Oil Theft, Sabotage Shut Down Shell's Nigerian Pipeline

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--After closing the Trans Niger Pipeline five times since July due to sabotage and oil theft, Shell Nigeria (NYSE:RDS.A) has declared force majeure on the export of Bonny Light crude, one of the major oil grades produced in Nigeria. The move releases the company from contractual obligation due to circumstances beyond its control.

The pipeline was shut down in the middle of last week after an oil spill led to the discovery of a series of holes drilled in the pipeline. The shutdown reduced crude oil production by 150,000 barrels per day.

Mutiu Sunmonu, managing director for Shell Nigeria, said that the company had repaired 189 crude theft points on the TNP this year. The pipeline is designed to carry 300,000 barrels of oil per day.

"We're dealing with a social tragedy, an environmental crisis and a sad waste of resources," Sunmonu said. "We find it difficult to safely operate our pipelines without having to shut them frequently to prevent leaks from illegal connections impacting the environment."

It has been estimated that Nigeria loses a minimum of $6 billion in oil revenue annually through oil theft and infrastructure sabotage. This equates to 200,000 barrels per day, or 10% of production sold internationally by criminal syndicates.

For related information, see June 25, 2013, article - Shell Joint Venture Invests $3.9 Billion to Secure Nigerian Oil and Gas Supplies

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