Shell Petroleum Development Company of Nigeria Limited has lifted the force majeure on exports of the country’s Forcados crude oil, bringing all of the nation’s oil exports fully online for the first time in 16 months.
The SPDC declared the force majeure on February 21, 2016, a week after the main export route, the Trans Forcados Pipeline, was attacked by militants in the Niger Delta.
Force majeure is a legal declaration that means the operator cannot fulfil a contract due to circumstances outside its control.
The resumption of Forcados, which typically exports 200,000 to 240,000 barrels per day, has brought the country to around the 1.8 million barrels per day that the government said it wanted to achieve before joining the Organisation of Petroleum Exporting Countries in cutting output to prop up oil prices, according to Reuters.
OPEC and some other producers agreed last month to extend output cuts of about 1.8 million bpd until March. The initial six-month deal is due to expire at the end of this month.
Nigeria and Libya, whose output has been disrupted by unrest and other factors, were both exempted from the curbs.
According to the Nigerian National Petroleum Corporation, at Forcados terminal alone, about 300,000 bpd of oil were shut-in following the declaration of the force majeure.
The corporation also said over 1,500 megawatts of power was lost to the attack on the Forcados pipeline, which is Nigeria’s major artery, with gas supply from it accounting for 40 per cent to 50 per cent of total gas production in the country.
In October, Shell resumed exports of crude oil from Forcados terminal following repairs but the production wells were shut-in again due to the shutdown of the Trans Forcados Pipeline on November 9, 2016 as a result of sabotage on the 48-inch crude export line.
Last week, Shell issued a loading programme for June exports that lifted planned exports from Nigeria to 1.75 million bpd, taking it to at least a 15-month high.
On Wednesday, one trader said the programme had been revised higher to 252,000 bpd, putting crude oil exports for the month at 1.8 million bpd.
“The Shell Petroleum Development Company of Nigeria Limited lifted the force majeure on crude oil exports from the Forcados terminal,” the firm said in a statement on Wednesday, adding that the move was effective from 4pm on Tuesday.
“The SPDC is grateful to various stakeholders, particularly the federal and Delta State governments, security agencies, the NNPC and communities for their support in the repair of the three sabotage leaks on the pipeline,” it said.
The lifting marks the first time in 16 months that all of Nigeria’s oil grades are free of loading disruptions severe enough to require force majeure.
In an operations update on Wednesday, Seplat Petroleum Development Company Plc, one of the indigenous oil firms affected by the shutdown of the terminal, noted that oil and condensate injection into the Forcados system resumed at the end of May.
The company said it had been able to successfully reinstate gross production at Oil Mining Leases 4, 38 and 41 to pre-force majeure levels of around 75,000 bopd and 290 million standard cubic feet of gas per day, or 125,000 barrels of oil equivalent per day.
The Chief Executive Officer, Seplat, Mr. Austin Avuru, said, “The resumption of exports at the Forcados terminal has enabled us to very quickly de-constrain production, and in doing so once again demonstrate Seplat’s strong underlying fundamentals.
“Our focus now is on restoring production and cash flow momentum, whilst also establishing longer-term access to multiple export routes. While the lifting of force majeure is welcome news, we continue to monitor the situation closely and, dependent on performance in the interim period, will seek to resume formal production guidance at our half-yearly results to be released on July 27, 2017.”