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Shell lifts force majeure on Bonny Light crude exports after key pipeline restarts

Highlights

Nembe Creek Trunk Line restarts after repairs

Bonny Light exports normally average 250,000 b/d

Nigerian oil output under threat from operational issues, security risks

Shell has lifted force majeure on loadings of Nigeria's key Bonny Light crude after exports were disrupted for almost a month due to the shutdown of the Nembe Creek Trunk line, the company said Nov. 24.

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A spokesperson for the Shell Petroleum Development Company of Nigeria said the force majeure was lifted at 1600 GMT on Nov. 22 "following the completion of the repair and restart of the Nembe Creek Trunk Line by the operator, Aiteo Exploration and Production Limited".

Bonny Light is one of Nigeria's main export grades, but the 150,000 b/d Nembe Creek Trunk Line -- a pipeline feeding the grade's export terminal, operated by Aiteo -- has come under repeated attack from militants. While that line is operated by Aiteo, Shell's Nigerian subsidiary is the operator of the Bonny Light export terminal.

The grade has a gravity of 32.9 API, sulfur content of 0.16%, and is known for yielding a large percentage of gasoil, distillates and vacuum gasoil. Loading volumes are typically around the 250,000 b/d mark, in the absence of disruption.

Other Nigerian crudes have suffered persistent outages and cargo delays in recent months, a factor that has limited exports while also raising concerns among typical buyers of the country's oil.

Forcados was under force majeure for almost a month between August and September due to a spill near the terminal, while a fire halted loadings at Qua Iboe for around six weeks at the start of 2021.

Many of Nigeria's key oil fields, terminals and facilities have been experiencing teething problems and a recent resurgence in attacks on oil facilities has exacerbated the situation.

Outlook

Nigeria's oil production outlook is under pressure as technical and operational issues along with mounting security concerns are likely to persist over the short term.

Nigeria has the capacity to pump around 2.2 million b/d of crude and condensate but in recent months, its output has been languishing below 1.55 million b/d.

The OPEC member only pumped 1.23 million b/d of crude and 300,000 b/d of condensate last month, as it remains hamstrung by operational setbacks, with key pipelines facing persistent sabotage.

S&P Global Platts Analytics said that due to "disruptions, declines, and underinvestment" Nigeria's output growth outlook is under stress.

"We forecast Nigerian crude output to rebound to 1.7 million b/d by Apr. 2022, compared with pre-pandemic volumes of 1.9 million b/d in April 2020, but risks are greater to the downside," Platts Analytics said in a recent note.