The Federal Government and some oil firms lost an estimated $67.92m (N24.45bn) in revenue in eight days following the suspension of exports of Forcados, one of the nation’s largest crude oil grades.
Shell declared force majeure on Forcados loading programme on April 6 after the Trans Forcados Pipeline was shut down on April 4 by the operator.
Force majeure is a standard clause in most contracts and it includes events such as natural disasters, wars and other occurrences not within the power or control of the executing party, which makes the implementation of the contract impossible.
Our correspondent gathered from industry sources that the pipeline was shut down after leaks were discovered on it.
Heritage Energy Operational Services Limited is the operator of the TFP while Shell Petroleum Development Company of Nigeria Limited operates the Forcados export terminal.
The Forcados terminal, one of the country’s biggest, was scheduled to load 283,000 barrels per day of crude for exports in April, according to Reuters.
At an average oil price of $30 per barrel and an exchange rate of N360 to the dollar, the country lost at least N24.45bn from April 4 to 11 to the shutdown.
A Shell’s spokesman, Mr Bamidele Odugbesan, confirmed to our correspondent on Saturday that the company declared force majeure effective from last Monday.
He said, “The reason why we declared force majeure was that Heritage shut Trans Forcados Pipeline. We don’t have anything to do in terms of control over when to shut down or when to restart the pipeline.
“As soon as they restart the line and production stabilises, then we will lift the force majeure.”
The Trans Forcados Pipeline is the major trunk line within the Forcados Oil Pipeline System, into which multiple branches from onshore fields are fed. The pipeline system transports oil, water and associated gas from fields in the western delta to the Forcados oil terminal, which has an oil export capacity of 400,000bpd.
Nigeria, Africa’s top oil producer, has been hit hard by price collapse occasioned by the coronavirus pandemic and exacerbated by the recent price war between Saudi Arabia and Russia.
The country relies on crude oil receipts for more than half of government revenues and virtually all its foreign exchange.
The Federal Government has already reduced its projection of 2.1 million bpd of oil production to 1.7 million bpd, with price benchmark slashed to $30 per barrel from $57 per barrel.