Shell Petroleum Development Company (SPDC) and other upstream companies operating in the western Niger Delta evacuate crude oil and condensates through the 48-inch subsea Forcados pipeline to the export terminal.
Following a spill that occurred on February 14, 2016 on the subsea crude oil export pipeline, Shell had on February 21, 2016 declared force majeure on Forcados liftings effective 1500hrs (Nigerian time), due to the disruption in production.
The company had also intensified efforts on containment and oil recovery, while also finalising repair plans, which the Minister of State for Petroleum, Dr. Ibe Kachikwu, had initially said could be completed by May 29.
A new militant group, the Niger Delta Avengers (NDA) had claimed responsibility for the attack.
However, a fresh threat by the NDA to attack oil workers and contractors involved in the repairs, had frustrated efforts to meet the May 29 initial target.
A source close to one of the companies that utilises the pipeline told THISDAY at the weekend that all the companies and the federal government might have lost an estimated $3 billion to the militant attack.
“If we talk about crude oil and gas, the companies and the government may have lost $3 billion revenue, based on the average oil price within this period. Collectively, 250,000 barrels per day – 300,000 barrels per day were shut-in and this represents the average daily loss and this has persisted for seven months at average oil price of $45. Assuming the pipeline is repaired this month, the loss may have lasted for seven months. We can’t quantify the loss by households and businesses as a result of power failure. Industries depend on gas also,” he said.
“Throughout this period, there is no gas for power generation. So, homes are in darkness and businesses depend on diesel generators. Industries are also short of gas and this increases operating costs. The total cost will be enormous when quantified,” he explained.
“Some of the companies using the pipeline have recorded zero production due to the attack,” he added.
From a peak of $115 per barrel in June 2014, crude oil price, which hovered around $49 per barrel last week, had dropped to $27 per barrel in January before it rose to 2016 peak of $52 per barrel in June.
Trans-Forcados Pipeline, which is operated by SPDC, belongs to the Nigerian Petroleum Development Company (NPDC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC).
Companies hit by the attack include: Shell, Seplat Petroleum Development Company Plc, Shoreline Resources Limited, Neconde, First Hydrocarbon Nigeria (FHN) and NPDC.
Some marginal field producers such as Pillar Oil, Midwestern Oil and Gas, Platform Petroleum and Energia also convey their crude oil through the pipeline.
However, some of these marginal field producers have another alternative route through the pipelines operated by the Nigerian Agip Oil Company (NAOC) to carry their crude oil to Brass Export Terminal.
Seplat, it was learnt, had also built alternative pipeline to supply crude oil from its western Niger Delta operation to the Warri Refinery but still depends largely on the Forcados pipeline.
Image credit: Punch Newspaper
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