Electricity Production Faces Fresh Challenge, Oil Leakage Forces Closure of Two Nigerian Oil Pipelines In The Niger Delta

Yemisi Izuora-

SHELL PETROLEUM

Nigeria’s Trans Forcados oil and gas pipeline and related production as well as Shell’s Nembe Creek line, carrying Bonny Light crude, were shut at the weekend, the ministry of power and Shell said in separate statements on Tuesday.

The 150,000 barrel per day (bpd) Nembe line was shut on Jan. 17 after a leak was found, which is still being investigated, a spokeswoman for Shell said adding that a section of the Trans Escravos pipeline was also closed on Jan. 14 for works and to remove crude theft connections.

According to Reuters, the pipelines are operated by Shell’s Nigerian joint venture SPDC.

Traders said it was too early to tell whether the shut downs would impact exports. Bonny Light exports were scheduled at 185,000 bpd in January and 170,000 in February and the grade is also transported via the Trans Niger Pipeline.

A spokeswoman for Shell said there was no impact on Bonny Light exports at present.

Nigeria’s power ministry said the Forcados pipeline was closed after a leak occurred at the Oteghele axis in the southern state of Bayelsa and there was no timeframe yet for the duration of the disruption.

“The minister of power … has appealed for the understanding of electricity consumers, for the reduction in power supply which this development may cause,” the statement said.

The affected section of the Forcados pipeline is run by state-owned Nigerian Petroleum Development Corporation, a subsidiary of the Nigerian National Petroleum Corporation but NNPC spokesman did not respond to a request for comment.

A spokesman for SPDC in Lagos said its production is linked lower down the pipe and was not affected.

Seplat Petroleum, which produces around 60,000 bpd and exports crude via the Forcados pipeline, declined to comment immediately but said it would issue a statement later.

Two other incidents of vandalism occurred in early January affecting the 24-inch and 28-inch sections of the pipeline. The damage took about a week each time to repair before the pipeline was back in use, the power ministry said.

The pipeline transports the Forcados crude oil grade and bout 260,000 bpd were scheduled to be exported in January and 210,000 bpd in February.

“(The shutdown) takes some cargoes out of the market, but we already had 10 days delay in Forcados,” a trader said, adding that two January cargoes had already been deferred to February with a knock-on effect into March.

“This may cause further delays” he said, which would support the prices of other Nigerian grades.

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