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Shell declares force majeure on gas supplies to Nigeria LNG

10 Aug 2016, 01:34 pm
Financial Nigeria
Shell declares force majeure on gas supplies to Nigeria LNG

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- Shell said the EGGS-1 pipeline that evacuates gas to the NLNG facility on Bonny Island has been shut down for an investigation into the cause of the leak. 


Royal Dutch Shell, an Anglo-Dutch oil giant, said on Wednesday that its Nigerian unit – the Shell Petroleum Development Company (SPDC) – has declared a force majeure on gas supplies to the Nigerian Liquefied Natural Gas Limited (NLNG) due to a leak on a major pipeline.

“The Shell Petroleum Development Company of Nigeria Ltd (SPDC) today (August 8, 2016) declared force majeure on gas supply to NLNG following a leak on the Eastern Gas Gathering System (EGGS-1) pipeline through which it supplies the bulk of its gas to NLNG,” according to Seja Majeed, a Shell spokesman.

Shell said the EGGS-1 pipeline, which evacuates gas to the NLNG facility on Bonny Island, has been shut down for an investigation into the cause of the leak and for repairs. “SPDC continues to supply gas to NLNG through other pipelines,” Majeed said.

A force majeure is a clause in contracts that removes liability from an oil company when natural or unavoidable catastrophes interrupt oil shipments.

Nigeria’s oil and gas output has declined due to unrelenting militant attacks on the production facilities, forcing many oil majors to declare force majeure in the Niger Delta. The country’s overall output fell to 1.4 million barrels per day earlier this month, according to Emmanuel Ibe Kachikwu, the Minister of State for Petroleum Resources.

In May this year, SPDC declared a force majeure on Bonnny Light crude exports due to a leak on the Nembe Creek Truck Line. Two months earlier, the company had declared a force majeure on Forcados oil exports after Niger Delta militants blew up the Trans Forcados Pipeline, a major trunk of the Forcados oil pipeline system. (Both Nembe and Forcados pipelines are located in Rivers State).

The NLNG is Nigeria’s principal gas export company. With a production capacity of 22 million metric tonnes per annum of liquefied natural gas and 5 metric tonnes of natural gas liquids, the company accounts for 7 percent of the world’s natural gas supplies.

The major shareholders of the NLNG include: the Nigerian National Petroleum Company (49 percent); Shell Nigeria (25.6 percent); Total Nigeria (15 percent); and Eni (10.4 percent).


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