Nembe leak takes up to 50,000 b/d of Nigerian crude offline

Up to 50,000 b/d of Nigerian production has been taken offline after a leak on oil mining lease 29 in Nembe, Bayelsa state, energy company Aiteo said.

The Nigerian firm said Junbe 19 that a leak had been first detected two days earlier, resulting in the shutdown of its fields in the onshore block.

Speaking to reporters late June 19, an Aiteo Eastern E&P spokesperson said Nembe production was around 50,000 b/d before the field was shut.

The leak is understood to have occurred on the Nembe Creek facility, the largest of 11 fields on OML 29.

Nembe crude is exported from the new Nembe Crude Oil Export Terminal and should run through the 150,000 b/d Nembe Creek Trunk Line, which also transports some of Shell's crude, but the pipe has faced security challenges in recent years and is not currently operational.

A source familiar with the matter said there was no impact from the leak on Shell's operations or loadings of its Bonny crude.

Nembe crude has low sulfur content, making it popular among refiners in Europe. According to data from S&P Global Commodities at Sea, Nembe crude is exported to the Netherlands, France, Spain and South Africa. Exports totaled 61,000 b/d in May, ship-tracking data shows.

However, trading sources told S&P Global Commodity Insights that the market impact of the leak had so far been minimal.

The leak's cause is as yet undetermined and Aiteo said it had shut down the fields as a precautionary measure while it contained the spill. An investigation has been launched into the trigger, along with the Nigerian Upstream Petroleum Regulatory Commission, the country's energy regulator.

However, the Aiteo spokesperson appealed against attacks on facilities that could potentially "derail plans by the JV partners in OML 29 to raise production to 80,000 b/d" by the first quarter of 2025.

Flagging output

Oil spills are common in the restive Niger Delta, where they are often caused by crude theft and vandalism, according to local and international companies. The Nembe Creek pipeline, along with the Trans Niger pipeline, is a major target for oil thieves.

Pilfering and sabotage are key reasons for flagging oil production in Nigeria, Africa's largest crude producer, alongside underinvestment, a dearth of exploration activity and technical issues at mature marginal fields.

Nigeria's crude oil production, excluding condensates, averaged 1.28 million b/d in May, according to government estimates, below its own production target of 1.7 million b/d and its OPEC output quota of 1.5 million b/d.

"The leak was reported on Monday, June 17, 2024, during routine operations... and all production from OML 29 shut down, Aiteo said in its statement on June 19. "This is a precautionary measure while mobilizing additional resources to contain the spill."

The company added: "While we regret the production losses to the Joint Venture and the nation and the potential environmental impact, our current priority is to expedite an efficient spill management process in line with regulatory standards and collaborate with all stakeholders to restore production and mitigate associated risks."