Nigeria to see increased oil production as Shell resumes export at 400,000-bpd Forcados Terminal
Nigeria is expected to see an increase in its oil production as Shell Petroleum Development Company Limited (SPDC) hinted in a statement on Wednesday that its 400,000 barrels per day (bpd) Forcados Oil Terminal would resume export operations by the end of this month. This is coming after months of underproduction leading to a significant drop in foreign exchange earnings from oil export due to crude theft and vandalism.
The oil major predicted that by then, the facility’s ongoing critical repairs would have been finished and normal export operations would have started.
“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 the statement.
Shell had pronounced a force majeure on the Forcados Oil Terminal Offtake Programme as a result of the ongoing oil theft which it said presented an “existential threat”.
Essien-Nelson said the active illegal connections to SPDC Joint Venture’s production lines and facilities in western Niger Delta and the inactive illegal connection to the onshore section of the 48” Forcados Export Line are in the company’s on-going programme to remove illegal connections on the pipelines that feed the terminal.
“SPDC gives priority to the removal of active illegal connections and to illegal connection points that have leaks. This scheduled programme is continuous as new illegal connections are identified during surveillance of the pipelines,” Essien-Nelson said.
“An example of such illegal connection is on the onshore section of the 48” Forcados Export Line, which is currently not active and has no sign of leak at the interconnection point,” she said.
Essien-Nelson reaffirmed SPDC’s commitment to managing its assets in a safe, dependable manner, and in compliance with generally recognized best practices.
“SPDC continues to work tirelessly, alongside government and partners, towards the eradication of crude theft from its infrastructure,” she said.
SPDC considers active unlawful connections and connection points as priority for removal. This scheduled programme continues as new unlawful connections are found while the pipelines are being monitored by the surveillance system.
Nigeria’s oil export data indicated the lowest decline in about 30 years as a result of persistent oil theft and pipeline vandalism, which led many of the operators to stop production.
The Nigerian National Petroleum Company (NNPC) Limited, a joint venture partner with SPDC, announced in September that the country was losing 470,000 bpd of crude oil, or roughly $700 million, per month to oil theft.
In its September report, the Organization of Petroleum Exporting Countries (OPEC) noted that Nigeria was unable to fulfill its 1.826 million bpd crude oil production target because it only managed to produce a paltry 927,000 bpd in August.
The National Upstream Petroleum Regulatory Commission (NUPRC), which confirmed the development, reported that crude oil output decreased month over month by 11.47 percent to 0.972 million barrels per day (mbpd) in August from 1.08 mbpd in July 2022.
The steady decline continues to place a significant financial burden on the implementation of Nigeria’s budget as oil revenues make up 80 percent of the federal government’s revenue and foreign exchange earnings.