Shell declares force majeure in Nigeria

PORT HARCOURT, Nigeria, Aug. 20 (UPI) -- Increasing violence from the Movement for the Emancipation of the Niger Delta has led the region's leading oil producer Shell to declare force majeure.

Shell's decision to invoke force majeure follows the recent destruction of two of its pipelines in Cawthorne Channel, Rivers State, This Day reported Friday.

Shell spokesman Precious Okolobo warned that the company may not meet its contractual obligations on the Bonny Light crude due to the rising violence, telling journalists, "The force majeure we declared is effective from August 16. By this, it means that the company is invoking the legal clause that frees it from its obligations due to events beyond its control. The crude deferment followed attacks on and crude oil theft from our Cawthorne Channel in Eastern Niger Delta."

Shell's decision comes in the wake of three separate attacks on its pipelines in the eastern Niger Delta since the beginning of the month.

Shell is Nigeria's biggest foreign operator in the country's lucrative oil sector. Increasing attacks have meant that the company in 2009 produced an average of 629,000 barrels per day compared with 850,000 bpd in 2008.

Overall Nigeria's crude oil exports in the past three weeks have stabilized at approximately 2.5 million bpd.

The loss from Shell production is particularly notable because it is largely composed of Bonny Light "sweet crude," Nigeria's largest type of crude oil exports, which is highly sought after by foreign refiners because of its light nature and low sulfur content.

Shell Corporate Media Relations Manager Tony Okonedo said, "We are working to carry out repairs as soon as possible. The force majeure affects export of Bonny Light for the rest of August and September, following production deferment from recent crude theft activities in the Eastern Niger Delta."

Shell's latest declaration of force majeure follows Shell's recently completed repair work at the Nembe Creek Trunk-line, which subsequently restored export of 100,000 bpd from the Bonny export terminal. Following recent repairs, Shell was also able to restore output at the 400,000 bpd Forcados terminal, which had also been shut-in because of attacks by armed militants.

The recent attacks represent a blow to Nigeria's late President Umaru Musa Yar'Adua's 2009 amnesty program for repentant militants, which created a positive environment for foreign oil companies to repair damaged production facilities and increase production, resulting in steadily growing output.

The recent incidents have been investigated by Joint Investigation Teams composed of government agencies, regulators, Shell Petroleum Development Co. of Nigeria and community representatives who confirmed the disruptions as caused by sabotage.