Shell Nigeria resumed exports of Bonny Light on 7 June nearly two months after force majeure was declared on the vital crude oil commodity.
As reported by the Nigerian press, force majeure was declared after the Nembe Creek Trunk line (NCTL) was closed for repairs. Yet the legal order to suspend deliveries without breaking contracts was lifted early Thursday morning after Shell declared the NCTL fixed and back in service.
The approximately 60-mile long NCTL pipeline usually carries some 600,000 barrels per day (bpd) of Bonny Light to its export terminal. According to Reuters, some 240,000 bpd of Bonny Light exports had been planned for July.
In the meantime, a new report from Platts blamed the force majeure action for contributing to a rise in Nigeria’s Qua Iboe crude oil grade to a 12-year high of $0.90 per barrel premium compared to Bonny Light. Earlier this year the premium over Bonny Light ranged between $0.40 per barrel in March and $0.15 per barrel in early May.
The global energy data company noted that a 30-day ceasefire between the Niger Delta Avengers rebels and the Nigerian government restored investor confidence in Qua Iboe.
Related: Saudi Aramco IPO Has Investment Banks Flocking to Riyadh
“A number of the grades that are similar in quality to Qua Iboe are currently under force majeure or have production issues and with the ceasefire that was agreed two weeks ago, buyers are keen to get their hands on Qua Iboe,” the report quoted a source as saying.
“We also need to keep in mind that Qua Iboe was not under force majeure because of a militant attack but because of an accident unlike the other grades, which are all out due to sabotage. This does also impact a buyer when considering which crude to source,” a trader explained.
Bonny Light is viewed as Nigeria’s benchmark oil, yet Platts found that Qua Iboe exported an average of 9.9 million barrels of crude in 2016. Bonny Light exported 6.1 million barrels on average when not under force majeure.
By Erwin Cifuentes for Oilprice.com
More Top Reads From Oilprice.com:
Erwin Cifuentes is a Contributing Editor for Southern Pulse Info where he focuses on politics, economics and security issues in Latin America and the Caribbean.…