Shell warns on Nigerian output after pipeline shutdown
Oil giant Shell warns it may not meet production targets on Bonny Light crude in Nigeria after it shut down a key pipeline that has been repeatedly hit by sabotage and theft.
LAGOS - Oil giant Shell on Tuesday warned it may not meet production targets on Bonny Light crude in Nigeria after it shut down a key pipeline that has been repeatedly hit by sabotage and theft.
The cause of the latest leak on the Nembe Creek Trunkline, discovered on Sunday, was not yet clear. The line has in the past been hit repeatedly by oil thieves seeking crude for sale on the black market.
Shell's Nigeria unit "declared force majeure on Bonny Light offtake programme effective 1600 hours Nigerian time today, 5th March, following the shutdown of Nembe Creek Trunkline (NCTL) after a leak was observed on Sunday," it said.
"The cause will be determined by a Joint Investigation Visit, which will be scheduled once the leak point has been excavated." Force majeure is a legal term releasing a company from contractual obligations due to circumstances beyond its control. Bonny Light is one of the main grades of crude oil produced in Nigeria.
On Monday, Shell raised alarm over "unprecedented" oil theft in Nigeria, particularly related to the sabotage of the Nembe Creek line, adding it would not rule out closing down the pipeline if such attacks continued. The comments were the latest from the industry over the problem of oil theft, which has been estimated to cost Nigeria, Africa's biggest oil producer, some $6 billion (4.6 billion euros) per year.
Output in Nigeria, Africa's largest oil producer, has been at around 2.0 million barrels per day. A 2009 amnesty deal led to a sharp decline in unrest in the oil-producing Niger Delta region, but criminal activity has since flourished.
While Shell blames most of the spills on sabotage, activists argue that the company does not do enough to prevent such incidents and effectively clean up the damage when they do occur.