With Force Majeure on Nembe Oil Line, Nigeria Risks Revenue, Production Cuts

Chineme Okafor in Abuja

The volume of crude oil produced and sold daily by Nigeria could take a fresh cut from the shutdown of a critical oil line in the Niger Delta region – the Nembe Creek Trunk Line (NCTL) for emergency repairs.

Coming shortly after Nigeria convinced the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC members to uphold its exemption from an existing crude oil production cap agreement signed to shore up prices and stabilise the oil market, the country from the development may see up to 150,000 barrels per day (bpd) of oil that should pass through the line to the Bonny export terminal deferred for an undisclosed period of time.

A statement from Aiteo Eastern Exploration and Production Company, which owns and operates the NCTL, stated that a new oil leak discovered on September 15, had forced the firm to declare a force majeure on the line.

Signed by the Senior Manager, Corporate Communications, Aiteo Group, Ndiana-Abasi Matthew, the statement, which was made available to THISDAY saturday, explained that emergency repairs on the line would commence as soon as the relevant procedures to guarantee safe works on it had been concluded.

As one of Nigeria’s major oil transportation arteries that evacuate crude from the Niger Delta to the Atlantic coast for export, the NCTL reportedly has a capacity to move up to 150,000bpd of oil at Nembe Creek. It equally has the capacity to evacuate up to 600,000bpd of liquids from the end point at Cawthorne Channel.

The statement from Aiteo stated that, “Our emergency pipeline and response teams are onsite and a Joint Investigation Visit (JIV) with the Department of Petroleum Resources (DPR), National Oil Spill Detection and Response Agency (NOSDRA) and other relevant government agencies is scheduled for next week to monitor line pressures and confirm safe-working levels.”

“Aiteo is working towards concluding the process speedily and will communicate further developments as they become available,” it added.

Though Nigeria on Friday got OPEC and non-OPEC members at the meeting of their Joint Ministerial Monitoring Committee, which ended in Vienna, to endorse its position that the exemption granted it at the November 2016 ministerial conference and subsequently extended at the May ministerial conference should be sustained until it stabilises its crude oil production, industry experts, however, told THISDAY developments such as that on the NCTL were some of the reasons the country had insisted on staying out of the pact for now.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, had consistently maintained that although Nigeria’s production recovery efforts have made some appreciable progress since October 2016, the levels were still unstable to warrant the push to bring her into the deal.

Kachikwu stated at the OPEC and non-OPEC meeting that even though Nigeria’s oil production in August was 1.802 million barrels per day (mbpd), it was still not an enough justification for such call. Also, a report of activities in Nigeria’s oil industry, which THISDAY obtained, showed that on the average, the country’s daily oil production hovered around 1.5mbpd within the first few weeks in September.

For instance, the report noted that there were respective incidences at the Qua Ibo loading terminal, Total JV Amenam platform, and Kolo Creek-Rumuekpe line, Trans Forcados Pipeline (TFP), and Trans Niger Pipeline (TNP), but with some of them like the Qua Iboe and TFP restored.