Nigeria loses 400,000bpd as Shell declares force majeure

Published

8 years ago

May 12, 2016

As Independent marketers seek outright deregulation of oil sector

With the declaration of force majeure on Bonny Light exports by Shell Petroleum Development Company of Nigeria Limited, about 400,000 barrels per day of Nigeria’s production has now been shut in.

Force majeure is a legal clause that allows an oil firm to stop shipments without breaching contracts.

The oil major said in a statement signed by its spokesperson, Mr. Bamidele Odugbesan, on Wednesday that the force majeure took effect from Tuesday, May 10, 2016.

It said the decision came as a result of a leak that led to the closure of the Nembe Creek Trunk line for repairs by the operator, Aiteo Eastern E & P Company Limited.

The SPDC did not disclose the cause of the leak in the statement.

Shell had in February declared force majeure on liftings from the Forcados export terminal following the disruption in production caused by the spill on its subsea crude export pipeline.

A group named Niger Delta Avengers claimed responsibility for the attack on the Shell oil pipeline, which shut down the 250,000bpd export terminal.

Commissioned in 2010, the 100-km NCT feeds the Bonny export terminal, and the disruption will affect the loading of seven cargoes, representing a combined volume 217,000 bpd. It has a capacity of 600,000 bpd, according to Shell’s website.

The halt in Bonny Light loadings comes less than a week after Chevron said 35,000 bpd of its Nigerian net crude production had been halted by an attack on its offshore Okan facility, and three months after Shell suspended production at Forcados.

If all Bonny Light production is cut, it will bring output to below 1.5 million bpd for the first time since September 1994, according to Energy Information Administration data. Nigeria exports almost all its production.

In the meantime, the Independent Petroleum Marketers Association of Nigeria (IPMAN) yesterday advised the Federal Government to deregulate the pump price of the Premium Motor Spirit (PMS).

Outright deregulation of the product, said the association, would have been preferable to increase of pump price to N145 per litre.

This is coming on the heels of the yesterday announcement of the new pump price with immediate effect.

Speaking with The Nation on phone, its Vice Chairman, Alhaji Abubakar Maigandi Dankigari said the new price would breed corruption in the sale of the product.

According to him, had government deregulated the price, some marketers could have sold it below the new price but with the announcement of N145 per litre, some marketers would still sell the above new pump price.

He submitted that “the best solution is that they should deregulate the sector. They should allow the prevailing market forces. Those who want to sell N145 per litre can sell. Those who can sell N130 can sell. But immediately the government gave that directive that the marketers should sell at that rate, it is what is causing corruption.

“So, if the government will take the decision of deregulating the petrol price and allow the market prevailing rate, the price will not even reach N145. But now the price will likely exceed that N145 because of the monopoly of the terminals.”

Ekiti State Governor Ayo Fayose last night accused the Federal Government of insensitivity to the plight of Nigerians with the latest increase in the pump price of the Premium Motor Spirit (PMS) otherwise known as petrol.

Fayose said the hike was a “demonstration of the level of hatred the President Muhammadu Buhari-led All Progressives Congress (APC) government had for Nigerians.”

The Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, said the decision was inevitable given the acute resource constraint. He said: “The overregulation of the sector and the subsidy regime had put enormous pressure on government finances and on our foreign reserves. It was evident that the policy choice was not sustainable. The review is in the long term interest of the economy and the people.

“Petroleum subsidy management has been characterised by serious transparency issues for several decades. There are two components of the subsidy phenomenon. The first is the actual subsidy, which is the differential between the pump price and the landing and other costs of fuel. The second [and more disturbing component] is the blatant corruption inherent in the fuel subsidy regime.

“For several years, the Nigerian economy suffered severe bleeding from this phenomenon; with subsidy payments in the one trillion naira threshold, and even more. In an economy with huge deficit in economic and social infrastructures, it was simply scandalous. It is in the overall interest of the economy and citizens for it to be discontinued.

“It will free resources for investment in critical infrastructures such as power, roads, the rail systems, health sector, education sector etc. The deficiency in all of these infrastructure areas is phenomenal. Fixing infrastructure will greatly improve productivity and efficiency in the economy and impact positively on the welfare of the people.

