Shell losing $33m weekly on Nembe Creek Trunkline

LAGOS – Oil giant Shell, through the local Shell Petroleum Development Company of Nigeria, SPDC, has been losing more than $33 million every week since the forced closure of its Nembe Creek Trunkline, NCTL, in the Niger Delta over leakage on the pipeline resulting from vandalism.

Shell declared force majeure on its Bonny Light crude with effect from March 5 as a result of the closure NCTL, one of its two major pipelines in the Niger Delta region.
Reports indicated that the oil giant was likely to lose more as it could not give a date when it would lift the force majeure

Shell logoSPDC’s second major pipeline in the Eastern Niger Delta, the Trans Niger Pipeline (TNP), that runs through Ogoniland, has also become a target for oil theft and illegal refineries.

The company is due this month to export 168,000 barrels of oil per day of Bonny Light, which was affected by the current force majeure.

In total, Shell and its joint venture partners have already lost over $110million over the week, based on beyondbrics’ calculation.
The calculation is based on the average price of crude which on Tuesday stood at $105 per barrel.

The capacity of the NCTL, which was shut down is 150,000barrels of oil per day.
The federal government taxes onshore oil revenues at 85 per cent, which translates to an impact of 15 per cent for Shell, representing $33million weekly.

The joint venture partners share the cost of operations and quantity of crude oil transported according to their participating interest, with the Nigerian National Petroleum Corporation (NNPC) as the majority shareholder, with a 55 per cent share.
SPDC has a 30 per cent share, Total E&P Nigeria has 10 per cent and Nigeria Agip Oil Company (NAOC) holds the remaining five per cent.

Shortly before SPDC observed an oil leak in the NCTL, the Managing Director of the company, Mr. Mutiu Sunmonu, had said on March 1 that he might consider shutting the pipeline completely.
“The volume being stolen is the highest in the last three years-over 60,000 barrels per day from the SPDC joint venture alone,” he said.

The company, however, said on Tuesday that no decision had been taken on a complete shutdown and that it was mobilising a team to repair the line after an investigation.
There has been a recent upsurge in crude oil theft on the NCTL, resulting in frequent production shutdown and massive oil spills blighting the environment, according to the company.

The NCTL, which was inaugurated in 2010 at a cost of $1.1 billion to replace an older pipeline, has been a target of oil thieves in recent times.

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