Shell Petroleum Development Company will stop Bonny Light crude oil exports after announcing a force majeure on the operation. The subsidiary of Royal Dutch Shell in Nigeria had made the decision due to circumstances beyond its control.
According to a spokesman, Shell’s decision to declare a force majeure was prompted by Aiteo Eastern Exploration and Production Company Limited’s decision to shut down the Nembe Creek Trunk Line.
The Nembe Creek Trunk Line is a major crude oil transportation channel used for the exportation/evacuation of crude to the Bonny Crude Oil Terminal. Shell said the force majeure on Bonny Light crude oil exports became effective from January 20, 2020.
What happened? Nairametrics had previously reported that a fire outbreak on the 100 kilometres long Nembe Creek Trunk Line, which has a capacity of 150,000 barrels per day, had compelled Aiteo to declare force majeure after the fire outbreak was contained and the damages were assessed.
Reacting to the fire outbreak, which occurred last year, Aiteo had stated that, “Our Operations Emergency Response team was immediately activated and following its urgent intervention and containment action, we are constrained to shut in injection as well as other related operations into the NCTL. In accordance with standard procedure, we requested the other injectors to do the same.”
What is force majeure: Force majeure is a standard contractual procedure, which is invoked in the occurrence of events such as natural disasters, wars, and other occurrences outside the power or control of the investing company that hampers the implementation of such contracts.
Other companies have declared force majeure in the past: Shell Petroleum Development Company had, on several occasions, been forced to declared force majeure on its facilities. In August 2015, SPDC temporarily stopped gas supplies to Nigeria’s LNG export terminal on Bonny Island in Rivers State due to a pipeline leak, Reuters reported.
Nairametrics also reported in March last year that Integrated Energy and Distribution Marketing Company had on several occasions issued a force majeure on its facilities while pleading with the Federal Government to buy back its 51% stake in Yola Electricity Distribution Plc following persistent attacks on the facilities.
Yola Electricity Distribution Plc, or Yola DisCo, is located in the North-Eastern part of the country which is a region prone to Boko-Haram attack.