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After nearly two months, Royal Dutch Shell has lifted the force majeure on one of Nigeria’s largest and most popular grades, Bonny Light, after a pipeline carrying the oil to the export terminal has finally been repaired.
In the middle of May, Shell Petroleum Development Company (SPDC), the Nigerian subsidiary of Shell, declared force majeure on Bonny Light exports because of the shutdown of the Nembe Creek pipeline. This led to the accumulation of lots of unsold crude. The Nembe Creek Trunkline transports 150,000 bpd of Bonny Light to the terminal that Shell operates and is one of two main pipelines that carry the Bonny Light oil grade to the export terminal.
After almost two months under force majeure, Shell has now confirmed that it “lifted the force majeure on Bonny Light exports following the repair and reopening of the Nembe Creek Trunkline by the operator, Aiteo Eastern E&P Company Limited.”
Bonny Light, with production of between 200,000 bpd and 250,000 bpd, is one of the main export grades for Nigeria and is very popular among refiners globally. The two-month force majeure on exports has benefited the pricing of other key Nigerian grades such as Forcados and Qua Iboe.
Nigeria’s oil exports were expected to drop to their 2018 low in July—to just 1.43 million bpd, compared to 1.796 million bpd in June, partly due to the force majeure on Bonny Light cargoes.
In June, there were disruptions to Bonny Light, Forcados, and Qua Iboe flows, but loading schedules showed that Nigeria’s August crude oil exports would likely rise from July. Exports of the Forcados grade were planned to increase to around 259,000 bpd next month, up from 195,000 bpd originally planned for July, according to loading programs seen by traders who spoke to Reuters.
Early in July, supply outages in Libya, Venezuela, Canada, and Nigeria itself boosted the price premiums of Nigerian grades to dated Brent, but traders were not rushing to book West African cargoes at what looked like high premiums amidst ample prompt loading oil supply.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.