While Shell Petroleum Development Corporation (SPDC) works towards the rehabilitation of the Forcados Export Terminal pipeline damaged by vandals, Nigeria would have lost about 25 million barrels of crude oil before it’s repaired.
The Forcados Terminal in Delta State, which is one of Nigeria’s biggest terminals with the capacity to export about 400,000 barrels of oil a day, was supposed to export 250,000 between February and May 2016.
Thus, at $40 per barrel of crude oil and 250,000 cut in export, Nigeria will lose $1 billion or about N200 billion revenue between February when the company declared force majeure and May when it is expected to complete repairs on the damaged pipeline.
SPDC had declared force majeure on Forcados lifting effective February 21 2016, following the disruption in production caused by the spill on the Forcados Terminal subsea crude export pipeline.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said that the repair of the pipeline could take until May.
Forcados is made up of two parts: The tank farm which receives crude oil produced from oil wells in Delta, Ondo, Edo and parts of Bayelsa States, and the crude oil loading platform where ships must come to lift crude.
As soon as the incident happened, Shell joint venture and third party production into the terminal was suspended as a precautionary measure while the company’s emergency response and oil response teams were activated to manage the incident.
This is, however, depleting the country’s crude oil revenue, which has been plummeting since June 2014.
At the African Petroleum Producers Association (APPA) Council of Ministers and sixth African Petroleum Congress and Exhibition on Tuesday in Abuja, Kachikwu, said that the crude oil price volatility had become a source of worry to the country.
He stated: “At a time when price volatility has become a major concern for everybody, I am told every time I have the podium that I should just keep talking and price will keep going up.
“It has worked sometime but the problem is that after a while you run out of things to say and price starts jumping down and they hold you responsible for that.
At a time when there are universal concerns on whether oil really should be the right medium of energy resource and people are moving very dramatically into clean energy sources; at a time when there is a huge social dislocation of economies because of the suddenness of the price volatility issues; at a time when investments in the sector are both confusing, and uncertain where to go given the uncertainties of this market, there is the need for us to come cohesively together as a block to provide a common front as you move into groups like Organisation of Petroleum Exporting Countries (OPEC).”
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Credit: All Africa
