Serious hitches in the production of oil in Nigeria, as well as Libya and Ecuador this week, hiked the price of oil globally to $80 per barrel.This was due to maintenance issues and oilfield shutdowns.
Apart from Nigeria, other oil producers including Ecuador and Libya also declared forces majeures this month on part of their oil production.
Brent crude traded near $80 a barrel despite the rapid spread of the Omicron coronavirus variant, supported by supply outages and expectations that U.S. inventories fell last week.
Brent crude rose by 55 cents, or 0.7 percent to $79.15 a barrel after hitting a session high of $79.85. U.S. West Texas Intermediate (WTI) crude rose 73 cents, or 1 percent to $76.30, after rising to $76.92.
Both contracts reportedly traded at their highest in the last month.
It was reported that about 200,000 barrels of crude oil are currently stranded as oil major Shell Plc halted crude shipments from Nigeria’s Forcados export terminal.
The action is considered another blow to Nigeria which has struggled to stem falling production.
Shell Petroleum Development Co. of Nigeria Ltd issued a notice of force majeure on Forcados shipments, effective from midday on December 21, and plans to issue a revised offtake program in due course.
More than 200,000 barrels a day of Nigerian crude normally pass through the terminal.
The shutdown comes just a month after Shell said it was restoring flows from the nearby Bonny facility. Force majeure is a clause that allows companies to skip contractual obligations following issues outside of their control.
The stoppage occurred during the replacement of one of the two single point moorings at Forcados, with the positioning of a jack-up barge preventing tanker access, export operations, and resumption of full production into the terminal, Nigerian National Petroleum Corp. said in a notice.
The presence of the jack-up offshore support vessel Seacor Strength at the Forcados moorings was confirmed by ship tracking data monitored by Bloomberg.
Neither the Nigerian National Petroleum Company Limited (NNPC) nor Shell indicated the likely duration of the stoppage. The force majeure suggests it will be long enough to affect four remaining cargoes that a port agent report seen by Bloomberg shows are due to be loaded this month.
Since Shell announced the month-long force majeure at the Bonny site in October, only one ship has loaded cargo from that terminal.
It was stated earlier that Nigeria, Libya, and Ecuador have declared force majeures this month on part of their oil production because of maintenance issues and oilfield shutdowns.
After a malfunctioning barge obstructed the path of a tanker, Shell Petroleum Development Company (SPDC), declared a force majeure on the exportation of Forcados crude oil.In the assurance that efforts to restore access are in progress, The Subsidiary of the Royal Dutch Shell Plc in Nigeria, SPDC, declared force majeure on Forcados exportation, effective from Monday, 12noon.Forcados, Nigeria’s crude mix, with an average production of around 200,000 barrels a day, had its shutdown, a month after Shell said it was restoring flows from its Bonny facility.
After Libya successfully secured the top spot in Africa in the month of october, with 1.24 mb/d; November this year, Nigeria repossess her top spot in Africa with the production of an average of 1.27million barrels per day (mb/d). According to the Organisation of Petroleum Exporting Countries (OPEC), the oil and gas sector accounts for about 10 percent of Nigeria’s GDP and petroleum shipment of around 86per cent of revenue.
Nigeria’s Forcados shutdown will further increase the ongoing issues that have reduced crude oil shipment sales in recent months.
According to the National Bureau of Statistics (NBS), Nigeria’s Q3 crude oil production reduced to 1.57mb/d from the 1.61mbl in Q1 of 2021. This update was enclosed in the “Nigerian Gross Domestic Product (GDP) Q3 2021 Report” “The nation in the third quarter of 2021 recorded an average daily oil production of 1.57million barrels per day (mbpd), lower than the daily average production of 1.67mbpd recorded in the same quarter of 2020 by 0.10mbpd and lower than the second quarter 2021 production volume of 1.61mbpd by 0.05mbpd.” the report said.
Investors await OPEC’s meeting, coming up on the 4th of January, which will decide on going ahead on a planned production increase of 400,000 barrels per day in February.