It will boost private investment in the downstream oil sector especially in petroleum product refining. This will ultimately reduce importation of petroleum products and ease the pressure on the foreign exchange market as well as foreign reserves.

It will eliminate the rampant patronage, rent seeking activities and corruption that currently characterise the downstream oil sector.

It will improve product availability and eliminate fuel queues

It will create more jobs for the teeming youth of the country in the downstream oil sector as investment in the sector improves.”

But, the Nigeria Labour Congress said it would resist the increase in the price of petrol describing it as the height of insensibility and impunity.

In a statement by the General Secretary, Dr. Peter Ozo-Eson, the congress said: “The unilateral increase in prices of petroleum products today by government represents the height of insensitivity and impunity and shall be resisted by the Nigeria Labour Congress and its civil society allies.

“With the imposition on the citizenry of criminal and unjustifiable electricity tariff and resultant darkness and other economic challenges brought on by the devaluation of the Naira and spiraling inflation, the least one had expected at this point in time was another policy measure that would further make life more miserable for the ordinary Nigerian

“The latest increase is the most audacious and cruel in the history of product price increase as It represents not only about 80 per cent increase but it is tied to the black market exchange rate.

“Furthermore, the process through which government arrived at this is both illogical and illegal as the board of the PPPRA is not duly constituted.

“The allusion to the fact that the this increase was arrived at after due consultation with stake holders is not only ridiculous and fallacious, it goes to show that the brief meeting held today during which government was advised shelve the idea until at least it meets with the appropriate organs of the Congress was in bad faith.”

Punch with additional report from Nation

Up Next

NIMASA Flags Off 3-Day Retreat To Evolve Sectorial Roadmap

Don't Miss

2 Nigerians to be executed in Indonesia for drugs

Click to comment

WAIVER CESSATION: Igbokwe urges NIMASA to evolve stronger collaboration with Ships owners

Published

5 years ago

April 13, 2019

Maritime First

…Stresses the need for timely disbursement of N44.6billion CVFF***

Highly revered Nigerian Maritime Lawyer, and Senior Advocate of Nigeria (SAN), Mike Igbokwe has urged the Nigeria Maritime Administration and safety Agency (NIMASA) to partner with ship owners and relevant association in the industry to evolving a more vibrant merchant shipping and cabotage trade regime.

Igbokwe gave the counsel during his paper presentation at the just concluded two-day stakeholders’ meeting on Cabotage waiver restrictions, organized by NIMASA.

“NIMASA and shipowners should develop merchant shipping including cabotage trade. A good start is to partner with the relevant associations in this field, such as the Nigeria Indigenous Shipowners Association (NISA), Shipowners Association of Nigeria (SOAN), Oil Trade Group & Maritime Trade Group of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

“A cursory look at their vision, mission and objectives, show that they are willing to improve the maritime sector, not just for their members but for stakeholders in the maritime economy and the country”.

Adding that it is of utmost importance for NIMASA to have a through briefing and regular consultation with ships owners, in other to have insight on the challenges facing the ship owners.

“It is of utmost importance for NIMASA to have a thorough briefing and regular consultations with shipowners, to receive insight on the challenges they face, and how the Agency can assist in solving them and encouraging them to invest and participate in the maritime sector, for its development.

“NIMASA should see them as partners in progress because, if they do not invest in buying ships and registering them in Nigeria, there would be no Nigerian-owned ships in its Register and NIMASA would be unable to discharge its main objective.

The Maritime lawyer also urged NIMASA to disburse the Cabotage Vessel Financing Fund (CVFF)that currently stands at about N44.6 billion.

“Lest it be forgotten, what is on the lips of almost every shipowner, is the need to disburse the Cabotage Vessel Financing Fund (the CVFF’), which was established by the Coastal and Inland Shipping Act, 2003. It was established to promote the development of indigenous ship acquisition capacity, by providing financial assistance to Nigerian citizens and shipping companies wholly owned by Nigerian operating in the domestic coastal shipping, to purchase and maintain vessels and build shipping capacity.

