Boost for Gas Export as Shell Lifts Force Majeure on Supplies to NLNG

Logo of Shell Petroleum Development Company

• NNPC to explore community-based pipeline protection model

Ejiofor Alike

Nigeria’s export of Liquefied Natural Gas (LNG) will receive a boost as Shell Petroleum Development Company (SPDC) on Friday lifted the force majeure it had declared on gas supplies to the Nigeria LNG (NLNG) plant in Bonny Island in Rivers State.

Also, the Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Ibe Kachikwu has hinted that the Corporation may settle for the option of community-based policing to protect the vast artery of oil and gas pipeline network across the country.

Shell had on August 4, declared force majeure on gas supplies to the Bonny Island liquefaction plant, citing a pipeline leak.

The declaration of force majeure freed the company from its contractual obligations to customers due to circumstances outside its control.

The company also launched investigations into the cause of the leak, which was not immediately known.

However, the force majeure did not affect all the gas supplies to NLNG by Shell as only one pipeline – Eastern Gas Gathering System (EGGS) was said to have been affected by the leak.

Though LNG exports still remained in progress, the company might have rescheduled some shipments with its customers.

But Shell’s Corporate Media Relations Manager, Mr. Precious Okolobo said in a statement yesterday that the joint venture had lifted the force majeure.

“Effective August 21, 2015, SPDC JV (Shell Petroleum Development Company Joint Venture)  lifted the force majeure on gas supplies to NLNG from the Eastern Gas Gathering System (EGGS-1) following repair of a sabotage leak on the line,” Okolobo said.

According to the Shell’s spokesman, a joint investigation team, which visited the site, found that the leak was caused by a crude theft connection, apparently installed by crude oil thieves.

Okolobo added that the crude oil thieves thought the pipeline was transporting crude oil.

NNPC holds a 49 per cent stake in NLNG and the rest is owned by oil majors - Shell, Total and Italy’s Eni.

NLNG, which accounts for about eight per cent of global LNG supplies, produces 22 million metric tonnes of LNG per year.

The company, which has shipped over 3,000 cargoes to customers since it was incorporated, has long-term supply contracts with buyers in Italy, Spain, Turkey, Portugal and France and as far as Japan, South Korea, Taiwan, China, India, Kuwait, Brazil and Wales

The company has about 16 long term LNG Sales Purchase Agreements (SPAs) with 11 buyers on a Delivered Ex-Ship (DES) basis.

These buyers include Enel of Italy, Gas Natural of Spain, Botas of Turkey, GDF Suez, GALP Gas Natural, BG LNG, Endesa, ENI, Iberdrola, Shell Western LNG BV and Total Gas and Power Ltd.

The long term buyers take delivery of their LNG in receiving facilities spread across the Atlantic Basin in Spain, France, Portugal and Italy in Europe, Turkey, Mexico and the United States.

NNPC to explore Community Based Pipeline Protection model…
The Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Dr. Ibe Kachikwu has hinted that the Corporation may settle for the option of community based policing to protect the vast artery of oil and gas pipeline network across the country.

Speaking while receiving Ambassador Perry John Calderwood the Canadian High Commissioner to Nigeria, during a courtesy visit to the NNPC Towers, Abuja, Dr. Kachikwu pledged to give a lot of attention to the perennial menace of pipeline vandalism and oil theft.

I intend to give a lot of energy to the issue of oil theft and pipeline vandalism. We must keep the losses from oil theft to the lowest figure possible. I don’t believe in the arm-for-arm approach, we must engage the host communities and inculcate in them the need to see the assets in their domain as their own,’’ Kachikwu said.

The GMD noted that in the months ahead, the Corporation would initiate discussions with community leaders and interest groups with a view to fashioning a workable community oriented pipeline protection format with less emphasis on the use of brute force to secure the lines.

On the state of the refineries, the NNPC helmsman solicited for support from Canadian companies and service providers stating that Nigeria could make do with Canada’s vast experience in refining and expertise in oil and gas operations.

In his response, Amb. Calderwood said the Canadian government and business entities are willing to work with the NNPC in growing the Nigeria oil and gas industry to enviable height