Royal Dutch Shell has lifted restrictions on exports of Forcados crude, a key Nigerian crude oil grade, whose exports was halted 15 months ago following militant attacks.
This comes even as oil price tumbled yesterday to its lowest in four weeks as an unexpected increase in U.S. crude stockpiles, rising production from Libya and Nigeria, which are exempt from OPEC output cut agreement, stir up fears that the global oil supply glut will remain unabated.
Shell’s Nigerian unit, operator of the Forcados pipeline through which the crude is exported by participating companies, declared force majeure on the crude on February 21, 2016 after the Niger Delta Avengers, a militant group, attacked the subsea export line.
But Shell on Tuesday lifted force majeure on Forcados crude shipments following the completion of repairs of the pipeline. Shipments this month will average about 250,000 barrels per day, according to loading program compiled by Bloomberg.
The return of Forcados may be good news for Nigeria, as it will add more than 10 percent to the country’s output, lifting it toward the 2 million barrels a day mark. Data shows that Forcados’s scheduled cargoes for June are the second highest of any Nigerian grade.
Ministry of Petroleum Resources had on Monday said daily crude and condensate output combined rose to 1.98million b/d compared with 1.85 b/d in April.
The loss of Forcados barrels in 2016 had the single biggest impact on Nigerian oil production out of any grade the country produces.
The NNPC, a participant in the Forcados terminal, said that about 300,000 bpd of its revenue from crude oil sales had been shut in since February 2016 due to the vandalism of the export line.
Indigenous oil and gas company, Seplat which relies on the terminal to export around 75,000 b/d of its crude had to secure alternative route.
Meanwhile, the price of Brent crude, the global crude benchmark which traded below $50 a barrel for the past couple of weeks were at $48.40 per barrel, down 3.4 percent, or $1.72 a barrel after climbing $50.12 on Tuesday.
The price drop fueled speculation that rising U.S. output will counter supply curbs by the Organization of Petroleum Exporting Countries and its partners, including Russia.
Prices slid even as some in the market remained concerned about the move by OPEC members Saudi Arabia and the United Arab Emirates to cut diplomatic and transport ties with Qatar, an OPEC member that had agreed to cut only about 30,000 barrels a day as part of Organization of the Petroleum Exporting Countries agreement to reduce output.