Shell lifts force majeure on NLNG

13 September 2016, Week 36, Issue 656

Shell Petroleum Development Co. (SPDC) has lifted its force majeure on gas supplies to the Nigerian LNG (NLNG) facility after locating and repairing a pipeline leak. 

The force majeure was announced on August 8 following reports of a spill from the Eastern Gas Gathering System (EGGS-1) pipeline, which runs to Bonny Island. At the time, the company said an investigation would be carried out to determine the source of the problem.

According to a SPDC spokesman, the leak was called by the drilling of a hole by unknown persons, and was found by a team of community members, SPDC officials and regulatory agencies. 

The NLNG plant has the capacity to process 22 million tonnes per year of LNG, equivalent to 7% of global supply. It can also process 5 million tonnes per year of NGLs.

Pipeline vandalism has taken its toll on Nigeria’s oil and gas industry but SPDC stopped short of attributing the leak to a targeted attack. The EGGS-1 line was the source of a similar force majeure in 2015, following an act of sabotage in July of that year. 

NLNG has been criticised by employees for reducing wages in August, by as much as 50%. The company has defended its move by citing the worldwide problems for the sector, in addition to having to make payment of dollar-denominated wages and subsequent conversion into Nigerian nairas. 

Nigeria has the seventh highest gas reserve in the world but onshore instability has repeatedly disrupted exports and stymied the country from meeting its own power needs. Shortfalls in local power generation have made the prospect for new LNG exports unlikely. Furthermore, though, the country’s inability to secure its pipelines has led Oando Group to raise the prospect of importing gas into Lagos, via LNG. 

Shell’s oil production has also suffered from an attack on its Forcados subsea link. This pipeline was attacked in February and, according to some reports, is due to come back on line this month. In addition to reducing Shell’s exports, this stoppage has had an outsized impact on production from indigenous companies that use the super-major’s infrastructure.