BusinessDay

Shell reopens terminal, suspends force majeure on Forcados crude

Shell has lifted a force majeure on exports of Nigeria’s Forcados crude oil after the pipeline transporting it reopened. The Dutch oil-giant said in a statement that the removal of force majeure followed the reopening of the Trans Forcados pipeline by operator Heritage Energy Operational Services Limited, a spokeswoman for the Shell Petroleum Development Company of Nigeria said on Monday.

Force Majeure refers to a provision which is commonly found in contracts that frees both parties from obligations if an extraordinary event prevents one or both parties from performing their obligation.

The pipeline was shut down on April 4, Shell said in a previous statement. It declared force majeure on April 6.

Forcados exports were set at roughly 245,000 barrels per day ( bpd) in May and 283,000 bpd in April.

Forcados terminal has history of shutdowns in the past. The pipeline was shut down in May 2018 for repairs over heavy leakage.

Read also: Nigeria brings to effect agreement to cut 9.7m/bpd of crude oil

In October 2016, it was shut for major repairs after a militant attack affected its loading programme.

Also, the pipeline was shut down May last year by Shell and Heritage over fire outbreak and in February 2016 after a bomb attack by Niger Delta Avengers.

Shell had recently announced that it will write down up to $800 million in the first quarter of 2020 after a drop in oil demand due to the coronavirus.

According to Shell, the global lockdown of 3 billion people – roughly 40percent of the world’s population, demand for fuel has been in free fall, forcing it to lower its refining output by around 13percent.

“Refinery utilisation is expected to be between 80% and 84% with availability expected to be between 93% and 96%. Refining margins are expected to be weaker compared with the fourth quarter 2019. Oil Products sales volumes are expected to be between 6,000 and 7,000 thousand barrels per day,” Shell said.

This is coming after the company had earlier this month said it would lower spending by $ 5 billion to $20 billion or less and suspend its vast $25 billion share buyback plan in an effort to weather the downturn.

Shell’s first quarter oil production was expected to fall by 4.5% versus the fourth quarter of 2019, while liquefied natural gas (LNG) volumes were set to decline by 2.3%.

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