Reports from Reuters indicates oil-producing giant, Shell has declared force majeure on exports of Nigerian Forcados crude oil. The Trans Forcados pipeline exports about 240,000 barrels of crude daily.
According to the reports, the pipeline was shut-down on April 4th by the operator Heritage Energy Operational Services. Shell manages the export terminal. No explanation was provided as a reason for the shutdown.
Why it matters: The Trans Forcados pipeline is one of Nigeria’s main crude oil terminal and was often a target of pipeline vandals and oil militants. Nigeria produces about 2 million barrels of crude daily and earned about $54 billion from crude oil and gas exports in 2019. The latest crude oil price war has threatened Nigeria’s ability to export crude as the NNPC declared it had unsold cargoes.
Earlier on Thursday, OPEC+ had agreed to a production cut that could set the stage for an increase in crude oil prices. A prolonged shutdown of the pipeline is bad news for the country as it affects its ability to meet its crude oil quota worsening its revenue situation.
History of shutdowns: Last May, the pipeline was shut by Shell and Heritage after a fire broke out. In February 2016, Forcados was shut down after it was bombed by the Niger Delta Avengers. It was at the time the first attack Nigerians had seen on a subsea pipeline.
It then suffered another setback in October 2016 after a further militant attack affected its loading program. This was after major pipeline repairs had been carried out. It was brought back in June 2017 helping push exports to the highest levels in 15 months.