Forcados’ return moves Nigeria closer to OPEC quota
Nigeria’s oil production could rise above 1.6 million barrels per day (bpd) with the return of Shell’s Trans Niger Pipeline and the Forcados terminal as early as November, helping to shore up the government’s declining oil revenue, analysts say.
Shell Petroleum Development Company (SPDC), on Wednesday, said the Forcados Oil Terminal would resume export operations by the end of October after repairs are completed.
“In addition to the repairs, we are working to remove and clamp theft points on the onshore pipelines to ensure full crude oil receipt at the terminal,” Abimbola Essien-Nelson, SPDC’s media relations manager, said in a statement.
According to Essien-Nelson, the active illegal connections to SPDC joint venture’s production lines and facilities in western Niger Delta as well as the inactive illegal connection to the onshore section of the 48” Forcados Export Line are in the company’s ongoing programme to remove illegal connections on the pipelines that feed the terminal.
Etulan Adu, an oil and gas expert, said a major implication of this development is the improvement of Nigeria’s oil export figures, which could help in meeting the Organization of Petroleum Exporting Countries’ (OPEC) quota.
Nigeria’s oil output has failed to match OPEC’s quota since November last year on rising crude theft, according to Mele Kyari, group chief executive officer of Nigerian National Petroleum Company Limited.
Divestments from onshore and shallow water fields by multinational oil companies have also crimped production. The bulk of the country’s oil output which used to come from onshore fields has now shifted to deep-water fields, where vandals cannot easily sabotage.
Analysts say the return of the terminals and pipelines with increased monitoring to check theft can also shore up the country’s foreign debt position which could also strengthen the naira.
“The oil terminal will improve production substantially since much of the crude production stopped because of the unavailability of Forcados,” said Ayodele Oni, energy lawyer and partner at Bloomfield law firm.
Oni said the Forcados terminal has the capacity to move around 850,000 bpd and if current efforts to check leaks continue, it could stem the tide of crude theft.
Last week, OPEC agreed to cut global oil output by 2 million barrels per day, excising about four percent from Nigeria’s September quota, placing a production cap of 1.823 bpd in October.
The country’s crude output, excluding condensate, again dipped below one million bpd in September.
Adu said the prospect for increased surveillance may bring back lost volumes.
Last week, the NNPC said it uncovered an illegal four-kilometre pipeline from Forcados in Delta State to the sea and a loading port that was part of an elaborate crude theft operation for the last nine years.
In addition, the shutdown of the Forcados oil terminal has denied Nigeria benefitting from high oil prices, experts say due to leakages and oil theft.
Jide Pratt, an oil and gas expert, said that the return of Forcados is a positive step in increasing Nigeria’s oil production which is at its lowest.
Pratt said the shutdown of the terminal was an opportunity to check the pipeline’s integrity and remove illegal connections put in place by thieves to tap oil from the pipeline.
“If production increases, the government will generate revenue from taxes and economic activities in the areas which will add to the nation’s Gross Domestic Product (GDP),” he said.