Nigeria loses $5bn as Forcados pipeline remains shut
The pipeline that ships Nigeria’s Forcados crude oil for export is yet to restart after it was shut down on February 15, 2016 due to militant attack, Daily Trust findings show.
The Nigerian National Petroleum Corporation (NNPC), a participant in the terminal said in its November report that about 300,000 bpd of its revenue from crude oil sales have been shut in since February 2016 due to the vandalism of the export line. At an average of $45 per barrel of crude, the country has lost about $4.9 billion within the last 12 months.
Shell Nigeria, operator of the Forcados pipeline declared force majeure at the terminal on February 21, 2016 as it was unable to export crude through it. The terminal can export 400,000 barrels of crude per day (bpd) when operating at full capacity and 200,000bpd at average capacity.
The shut-in is also responsible for the gas supply shortage for power generation, NNPC said on Monday, as gas production is also affected.
Although the pipeline resumed operations in October, allowing some cargoes to load, fresh militant attacks later took the line out again, shutting in more than 200,000 bpd.
“The force majeure on Forcados exports is still in place,” a Shell Nigeria spokesman, Precious Okolobo, replied in a text but didn’t say when the line will be reopened.
“The force majeure is still in place pending repairs of the line and stable crude oil production,” NNPC also said.
But Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, explained yesterday that repair work on the facility was nearing completion.
Kachikwu told the House of Representatives Committee on Petroleum Resources (Upstream) during the defense of the ministry’s 2017 budget that the facility could be reopened in a matter of weeks, a development that would shoot up oil production to 2.2 million bpd.
The pipeline could restart early March, Head of Energy Research at Ecobank, Dolapo Oni, also said, echoing an interview Seplat boss Austin Avuru gave in January. Seplat’s production of 75,000 bpd is exported via the terminal.
“Since it has been offline, Nigeria’s production has really suffered. You can see the impact in October last year that as soon as it came back, our production rose to 2.1 million bpd just for like a week before the (militants) shut it down,” Oni added.