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BusinessDayOnline: Shell’s force majeur to worsen power crisis

OLUSOLA BELLO & EJIOFOR ALIKE on 17 October, 2007

The lingering power crisis in the country may worsen following a force majeur on the supply of 200-million cubic feet-a-day of gas from the Utorogu-Ughelli gas field by Royal Dutch Shell last weekend.

The shutting down of the gas pumping station in Delta State, will cut gas supply to the nation’s power plants, and worsen the hardship of electricity consumers.

The company had earlier shut natural gas pumping at the gas field following a fire in the gas condensate pipeline which was reported by Shell Petroleum Development Company (SPDC).

Following the fire incident and the shutdown of the gas plant feeding the pipeline, Alexandra Wright, company spokeswoman, said the company had to declare force majeure on deliveries to the nation’s gas pipeline network.

The declaration of force majeure indemnifies Shell from litigation if it fails to meet its contractual obligations to its customers.

According to her, the cause of the fire was not immediately known, but helicopter over-flight confirmed the fire incident around Otor-Edo in Ughelli South Local Government Area of the state.

Wright also confirmed earlier reports that the fire was caused by the activities of vandals who attempted to siphon fuel from the pipeline. She disclosed that the helicopter inspection spotted hoses and drums which might have been abandoned by the fleeing vandals.

She also said the company deferred production of about 300-million cubic feet of gas a day which was pumped together with gas condensate.

The company’s officials are yet to reach the damaged site to repair the pipeline and there has been no indication on how long production will be suspended.

The declaration of force majeur on gas supply to Nigerian customers will affect the nation’s power plants, especially the 1,320 megawatts Egbin power station, which depends on gas from the pumping station.

Shell contributes about 200-million standard cubic feet a day to augment the supply to Egbin just to keep the plant going.

The declaration of force majeur on gas supply to the station means a drastic reduction in power supply. Both corporate and individual consumers, as well as small businesses have suffered untold hardship for over a year due to the problems experienced at Egbin. The two pipelines that supplied gas to the power station were blown up during the February 18, 2006 attack on Royal Dutch Shell’s Forcados oil terminal. The pipelines supplied gas from Chevron facilities in Escravos to the station.

The destruction of the pipelines made it impossible for Chevron to supply gas from Escravos through the pipelines to the station and this resulted to acute power problems.

Earlier this year, the militants allowed government access to the damaged site for repair works to be carried out on the pipelines.

The whole six units of the Egbin plant each with a generating capacity of 220 megawatts were later shut down to enable the Nigerian Gas Company (NGC) carry out maintenance work on the pipelines that supply gas to the station.

It would be recalled that Shell last week lifted force majeure on its Forcados oil terminal, thereby getting set to begin production from the area as violence in the Niger Delta abates.

Shell had confirmed in July that small quantities of production had returned from Forcados – between one percent and three percent on a daily basis of total capacity.

The Forcados platform operated at a capacity of 380,000 barrels a day prior to militant attacks that shut the terminal in February 2006.

http://businessdayonline.com/National/626.html

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