Nigeria’s struggles to stem falling oil production suffered four major force majeure in 2021. They happened for different reasons including technical problems, operational issues, and mounting security concerns.
Force majeure refers to a clause in contracts that allows both parties to walk out of the contract when an extraordinary event or circumstance beyond the control of the parties happens.
In 2021, force majeure was a huge concern for Africa’s biggest economy because the country’s three tiers of government rely on oil exports for some 90 percent of its foreign exchange and monthly allocation to meet their various obligations to 774 local governments scattered around the country.
Trans-Forcados pipeline shut down
Shell Production Development Company (SPDC), Shell’s subsidiary in Nigeria, declared a Force Majeure on the Forcados Oil Terminal Offtake Programme which was effective on Thursday 14 January 2021 following the operator’s shutdown of the Trans Forcados Pipeline.
The force majeure took effect from 1000 local time (0900 GMT) on Jan. 14, a Shell spokesperson said.
A representative at Heritage said the Trans Forcados pipeline had initially shut down for “maintenance services” but “community disturbances” had disrupted the exercise. The pipeline, therefore, remained shut for longer than scheduled, leading to Shell declaring force majeure, the source said.
TransForcados is a gasoline-rich sweet crude blend and is one of Nigeria’s top export grades. Output has averaged around 250,000 bpd over recent months.
In August, SPDC said exports of Forcados crude oil were under another force majeure, confirming what a trade source told BusinessDay a week before official confirmation.
Forcados, is one of Nigeria’s main crude oil terminals, exporting an average of 240,000 barrels of crude oil daily, roughly 16percent of Nigeria’s July exports of 1.5 million bpd.
In an email, an SPDC spokesman said the company declared force majeure after curtailing production and suspending exports having noticed a sheen on the water around the loading buoy.
Nembe Creek Trunk Line shutdown
In October 2021, Shell declared force majeure on the Bonny Oil and Gas Terminal Offtake Programme following the shutdown of the Nembe Creek Trunk Line (NCTL) by the operator, Aiteo Exploration and Production Limited.
“(SPDC) has declared a Force Majeure on the Bonny Oil and Gas Terminal Offtake Programme effective 1700 Nigerian time (1600 GMT) on Monday 25 October 2021, following the shutdown of the Nembe Creek Trunk Line (NCTL) by the operator, Aiteo Exploration and Production Limited,” the statement reads.
Forcados goes out again
In December 2021, Shell declares a force majeure on exports of Nigeria’s Forcados crude oil following the shutdown of a key pipeline that was largely due to a malfunctioning barge obstructing a tanker path.
This represents disruption that is helping oil prices hit a level not seen in recent weeks and it also signifies how cash-strapped Nigeria is failing to take advantage of rising oil prices to ramp up exports.
Growing threats by militants to renew attacks on oil infrastructure in the restive Niger Delta also pose a huge concern for Africa’s largest oil producer.
Nigeria has the capacity to produce around 2.2 million-2.3 million bpd of crude and condensate, but production has averaged only around 1.62 million bpd in the first seven months of 2021, according to Platts estimates