Shell in Nigeria warns on production after pipeline sabotage

Shell in Nigeria yesterday said it has warned it may not meet contractual obligations on Bonny Light crude, after oil thieves sabotaged two pipelines in the country’s south. “The force majeure we declared is effective from August 16 at 1800 hours (1700 GMT),” company spokesman Precious Okolobo said referring to the legal clause that frees the company 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,” he said. He declined to give figures on the amount of oil lost following the attacks. “Efforts are ongoing to repair the damaged pipelines,” Okolobo said. Over the weekend, Shell said sabotage of pipelines by oil thieves in southern Nigeria was on the increase and had led to halts in production, without providing details on the amount of crude lost.

It said three separate incidents had occurred between August 1 and August 12 alone on two Cawthorne Channel Bonny pipelines. Shell said “suspected crude thieves drilled holes or inflicted hacksaw cuts to siphon oil.” The most recent incident reported on August 12 had led the company to deploy containment booms to stop the oil from further spreading in the swampy region, though Shell declined to provide numbers on the amount spilled. “The environmental and social cost of widespread sabotage is simply unacceptable,” Shell Vice President Babs Omotowa said over the weekend. “Last year, 98 percent of the oil spilled from (Shell’s Nigeria) operations was caused by sabotage. It is our policy to clean up spills regardless of the cause.” Oil thieves in Nigeria often sabotage pipelines and take the stolen oil to illegal refineries. Militants in southern Nigeria have also carried out repeated attacks on pipelines and other oil industry targets in recent years, demanding a fairer distribution of oil revenue. The attacks led to a decline in production to about one million barrels per day in the world’s eighth largest oil exporter, but an amnesty deal offered to militants last year has greatly reduced the number of incidents. Production has since increased to more than two million barrels per day, according to the most recent report from the International Energy Agency. Shell, Nigeria’s biggest operator in the oil sector, produced an average of 629,000 barrels per day last year compared to 850,000 barrels in 2008.