Nigeria Wants Shell To Open Major Pipeline But Attack Feared

Image source: Nogtec

Nigeria wants Royal Dutch Shell to reopen one of its main pipelines but the oil multinational is resisting, analysts say, for fear it could once again be bombed by militants.

Associated Press report continues:

The Trans Forcados Pipeline, the main feed to the 400,000-barrel-a-day Forcados export terminal, has been shut for all but three weeks of the past year, Lagos-based SBM Intelligence said in its weekly risk analysis published Friday.

In their most sophisticated attack, militants used divers to blow up an underwater section of the pipeline in the Atlantic a year ago. Defying militant death threats, Shell flew in underwater engineers who took seven months to get the pipeline operational.

Two days later, the militants bombed it again.

Shell Nigeria lost US$3 billion during the seven months of repairs, Africa Confidential newsletter estimated at the time.

"Nigeria wants Royal Dutch Shell to reopen a major export pipeline in the Niger Delta but the oil major wants better protection first, to avoid having it blown up yet again," SBM Intelligence said, quoting unidentified officials and industry sources.

Shell Nigeria said only that one of its priorities is to secure the pipeline, while indicating it is still working to contain leaks. "Our focus on the Forcados leaks is on containment, spill recovery and securing the line," spokesman Precious Okolobo told The Associated Press on Saturday.

Petroleum Minister Ibe Kachikwu announced last month that Nigeria, one of Africa's top oil producers, lost between US$50 billion and US$100 billion in oil revenues because of militant attacks last year. At the worst point, he said, production was cut to 1.2 million barrels a day - a loss of 1 million barrels a day and the lowest rate of production in 30 years.

The Forcados terminal handles nearly one-quarter of Nigeria's exports. So experts are puzzled by the state oil company's declaration this week that production has risen to 2.1 million barrels a day - near optimal production of 2.2 million.

"Nigeria has given differing figures for its oil output in recent weeks ... without giving an explanation," said SBM Intelligence, quoting figures between 1.7 million to 2.2 million barrels a day.

With Nigeria confronting its worst recession in 25 years, "We certainly hope the figures are true," the analysts said.

Oil militants say careless production in the southern Niger Delta has brought nothing but misery, with pollution from oil spills destroying farmlands, fishing grounds and millions of livelihoods.

At one point, all three of Nigeria's biggest export terminals were closed for repairs from militant attacks: Forcados, ExxonMobil's Qua Iboe and Eni's Brass River. Qua Iboe, the biggest terminal, was shut for more than three months before quietly resuming exports in October. It is not clear if Brass River is operating. Oil companies are reluctant to divulge information for fear of more attacks.

There has been no major attack since an August cease-fire to allow negotiations between the government, representatives of militants, community leaders and oil companies operating in the Niger Delta. Community leaders have expressed confidence in Vice President Yemi Osinbajo's visits and promises of a comprehensive plan to help residents benefit from oil production.

Low oil production and international prices for the petroleum that provides 80 percent of government revenue have brought on a recession in Nigeria compounded by a massive foreign currency shortage.

Nigeria lost its place as Africa's biggest oil producer last year, to Angola.