Vandals cut crude supply to Forcados terminal

The supply of crude oil into Shell’s Forcados terminal has been cut by as much as 50 per cent after an alleged sabotage operation on the company’s pipeline, trading sources told S&P Global Commodity Insights.

The incident, it was learned, has led to loading delays and a possible force majeure declaration.

Sources, speaking to S&P Global on condition of anonymity due to the sensitivity of the situation, said, “Repairs were being carried out on the 300,000 barrels per day capacity onshore Trans Forcados Pipeline, which transports one of Nigeria’s largest crude streams, following an issue on the pipeline over the weekend.”

The report stated that Heritage Energy Operational Services Limited might be preparing to declare force majeure at the Trans Forcados Pipeline due to unforeseen circumstances affecting operations.

Heritage Energy Operational Services. Operates the OML 30 license in the Niger Delta and a segment of the TFP.

A trading source told S&P Global that repairs were being done on the pipeline due to sabotage and this may last for a week, reducing exports by half.

The report added that S&P Global Commodities at Sea showed five ballast crude vessels queueing at the Forcados terminal as of Tuesday.

Light Forcados crude is one of Nigeria’s key export grades, produced by several companies and sold in Europe, North America and other parts of Africa.

The terminal is capable of processing 300,000 bpd of crude, but just 243,000 bpd of Forcados was produced in September, according to data from the Nigerian Upstream Petroleum Regulatory Commission.

One market source was quoted as saying that the issue should be fixed within seven days and it was only affecting the pipeline leading to the terminal, rather than the terminal itself.

“Another trader, however, said the problem could last as long as three weeks,” it was stated.

The Shell Petroleum Development Company of Nigeria, the UK energy major’s Nigeria subsidiary, is the operator of the SPDC Joint Venture and the Forcados Oil terminal.

It was learned that the Forcados pipeline and terminal have long been major targets for oil thieves in the restive Niger Delta.

The terminal was offline for a large chunk of 2022 following attacks, while in 2021 the closure of the pipeline prompted a force majeure declaration by Shell on the whole Forcados terminal.

“Platts, part of S&P Global Commodity Insights, last assessed Forcados at $74.55 per barrel on October 21 — a $1.35 per barrel premium to the Dated Brent benchmark — well below its 2024 peak of $95.15 per barrel on April 5,” the report added.

Nigeria, Africa’s biggest oil producer, is capable of pumping some 2.2 million bpd of crude but produced just 1.35 mbpd in September, according to the Organisation of the Petroleum Exporting Company.

The NUPRC said it was targeting an additional 1 mbpd of crude oil in the next one year.

Shell is attempting to exit the Niger Delta after agreeing to sell its onshore business to Renaissance — a consortium of five Nigerian companies — but the NUPRC refused to approve the divestment deal.