“Research shows that this fund has grown to about N44.6billion; and that due to its non-disbursement, financial institutions have repossessed some vessels, resulting in a 43% reduction of the number of operational indigenous shipping companies in Nigeria, in the past few years.

“Without beating around the bush, to promote indigenous maritime development, prompt action must be taken by NIMASA to commence the disbursement of this Fund to qualified shipowners pursuant to the extant Cabotage Vessel Financing Fund (“CVFF”) Regulations.

“Indeed, as part of its statutory functions, NIMASA is to enforce and administer the provisions of the Cabotage Act 2003 and develop and implement policies and programmes which will facilitate the growth of local capacity in ownership, manning and construction of ships and other maritime infrastructure. Disbursing the CVFF is one of the ways NIMASA can fulfill this mandate.

“To assist in this task, there must be collaboration between NIMASA, financial institutions, the Minister of Transportation, as contained in the CVFF Regulations that are yet to be implemented”, the legal guru highlighted further.

He urged the agency to create the right environment for its stakeholders to build on and engender the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders.

“Lastly, which is the main reason why we are all here, cessation of ministerial waivers on some cabotage requirements, which I believe is worth applause in favour of NIMASA.

“This is because it appears that the readiness to obtain/grant waivers had made some of the vessels and their owners engaged in cabotage trade, to become complacent and indifferent in quickly ensuring that they updated their capacities, so as not to require the waivers.

“The cessation of waivers is a way of forcing the relevant stakeholders of the maritime sector, to find workable solutions within, for maritime development and fill the gaps in the local capacities in 100% Nigerian crewing, ship ownership, and ship building, that had necessitated the existence of the waivers since about 15 years ago, when the Cabotage Act came into being.

“However, NIMASA must ensure that the right environment is provided for its stakeholders to build and possess the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders. Or better still, that they are solved within the next 5 years of its intention to stop granting waivers”, he further explained.

Breaking News: The Funeral Rites of Matriarch C. Ogbeifun is Live

Published

5 years ago

March 7, 2019

Maritime First

The Burial Ceremony of Engr. Greg Ogbeifun’s mother is live. Watch on the website: www.maritimefirstnewspaper.com and on Youtube: Maritimefirst Newspaper.

Wind Farm Vessel Collision Leaves 15 Injured

Published

5 years ago

February 20, 2019

Maritime First

…As Valles Steamship Orders 112,000 dwt Tanker from South Korea***

A wind farm supply vessel and a cargo ship collided in the Baltic Sea on Tuesday leaving 15 injured.

The Cyprus-flagged 80-meter general cargo ship Raba collided with Denmark-flagged 31-meter wind farm supply vessel World Bora near Rügen Island, about three nautical miles off the coast of Hamburg.

Many of those injured were service engineers on the wind farm vessel, and 10 were seriously hurt.

They were headed to Iberdrola’s 350MW Wikinger wind farm. Nine of the people on board the World Bora were employees of Siemens Gamesa, two were employees of Iberdrola and four were crew.

The cause of the incident is not yet known, and no pollution has been reported.

After the collision, the two ships were able to proceed to Rügen under their own power, and the injured were then taken to hospital.

Lifeboat crews from the German Maritime Search and Rescue Service tended to them prior to their transport to hospital via ambulance and helicopter.

“Iberdrola wishes to thank the rescue services for their diligence and professionalism,” the company said in a statement.

In the meantime, the Hong Kong-based shipowner Valles Steamship has ordered a new 112,000 dwt crude oil tanker from South Korea’s Sumitomo Heavy Industries Marine & Engineering.

Sumitomo is to deliver the Aframax to Valles Steamship by the end of 2020, according to data provided by Asiasis.

The newbuild Aframax will join seven other Aframaxes in Valles Steamship’s fleet. Other ships operated by the company include Panamax bulkers and medium and long range product tankers.

The company’s most-recently delivered unit is the 114,426 dwt Aframax tanker Seagalaxy. The naming and delivery of the tanker took place in February 2019, at Namura Shipbuilding’s yard in Japan.

Maritime Executive with additional report from World Maritime News