By Paul Burkhardt and Elisha Bala-Gbogbo: August 10, 2016
Royal Dutch Shell Plc said its local unit has declared force majeure on supplies to a liquefied natural gas plant in Nigeria because of a leak in a pipeline as the OPEC member suffers from militant attacks on energy infrastructure that are hurting exports.
“The pipeline has been shut down for a joint investigation visit into the cause of the leak and repairs,” Natasha Obank, a Shell spokeswoman, said in a statement. The leak occurred on the Eastern Gas Gathering System, or EGGS-1, pipeline which supplies the bulk of Shell’s gas to the Nigeria LNG plant on Bonny Island. Some supply continues through other pipelines, Shell said.
Nigeria’s government has resumed payments to former militants and is attempting to establish talks to end attacks on pipeline infrastructure in the oil-rich Niger Delta that have damped crude production to almost a 30-year low. Output has fallen to 1.4 million barrels a day, Minister of State for Petroleum Resources Emmanuel Kachikwu said earlier this month.
While Shell has declared force majeure on supplies, “alternative sources of gas supply have enabled Nigeria LNG to continue production and loading” at its plant on Bonny Island, Charles Okon, a spokesman, said Wednesday in an e-mailed response to questions.
Any reduction in LNG exports would be a blow to a country already suffering the economic effects of low oil prices and militant attacks. The NLNG project has a capacity to process 22 million metric tons a year of the liquefied fuel, or 7 percent of world supply, as well as 5 million tons of natural gas liquids, according to a Shell website. The Nigerian National Petroleum Corp. holds a 49 percent share and Shell has 25.6 percent. Total SA and Eni SpA hold 15 percent and 10.4 percent, respectively.
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