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Shell to shut Nembe oil pipeline in April

By on March 23, 2013

Shell Nigeria PLC will in April shut down the 150,000-barrel-a-day Nembe Creek oil pipeline temporarily.

According to the company, its decison was based on the urgent need for the clearing away of illegal connections intended to steal crude from the pipeline.

The shutdown, which illustrates the deepening impact of alleged oil theft on the Nigerian industry, is Shell’s response to increasing numbers of illegal connections to the pipeline this year, many of which pollute the local environment, said Jurgen Janzen, pipelines asset manager at Shell Petroleum Development Company
in a briefing with journalists in the oil-rich city of Port Harcourt.

Shell had to shut down the Nembe Creek pipeline earlier this month because of an oil spill caused by an illegal attempt to steal crude. The volume of oil spilled in Nigeria in March was the highest since November, according to data posted on Shell’s website. However, the 700 barrels worth of oil spilled so far in March remains well below the 2,000 barrels spilled each month on average last year.

“Since the beginning of this year, it’s going up again. There are at least 90 [illegal connections] still in the system now that we are aware of,” Mr. Janzen said. SPDC is now losing 60,000 barrels a day to oil theft, an increase from 50,000 barrels a day previously.

The increased illegal oil trade has triggered fears of a new environmental disaster in the Delta. During a flyover of part of the Nembe pipeline provided by Shell for reporters Friday, a large cluster of illegal refineries processing stolen oil could be seen. Neighboring soil and waterways were dark from the oil residue produced by the makeshift facilities.

Mr. Janzen said the illegal refineries are so inefficient that 70% of their oil is wasted and ends up contaminating the environment.

In October, Shell pegged the cost of all oil theft in Nigeria, not just from SPDC facilities, at more than $6 billion a year, based on estimates that more than 150,000 barrels a day are stolen in the country.

SPDC is a joint venture between Shell, the Nigerian National Petroleum Corp., France’s Total SA and Italy’s Eni SpA.

“In the coming April, we will shut down the entire Nembe Creek Trunk Line to remove tapping points,” for an estimated nine days, Mr. Janzen said.

The pipeline, located in the Eastern part of the Niger Delta, normally transports about 150,000 barrels of crude oil each day, which contributes to the Bonny Light export grade.



[Business Day]