The force majeure on Bonny Light crude exports buoyed by disruption of crude oil exports on a 97 kilometre – 150,000 barrels of oil per day – Nembe Creek Trunk Line (NCTL) hit one month last weekend, dipping revenues by the Federal Government and oil companies by $301.5 million.
Spokesperson for Shell Petroleum Development Company (SPDC), Bamidele Odugbesan, confirmed to New Telegraph last Sunday that the force majeure, which he said steamed from similar force majeure by Aiteo on 150,000 barrels of oil per day – Nembe Creek Trunk Line (NCTL), is still in place.
The shutdown of the 150,000 barrels daily capacity NCTL, checks by this newspaper showed, amounted to 4.5 million barrels capacity loss and with an average price of $67 per barrel price of the crude oil, the country and oil producer lost a $301.5 million in 30 days that the installation remains shut.
“Yes the force majeure is still in place,” Odugbesan said in a telephone interview last Sunday.
The force majeure is a contractual term on unforeseeable circumstances that prevent someone from fulfilling a contract. A leak on the 240,000 barrels per day capacity Trans- Forcados pipeline that shut down in early May, also effectively cut down deliveries of Forcados, the country’s largest crude grade.
The shutdown of the Nembe Creek Trunk Line (NCTL) by the operator, Aiteo Eastern E&P Company Ltd, the spokesperson for Shell Petroleum Development Company of Nigeria Ltd (SPDC) said, “led to the force majeure.”
He added that all enquiries on the cause of the leak and repair of the pipeline should be directed to the operator.
“The Shell Petroleum Development Company of Nigeria Ltd (SPDC) declared force majeure on Bonny Light exports effective 08.00hrs Nigerian time, May 17, 2018 following the shutdown of the Nembe Creek Trunk Line (NCTL) by the operator, Aiteo Eastern E&P Company Ltd,” a statement earlier issued by SPDC said.
Bonny Light oil is a high grade of Nigerian crude oil with high American Petroleum Institute (API) gravity (low specific gravity), produced in the Niger Delta basin and named after the prolific region around the city of Bonny.
The very low sulphur content of Bonny Light crude makes it a highly desired grade for its low corrosiveness to refinery infrastructure and the lower environmental impact of its by-products in refinery effluent.
Already, shipments of Nigeria’s Bonny Light crude, one of the country’s major sources of oil revenue, are experiencing delays in loading. Cargoes of oil from the Bonny Light stream, for which exports are expected to reach around 195,000 barrels per day in June, had been delayed by a few days up to about a week.
Meanwhile, the Nigerian crude remained in ample supply last weekend even after another stream was affected by loading delays.
About 25-28 cargoes of July-loading crude are still available out of the 48 originally planned, a trader said, representing plentiful supply.
Loadings of Qua Iboe crude oil in June and July have been delayed by about a week following power outage, two trade sources said, shifting a few cargoes into later months.
Shipments of Bonny Light are subject to force majeure and the Trans Ramos pipeline, which carries Forcados to the coast for export, is closed for repairs.
The company said, “it was halting crude exports from a major Nigerian pipeline,” the agency reported. Concerns that Iranian exports could fall because of renewed United States (U.S.) sanctions, it was also gathered,also contributed to the price surge, as the sanction reduces supply in an already tightening market.
U.S. President Donald Trump’s decision this month to withdraw from an international nuclear deal with Iran and revive sanctions that could limit crude exports from OPEC’s third-largest producer has boosted oil prices.
“The geopolitical noise and escalation fears are here to stay,” said Norbert Rücker, head of macro and commodity research at Swiss bank, Julius Baer. “Supply concerns are top of mind after the United States left the Iran nuclear deal.”
Global inventories of crude oil and refined products dropped sharply in recent months owing to robust demand and OPEC-led production cuts. Oil stocks were expected to drop further as the peak summer driving season nears, offsetting increases in U.S. shale output, Bernstein analysts said. Several banks have in recent days raised their oil price forecasts, citing tighter supplies and strong demand. Further supporting prices, Shell (RDSa.L) on May 17 said it was halting crude exports from a major Nigerian pipeline.
The New Telegraph