Nigeria’s Oil Output Drops 150,000 BPD After Shell Pipeline Closure

The Nigerian unit of Shell has shut its Trans Niger Pipeline due to a leak, while the managing director of the Nigerian National Petroleum Corporation (NNPC) said on Monday that the pipeline was attacked, effectively shutting in 150,000 bpd of crude oil output.

Shell’s Nigeria subsidiary, Shell Petroleum Development Company (SPDC), said that it had shut the pipeline last Friday following a leak that had occurred in Ogoniland. The company was investigating the cause of the leak, it has said, as reported by Reuters.

Trans Niger Pipeline is the other export route for Bonny Light exports, the first being the Nembe Creek Trunk Line, which closed earlier this month. Now the closure of the Trans Niger Pipeline effectively shuts Bonny Light exports.

Two weeks ago, Shell’s Nigerian unit declared a force majeure on Bonny Light crude oil exports, just two weeks after it had lifted a previous force majeure on exports of the grade. The force majeure was declared after Aiteo, the operator of the Nembe Creek Trunk Line, shut down the line.

According to data compiled by Reuters, as of June 22, Bonny Light loadings for August were set at 226,000 bpd. At that time, the grade was under the previous force majeure declared by Shell.

Speaking to Nigerian reporters on Monday, NNPC’s group managing director Maikanti Baru said that suspected militants had blown up the Trans Niger Pipeline, reducing Nigeria’s production by 150,000 bpd.  

The closure of the Trans Niger Pipeline comes just as Nigeria is recovering it crude oil output and was invited to share its production plans with OPEC-non-OPEC’s joint monitoring committee meeting earlier this week. Nigeria, alongside Libya, is exempt from OPEC’s cuts due to militant attacks on oil infrastructure, although Nigeria has agreed to cap production at 1.8 million barrels per day after production has stabilized at that level.

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The two African producers had steadily raised their production in recent months to the point that the market and analysts have started questioning whether it is time to put a limit on their production recovery.

The Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) said on Monday that it “acknowledges the upside limitations of both countries beyond their current production levels. Once their production levels stabilize, participating producing countries should further cooperate in a manner that contributes to the stabilization of the market.”

By Tsvetana Paraskova for Oilprice.com

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