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Shell’s Forcados terminal may remain shut until April

By on February 28, 2016

Nigeria’s oil export revenue, which has been driven down by the plunge in global oil prices, looks set to worsen as flows of the nation’s Forcados crude oil to the export terminal could be halted until April.

The pipeline operator, the Shell Petroleum Development Company of Nigeria Limited, put the grade under force majeure on February 21, a week after a pipeline leak forced it to halt loadings to the export platform.

The declaration of force majeure freed the oil major from contractual obligations to its customers due to circumstances beyond its control.

As a result of the oil spill on the Forcados Terminal subsea crude export pipeline, production into the terminal and crude oil exports were stopped soon after the spill was discovered.

Reuters quoted local and trading sources as saying that it was likely to take until early April before the pipeline is repaired, and oil production and flow to the export terminal resumed.

About 249,000 barrels per day of oil were scheduled to be exported from the Forcados stream in both February and March.

The sources were quoted to have said that gas production associated with the Forcados field would also have to close, depending on how long it takes to repair the pipeline.

The Forcados export terminal in Delta State is one of the country’s biggest terminals with capacity to export about 400,000 barrels of oil per day.

When contacted for comment, a spokesperson at Shell, who pleaded not to be quoted, told our correspondent that he could not say when the repair of the pipeline would be completed.

He said, “We cannot give repair timing at this time. When we are able to do that, we will surely do so. It is going to depend on the duration of repair work on the pipeline. That notwithstanding, we have intensified efforts on clean-up, oil recovery and distribution of relief materials to communities.”

Meanwhile, Japan’s imports of Liquefied Natural Gas from Nigeria fell sharply in January, data released on Friday by the Asian country’s Ministry of Finance showed, Platts reported.

Japan’s LNG imports slid by 14.1 per cent year on year to 7.2 million metric tonnes in January, according to the data.

Imports from Nigeria dropped 57.7 per cent from a year ago to 299,419mt while no LNG shipments arrived from Europe and Equatorial Guinea.

Japan had a warmer winter in December as well as part of January, which helped many utilities pile up their inventories and dent their demand for LNG.

Imports from Qatar, the third largest LNG supplier for Japan in January, also plunged 41.2 per cent from a year earlier to 898,941mt.

Australia and Malaysia came in first and second with supply from the former slipping 1.4 per cent year on year to 1.6 million mt.

Malaysia sent 1.5 million mt, down by 4.8 per cent from a year ago.

The 3.7 million mt/year Equatorial Guinea LNG plant in the Gulf of Guinea was shut part of January due to scheduled maintenance.

Trinidad sent a 57,083mt cargo that traded at $414.36/mt, or $7.969/MMBtu.

The Japan Customs Cleared crude oil price was at $37.007/b in January, down by 41.9 per cent from a year earlier and down 14.9 per cent from December.

Some of Japan’s long-term LNG contracts are linked to the JCC crude price but with a lag of a few months, so fluctuations in oil prices typically take some time to be reflected in LNG prices.

 

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