigation visit which will determine the cause and volume of oil spilled.

SPDC, in its latest report, indicated that crude oil theft, sabotage and illegal refining were the main sources of pollution in the Niger Delta and were the cause of 75 per cent of spill incidents from SPDC JV pipelines in 2014.

It reported further that an average of 37,000 barrels of oil equivalent a day (boe/d) were stolen from the SPDC JV network in 2014, with an additional 110,000 boe/d of production deferred due to illegal interference with pipelines and other illegal activities, such as theft of well head equipment.

The company also pointed out that one of its key priorities was to achieve the goal of no spills while also lamenting that in addition to spills caused by criminal activity, there were 37 operational spills of more than 100kg in volume from the SPDC JV network during 2014, compared to 30 in 2013.

It maintained that the volume of oil spilled in operational incidents was reduced to 0.3 thousand tonnes in 2014, from 0.4 thousand tonnes in 2013.

“To reduce the number of operational spills, SPDC JV is focused on implementing a work programme to appraise, maintain and replace key sections of pipeline. 132 km of new pipelines were installed during 2014, bringing the total for the last four years to more than 900km.

“SPDC JV pipeline network is covered by surveillance contracts to ensure that spills are discovered and responded to as quickly as possible. “There are also regular over-flights to detect new theft points,” it added.

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