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NNPC, Shell, others lose $180m to closure of EA Offshore Field

By BusinessNews Staff on August 6, 2014

The Nigerian National Petroleum Corporation (NNPC) and international partners in the Shell Petroleum Development Company (SPDC) operated joint venture are losing about $180 million to the suspension of crude oil production at the East Area (EA) field.

SPDC had on June 12, 2014 closed the EA for repair of the soft yoke mooring platform (SYMP), which connects the floating production storage and offloading (FPSO) vessel, code-named ‘Sea Eagle’ with the mooring platform.

The company also declared force majeure on exports of EA blend of crude oil until the work programme is completed and production resumed.

The development followed what SPDC called recent bad weather offshore, which damaged the SYMP bearing, thereby necessitating the shutdown of the facility.

Though the EA has a production capacity of 115,000 barrels per day, SPDC said in a statement that only 40,000 barrels of oil per day production was deferred.

However, at an average price of $100 per barrel at the international market, the shut-in of 40,000 barrels per day for 45 days translates to loss of $180 million by the joint venture partners comprising the NNPC, Shell, Total and Agip.

A source close to the oil giant confirmed to THISDAY at the weekend that crude oil production was yet to be resumed at the facility.
The offshore field, located close to about 12 communities around Iduwini Kingdom in Ekeremor Local Government Area of Bayelsa State, is south west of Warri in water depths of around 25 metres.

One of the early incidents of kidnapping of oil workers in the Niger Delta was recorded at the facility on January 10, 2006 when militants kidnapped four foreign oil workers, including an American, a Russian and a Croatian, forcing Shell to shut down the 115,000 barrels per day platform.

It resumed production in July 2009 after more than three years offline, with an initial output of 50,000 barrels a day, which was later ramped up to its production capacity of 115,000bpd.

Shell had also shut down the SPDC Joint Venture-operated oilfield in April 2010, as a precaution to enable repairs on the FPSO, which achieved first oil on December 14, 2002.

Between 2007 and 2010, Shell was said to have spent several billions of naira on projects in the 12 EA host communities.

The company also trained 12 scaffolders and painters currently working on the Sea Eagle in addition to the 12 community local representatives the company engaged.

[This Day]

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